Known Loss endorsement prevents coverage if the insured knew the loss was probable at the time the contract was issued. Which statement best reflects this rule?

• A. Coverage is guaranteed for all losses
• B. Coverage is denied if the loss was known to be probable
• C. Coverage is extended for all such losses
• D. This endorsement only applies to property damage

Answer: (B)

The Known Loss endorsement is about preventing coverage for losses the insured already knew were likely before the policy was issued. If, at the time the contract was issued, the insured (or their agent) knew that a loss was probable, the insurer can deny coverage for that loss under this endorsement. This rule stops the insured from obtaining protection for a risk they already anticipated.

It’s not about guaranteeing coverage for all losses, and it doesn’t extend coverage for losses that were known to be probable. It also isn’t strictly limited to property damage; the endorsement can apply to losses within the scope of the policy where knowledge of a probable loss existed. For example, if the insured knew a roof issue made a leak probable before buying the policy, a claim for that leak can be denied under this rule.