A reasonable precautions condition in a liability insurance policy requires the insured to take precautions it subjectively considers reasonable having regard to risks it subjectively recognises; the insurer must show the insured recognised the danger and knew its response was inadequate or was indifferent to whether the danger was averted. Appellate challenges to findings about an insured entity's state of mind engage the principles of appellate restraint applicable to findings affected by the trial judge's assessment of witness credibility, including where the entity's state of mind is inferred from the evidence of its constituent members. Hypothetical evidence from witnesses about what they would have done had they held a particular state of mind is admissible and its weight is a matter for the trial judge.
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