The known loss rule is a legal principle that states that insurance policies do not cover losses that are already known to the policyholder at the time the policy is purchased. This means that if an individual or business is aware of a potential loss or damage when they purchase an insurance policy, that loss or damage is not covered by the policy. The rationale behind the known loss rule is that insurance is meant to protect against unexpected losses, not known or expected losses.
Examples of Known Loss Rule:
The known loss doctrine is not commonly applied in personal injury cases, as personal injury claims typically involve accidental or unforeseen injuries rather than known or expected losses. However, there may be situations where the known loss doctrine could potentially be relevant in a personal injury case. For example:
- A plaintiff who was already experiencing chronic pain and medical issues prior to an accident, and sought medical treatment for those conditions after the accident, may have their claims limited by the known loss doctrine if the pre-existing conditions were already known to them and they were seeking treatment for them before the accident.
- A plaintiff who intentionally causes harm to themselves, such as by engaging in dangerous behavior, may be barred from recovering damages under the known loss doctrine if they were aware of the risks involved and chose to engage in the behavior anyway.
- A plaintiff who knew of a defect in a product that caused their injury but continued to use the product anyway may be barred from recovery under the known loss doctrine if their injury was the result of a known and accepted risk.
The application of the known loss rule in personal injury cases is highly fact-specific and dependent on the particular circumstances of each case. It is always best to consult with a qualified attorney to determine whether the known loss doctrine may apply to your particular case.