Understanding the Knowledge Date in Lawyers Professional Liability Insurance
When it comes to Lawyers Professional Liability Insurance (LPL), one of the most critical and often misunderstood concepts is the ‘knowledge date.’ Also known as the ‘prior knowledge date’ or ‘continuity date,’ this underwriting term can significantly impact whether or not a claim is covered. Knowledge date is a frequently litigated issue with LPL claims. Here’s what attorneys need to know.
What Is the Knowledge Date?
The knowledge date is the cutoff date used by insurers to assess whether a lawyer was aware or reasonably should have been aware of a potential issue that could lead to a claim. If a lawyer had prior knowledge of a situation before this date, any resulting claim may not be covered.
How It Relates to Prior Knowledge
Most LPL policies include a prior knowledge exclusion that states something like:
“This policy does not apply to any claim arising out of any act, error, or omission known to any insured prior to the effective date of the policy if it was reasonably foreseeable that such act could give rise to a claim.”
This means that if a lawyer knew or should have known about a problem before the knowledge date, coverage for any resulting claim may be denied, even if the claim is made during the policy period.
Knowledge Date vs. Prior Acts Date
While the knowledge date determines what known issues are excluded, the prior acts date controls how far back coverage goes for unknown issues. Here’s a comparison:
• Prior Acts Date: Earliest date for which professional services are covered.
• Knowledge Date: Date before which known issues are excluded from coverage.
Real-World Example
Suppose a lawyer applies for coverage on January 1, 2025, knowing that a client had complained about a missed deadline in December 2024. If the policy has a knowledge date of January 1, 2025, and a claim is filed in March 2025, the insurer could deny the claim on the grounds that the lawyer had prior knowledge of the potential claim before the policy started.
Best Practices
To avoid issues related to knowledge date exclusions:
• Always disclose known incidents or threats of claims when applying for coverage.
• Understand the difference between prior acts coverage and knowledge-based exclusions.
• Knowledge date is a two edge sword, if switching insurers be aware that the new insurance policy likely precludes coverage for known issues not reported to your incumbent insurer.
The knowledge date is a key factor in determining claim eligibility. Lawyers must understand how it works to avoid unexpected denials and ensure continuous claims-made coverage.
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Lee Norcross, MBA, CPCU
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L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
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Lee@L2Ins.com
616-726-7080
