Exclusion Trio Bars Coverage for Undisclosed, Pre-Policy Claim: Wiley

In a summary judgment win for Wiley’s client, a Kentucky Circuit Court, applying Kentucky law, held that a prior knowledge exclusion, application exclusion, and prior notice exclusion all applied to bar coverage for a claim brought against the insured care facility. Hunt v. Masonic Homes of Ky. Inc., No. 17-CI-005888 (Ky. Cir. Ct. June 9, 2026). The court also held that a claims administrator entity, which did not issue the policy, must be dismissed because it never had a contractual relationship with the insured. The court also granted summary judgment as to the insured’s bad faith claims against both the insurer and the claims administrator.

The insured, a senior care and assisted living facility, was sued by the estate of a resident who allegedly received substandard care at the facility. In December 2016, the resident suffered a severe hip fracture at the facility and died shortly thereafter. That month, the decedent’s daughter contacted the insured multiple times to inquire about the circumstances of the injury. In February 2017, the estate’s counsel sent a letter to the facility regarding possible substandard care and asking that the insured share the letter with its “liability insurance carrier and/or general counsel.” On March 6, 2017, the insured applied for a new insurance policy with one of the third-party defendants (the “Insurer”), but it did not acknowledge on the application the estate’s potential legal claim against it. Two days later, the insured notified the insurance company for the expiring prior policy year (the “Prior Insurer”) about the incident. The Prior Insurer denied coverage. About seven months later, when the Prior Insurer reasserted its earlier denial, the insured notified the subsequent Insurer. In the ensuing litigation, the subsequent Insurer and its claims administrator both moved for summary judgment.

The subsequent Insurer’s policy contained an exclusion barring coverage for any claim arising from any fact or circumstance required to be disclosed on the insured’s application for the subsequent policy. In addition, the subsequent policy included a prior knowledge exclusion that precluded coverage for claims arising out of circumstances that, prior to March 2017, any insured knew or reasonably could have foreseen might result in a claim. The subsequent policy also contained a prior notice exclusion, which barred coverage for any claim involving circumstances that were noticed under a prior policy.

The court first held that the subsequent policy’s prior knowledge exclusion applied because the insured knew or reasonably should have foreseen a claim in connection with the decedent’s injury before March 2017. The insured was aware of the potential legal claim as early as December 2016, when the decedent’s daughter contacted the insured to inquire about the cause of the decedent’s broken hip, and the insured also received a letter issued in February 2017 alleging substandard care and advising the insured to notify its carrier or general counsel. The court also held that the application exclusion precluded coverage because the insured should have answered “yes” to questions on the application and disclosed the known facts and circumstances surrounding the decedent’s injury and the estate’s communications with the insured, which it knew or should have known may give rise to a claim. Finally, the court held that the prior notice exclusion applied to defeat coverage because the insured provided notice of a potential claim to another insurance company (the Prior Insurer) almost seven months before providing notice to the subsequent Insurer, after the Prior Insurer had repeatedly declined coverage.