For liability policies, there are two types of policies that have different triggers for coverage — claims-made and occurrence policies.

§ 24.7.1—Claims-Made

A claims-made policy provides coverage for a claim made against the insured during the term of the insurance policy (or a period defined in the policy that can often extend beyond the termination of the policy, or what is called a "tail" period). Most specialized liability policies such as E&O, D&O, EPL, and EI policies are claims-made policies.

§ 24.7.2—Accidents and Occurrences

An occurrence policy provides coverage for a claim made against the insured that arises out of damage or injury that took place during the policy period, regardless of when the insured makes the claim. Most CGL insurance is written on an occurrence form. The difficulty with occurrence form policies is that a claim can arise out of a covered event that occurred many years earlier. As a result, it is difficult for an insurance company to assess future liabilities.

There are four different common triggers for coverage under an occurrence policy. Triggers are important because they allow the insured and insurers to know which policy or policies the insured should look to to cover any covered loss.

1) Exposure (coverage is triggered when the first injury-causing conditions occur);
2) Manifestation (coverage is triggered when the personal injury or property damage becomes known, or is discovered by, the property owner or victim);
3) Continuous (progressive indivisible injury or damage occurs continuously from the time of exposure or installation until the time of discovery); and
4) Injury-in-fact (coverage is triggered when the personal injury or property damage underlying the claim actually occurs).

The type of trigger the court applies will greatly affect the amount of coverage and, if the insured had multiple carriers over a number of years, which carrier or carriers is or are responsible for a covered loss. For instance, in the case of a slow water leak that spanned multiple coverage periods, if the court applies the continuous trigger, then multiple carriers and/or policies may each be responsible. If the court applies the exposure trigger, the carrier who insured when the leak started would be responsible. If the court applies the injury-in-fact trigger, the carrier or carriers who provided coverage once the property was actually damaged would be responsible.

Once a "trigger" is...

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