Legal Definitions - knowledge-of-falsity exclusion

Definition: A provision in some commercial general liability policies that excludes coverage for damages arising from an oral or written communication made by the insured with knowledge that it is false.

Example: A company publishes an advertisement claiming that their product can cure cancer. They know that this claim is false, but they still publish it. If someone sues the company for false advertising, their insurance policy may have a knowledge-of-falsity exclusion, which means that the insurance company will not cover the damages.

This example illustrates how the knowledge-of-falsity exclusion works. If the insured knowingly makes a false statement, they cannot rely on their insurance policy to cover any damages resulting from that statement.