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Term: Coverage Trigger

2 Feb 2015

An event that must occur in order for a liability policy to apply to a loss. Coverage triggers are outlined in the policy language, and courts will use different legal theories pertaining to triggers to determine whether policy coverage applies.

Insurance companies use coverage triggers to ensure that the policies they underwrite only apply when specific events occur. They do this to ensure that they only pay claims under certain circumstances, though this can shift the burden of proving that a policy should apply to the insured.

Because proving what triggers applied can be expensive or difficult, courts rely on legal theories to provide guidance. These theories apply to insurance cases involving different events. Four different theories apply to coverage triggers: injury-in-fact, manifestation, exposure, and continuous trigger.

– Injury-in-fact theory says that the coverage trigger is the injury itself, so when the insured breaks his or her leg the liability insurance applies.

– Manifestation trigger theory says that the coverage trigger is the discovery of the injury or damage, so when the insured discovers that his or her vehicle is damaged the coverage applies. In some cases courts may differ on whether they use the actual date of the discovery, or if they use the time that the damage should have been discovered.

– Exposure trigger theory often applies to injuries that manifest over time, such as those caused by breathing in harmful chemicals. It may take years for the injury to appear, but courts may consider the original period of the exposure (e.g. when the injured party was first exposed to the chemicals).

– Continuous trigger theory states that a combination of trigger types – manifestation, exposure, and injury-in-fact – leads to an injury that develops over time. This type of trigger is used to ensure that the insurance company’s obligations are not diluted.

Covid-19 – Johns Hopkins University

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