The “first manifestation” provision may significantly modify or deviate from the most recent ISO Commercial General Liability policy form, CG 00 01 12/07, commonly referred to as an
“occurrence” form. The principle difference between the ISO “occurrence” form and a manifestation form is what is being referred to as “trigger of coverage.” The trigger of coverage is the event or circumstances that activate the insurer’s defense and indemnity obligations under the policy.
According to ISO rules the standard ISO form is intended to provide coverage for an injury that occurs during the policy period, regardless of when the injury becomes known or manifested. Therefore, “occurrence” policies may cover injuries that occur during the policy period but are not discovered until years later (i.e., hidden construction defects). Although manifestation forms differ between insurers, discovery of the injury or damage is intended be the trigger of coverage. Most forms require the injury or damage to be known or discovered during the policy term.
For example, a leak in the window installed by a contractor begins in year I and was discovered during year I, but continues during year II. Both an occurrence and manifestation policy effective during year I would provide coverage for year I because the damage occurred and was discovered during the policy term. An “occurrence” policy effective during year II may also cover the damages during year II. A manifestation policy would not, because the damage was not discovered during the policy term.
Some insurers have adopted the manifestation form, or discovery trigger, for two primary reasons: to limit their exposure to a single policy period, because injury or damage can manifest at only one point in time; and to insurers’ exposure to an unpredictable and lengthy “tail” of lawsuits filed years after the risk they agreed to protect against.