Thursday, April 9, 2009

First Circuit distinguishes policy condition regarding knowledge of existing claim from known loss doctrine

In my last post I discussed the recent First Circuit decision in Employers Reinsurance Corp. v. Globe Newspaper Co, Inc., which held that a likely loss is not a known loss.

Although the court found that coverage for the Globe was not barred by the known loss doctrine, it went on to state in dicta that coverage may be barred by a condition of the prior acts endorsement of the policy. That condition required that the Globe not have had, prior to the new policy, "notice or knowledge" of the claim in question or of "circumstances that would give rise to such claim." The court distinguished that condition from the known loss doctrine, stating that the condition "bars insurance not for a known loss but merely where there is notice on the insured's part, not conveyed to the insurer, of 'circumstances which would give rise to such claim.'"

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