What is a Coverage Trigger?
A coverage trigger is an event that must happen in order for a liability policy to apply to a loss. Coverage triggers are outlined in the policy language, and courts will utilize different legal speculations pertaining to triggers to determine whether policy coverage applies.
How a Coverage Trigger Works
Insurance companies use coverage triggers to guarantee that the policies they endorse possibly apply when specific events happen. They do this to guarantee that they just pay claims under particular conditions, however this can shift the burden of proving that a policy ought to apply to the insured.
Since proving what triggers applied can be costly or troublesome, courts depend on legal hypotheses to give guidance. These speculations apply to insurance cases involving various events. Four unique speculations apply to coverage triggers: injury-in-fact, manifestation, exposure, and continuous trigger.
Coverage Trigger Theories
- Injury-in-fact theory says that the coverage trigger is the injury itself, so when the insured breaks their leg the liability insurance applies. One illustration of this theory was in Louisiana in which a company spilled hazardous waste into a nearby river, and that waste advanced into a drinking system months after the fact. Thus, a family turned out to be ill due to drinking the water. The injury-in-fact trigger is the time the family turned out to be ill, not when the hazardous waste was unloaded into the river.
- Manifestation trigger theory says that the coverage trigger is the discovery of the injury or damage, so when the insured finds that their vehicle is damaged the coverage applies. Now and again courts might vary on whether they utilize the genuine date of the discovery, or on the other hand assuming they utilize the time that the damage ought to have been found. A genuine illustration of this theory in action is the point at which a claimant alleged that the work a Texas HVAC company completed in 2010 spilled after some time, causing damage to their home's drywall, ceiling and flooring. The claimant found the hole in November 2017. The insured offered the claim to its 2010 to 2017 CGL transporters. The transporters that gave the coverage in 2010 to 2016 denied coverage since Texas had adopted the manifestation coverage trigger.
- Exposure trigger theory frequently applies to injuries that manifest after some time, like those brought about by breathing in unsafe synthetic compounds. It might require a very long time for the injury to show up, yet courts might think about the original period of the exposure (for example at the point when the injured party was first presented to the synthetic compounds).
- Continuous trigger theory states that a combination of trigger types - manifestation, exposure, and injury-in-fact - prompts an injury that creates over the long haul. This type of trigger is utilized to guarantee that the insurance company's obligations are not diluted. For instance, a food manufacturer utilized an additive to increase the shelf life of one of its products. This additive was subsequently found to cause medical conditions, however it required a very long time for the illness to create. During the period that the manufacturer was using the additive, it had purchased several different liability policies. Under a continuous-injury trigger, every one of these policies is said to give coverage, since the injury happened throughout some stretch of time in which various coverages covered.
- A coverage trigger is outlined in an insurance policy as an event that will trigger before a payout.
- Insurance companies use coverage triggers to guarantee that the policies they endorse possibly apply when specific events happen.