The prior known circumstances exclusion
Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05
What the exclusion actually does
Professional indemnity (PI) policies in the UK are almost always written on a claims-made basis. That means the policy in force when a claim is made against you responds — not the policy that was in force when you did the work. To stop firms buying cover only once a problem has surfaced, insurers attach a prior known circumstances exclusion (sometimes called a “known claims and circumstances” exclusion or a “prior knowledge” condition).
In plain terms: if, before the policy incepted, you knew of a fact or circumstance that could reasonably be expected to give rise to a claim, the new policy will not pay that claim. The loss sits with whoever was on risk when you first became aware of it.
Why it matters most when you switch insurers
This is the moment the exclusion bites hardest. Say you move from Insurer A to Insurer B at renewal. A complaint you were already aware of under Insurer A then turns into a formal claim three months into Insurer B’s policy. Insurer B points to the prior known circumstances exclusion and declines. Insurer A says the claim was never notified to them during their policy period. You can end up with a genuine claim and no insurer accepting it — a coverage gap that is entirely avoidable.
The mechanism that closes that gap is notification. Every claims-made PI policy carries a duty to notify the insurer of circumstances that might lead to a claim during the policy period in which you become aware of them. Notify Insurer A of the circumstance before that policy ends, and it becomes their claim — even if the demand for money only lands months later under Insurer B.
Switching PI insurer this year? We check for gaps before you move — not after a claim.
Get a PI quote →“Known” is broader than you think
The exclusion rarely requires that you knew a claim was certain. Most wordings apply where you were aware of a circumstance that could reasonably be expected to give rise to a claim. That objective test catches more than obvious disputes. Common triggers include:
- A client complaint or expression of dissatisfaction, even if informal
- An error you spotted in your own advice, report or deliverable
- A missed deadline or limitation date
- A demand for a refund, a rework, or a threat to “take it further”
- An internal audit or file review that flagged a problem
- A regulator, professional body or third party raising concerns about your work
You do not have to have received a solicitor’s letter. Awareness of the underlying circumstance is enough. This is why the proposal form for a new policy asks whether you are aware of any circumstances that might give rise to a claim — and why answering honestly protects you.
The link to fair presentation
Under the Insurance Act 2015, a business buying commercial insurance owes a duty of fair presentation of the risk. When a proposal form asks about known circumstances, that question is part of the presentation. Failing to disclose a circumstance you were aware of is not just an exclusion issue — it can amount to a breach of the duty of fair presentation, which gives the insurer remedies ranging from proportionate reduction of a claim to avoiding the policy altogether. So the honest answer that feels awkward at renewal is the answer that keeps you covered.
Notify now or claim later: a comparison
| Scenario | Which policy responds |
|---|---|
| You notify a circumstance to your current insurer before the policy ends, then switch. Claim arrives later. | The old policy (the one notified). Cover holds. |
| You knew of the circumstance but did not notify, then switched. Claim arrives under the new insurer. | Likely neither. New insurer applies the prior known circumstances exclusion; old insurer was never notified. |
| A genuinely unknown error surfaces as a claim under your current policy. | The current policy. This is exactly what claims-made cover is for. |
| You retired or closed the firm and let cover lapse; a claim arrives afterwards. | None, unless you bought run-off cover. |
Retroactive dates and run-off
Two related features sit alongside the exclusion and are worth understanding when you move insurer:
Retroactive date. Many PI policies cover work done back to a stated retroactive date, provided the circumstance was unknown at inception. When you switch, check the new policy carries the same retroactive date (ideally “none” or your original start date). If a new insurer imposes a later retroactive date, older work can fall outside cover entirely — a quieter cousin of the known circumstances problem.
Run-off cover. When you stop trading, merge or retire, claims can still arrive for years afterwards because of the claims-made structure. Run-off cover keeps a policy responding to those late claims. It only covers matters that were unknown when the run-off was arranged — the prior known circumstances principle still applies.
If any of this is unclear on your current schedule, it is worth a five-minute check before you commit to a move. Start a PI quote with Apex and we will compare retroactive dates and notification wording as part of the process.
Practical steps before you switch insurer
- Sweep your files for any complaints, errors or near-misses you are aware of.
- Notify your current insurer of every such circumstance in writing before the policy expires.
- Answer the proposal form honestly — disclose everything you know.
- Match the retroactive date on the new policy to your original cover.
- Keep evidence of what you notified and when.
Common questions
Does the exclusion apply if I only had a vague sense something might be wrong?
Potentially, yes. The test is usually whether a reasonable professional in your position would have recognised the circumstance could lead to a claim. A vague unease may not meet it, but a clear warning sign will. When in doubt, notify.
Can I still get cover for a matter I already know about?
Not under a standard new policy — that is precisely what the exclusion removes. The correct route is to notify the insurer who was on risk when you first became aware, so their policy responds.
What if I forgot to notify a circumstance before switching?
Tell your broker straight away. There may still be options depending on timing and wording, but the position is far weaker once you have moved insurer. Early advice matters.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.