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It is axiomatic that traditional insurance policies cannot be purchased to cover losses known to exist. A classic example is the homeowner standing in his basement, with water up to his ankles, who tries to order flood insurance for the first time. 

Insurance companies attempt to expand this general rule by advocating for a “known loss” bar to coverage (the “Known Loss Doctrine”), asking courts to analyze whether circumstances known to the policyholder before the policy was sold portended a future loss and should have been disclosed to the insurance company.  In other words, insurance companies argue, coverage should be excluded for any subsequent losses somehow arising from facts the policyholder knew about. 

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