Insurance Law Lesson 55: Preexisting Risks

Before issuing a policy, insurers want to know whether there are existing claims or an expectation that a particular claim will arise.

In occurrence-based coverages (coverage that applies to injury that occurs during the policy period), this is more about loss history and predicting the risk of future loss.

In claims-made coverages (coverage that applies only to claims that are asserted during the policy period, generally including when the injury occurred within some retroactive period) this is about not issuing coverage for a known loss.

If a doctor discloses that in the prior year he made a dreadful mistake, the insurer might not be willing to issue a policy to cover a lawsuit that may come from that mistake.

In a disability policy, the insurer might not be interested in taking on the risk for the person who has had multiple knee surgeries.

So, how do these people get coverage?

Targeted carve-outs. Exclusions that bar coverage for a particular claim.

In the Harvey Weinstein case discussed in the prior lesson, it was suggested that some of Weinstein’s policies may well have had “prior acts” exclusions. If the insurers knew about a history of accusations, I wouldn’t be surprised if his policies had such exclusions.

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