What are the prior dishonesty provisions?

The prior dishonesty provisions refer specifically to the exclusions relating to dishonest acts committed by an insured or their employees. When the correct choice highlights exclusions for known dishonest acts, it emphasizes the principle that an insurance policy should not cover losses that arise from intentional or fraudulent behavior. This means that if an insurer discovers that an employee has committed a dishonest act, they can terminate coverage immediately to prevent further liability.

This framework is critical for insurers because it helps them manage risk. By excluding coverage for known acts of dishonesty, the insurer is actively protecting itself against potential fraudulent claims that could otherwise undermine the integrity of the policy and lead to significant financial loss.

Understanding this allows adjusters to navigate claims more effectively and helps in preventing future fraudulent actions. The immediacy of terminating coverage upon discovery reinforces the seriousness with which dishonest conduct is treated, ensuring that insurance should not serve as a safety net for wrongdoing.