Manifestation Trigger

What Is a Manifestation Trigger?

In the insurance industry, a "manifestation trigger" is the moment when a policyholder becomes aware of a reason to file a claim. For example, in home insurance, the manifestation trigger occurs when the policyholder discovers property damage.

Usually, the manifestation trigger happens after the event took place because it takes time for the policyholder to identify the cause of the damage.

Key Takeaways

• The manifestation trigger is the date when a policyholder discovers damages resulting in an insurance claim.
• It is one of the various dates used in the insurance industry.
• Terms like this become necessary when policyholders and insurers disagree on claim responsibilities.

How Manifestation Triggers Work

Determining the exact date of a covered event can be complicated. For instance, a homeowner might find mold infestation when returning from a vacation. In this case, the manifestation trigger is the date the mold is discovered, regardless of when it started growing.

These nuances matter to insurance companies as they determine their responsibility to cover the policyholder’s claim. Depending on the policy, the insurer may not be liable if the manifestation trigger occurs after the coverage term ends. However, a policyholder who discovers an issue after the insurance has expired can argue that the insurer is still responsible, provided they can prove the problem developed while they were insured.

To handle such arguments, the insurance industry uses specialized terms like "manifestation trigger" to describe different types of dates and discoveries. An exposure trigger, for example, is when a policyholder first experiences harm, while an injury-in-fact trigger is when an injury or illness becomes known. Continuous triggers, on the other hand, refer to gradual damage accumulation over time.

This language can be especially complex when the policyholder changes policies multiple times within the relevant period, making it difficult to determine who is responsible for honoring the different claims.

Real-World Example of a Manifestation Trigger

For instance, consider the case of Don’s Building Supply, a Texas wholesaler of exterior insulation and finish systems installed on homes constructed between late 1993 and late 1996. During the construction, Don’s had three consecutive general liability insurance policies from OneBeacon. From 2003 to 2005, homeowners filed lawsuits against Don’s, claiming that the insulation was defective and allowed moisture to cause damage like rot.

The homeowners argued that the damage began six months to a year after installation while the policies were active. However, the damage remained hidden until after the policy period ended. The debate was resolved when it reached the Texas Supreme Court. The court addressed the question of whether "an insurer’s duty to defend is triggered where damage is alleged to have occurred during the policy period but was inherently undiscoverable until after the policy period expired?" The Court answered "yes," ruling that the key date triggering coverage was when the injury occurred, not when the homeowner discovered it. In other words, the manifestation trigger was the decisive moment in this case.