Legal Definitions - manifestation theory

Manifestation theory is a principle in insurance law that helps determine which insurance policy is responsible for covering an injury or damage that develops over time. Under this theory, coverage is triggered by the insurance policy that is active at the moment the injury or damage first becomes apparent or detectable. This means that the policy in effect when the problem "manifests" itself—when symptoms or damage are first observed—is the one that must provide coverage, regardless of when the initial cause of the harm occurred or when the injury silently began to develop.

Here are some examples to illustrate how manifestation theory works:

• Construction Defect: Imagine a commercial building was constructed in 2010, and the contractor had Insurance Policy A at that time. Due to a subtle flaw in the foundation work, a structural issue slowly developed over several years, but it wasn't visible. In 2018, significant cracks suddenly appeared in the building's walls, and the floors began to visibly sag, indicating a major structural problem. At this point, the contractor had switched to Insurance Policy B. Under the manifestation theory, Insurance Policy B (the policy active in 2018) would be responsible for covering the repair costs because that is when the damage first became apparent and observable.

• Product Liability (Medical Device): A patient received a medical implant in 2015 from a manufacturer insured by Policy X. Unbeknownst to anyone, the implant had a microscopic design flaw that caused it to slowly degrade over time. For three years, the patient felt fine. However, in 2018, the patient began experiencing severe pain and complications directly attributable to the implant's degradation, requiring immediate surgery to remove it. By 2018, the manufacturer was insured by Policy Y. According to the manifestation theory, Policy Y would be the responsible insurer because 2018 was when the injury and its symptoms first became evident to the patient and medical professionals.

• Environmental Contamination: A factory operated from 2005 to 2010, during which it had Insurance Policy P. During this period, a slow, undetected leak from an underground storage tank caused gradual contamination of the soil and groundwater. The factory changed insurance providers in 2011 to Policy Q. In 2016, a neighboring property owner discovered significant contamination on their land, which was traced back to the factory's old leak. This was the first time the environmental damage became apparent. Under the manifestation theory, Insurance Policy Q (the policy active in 2016) would be responsible for the cleanup costs because that is when the environmental damage was first discovered and became known.