The injury-in-fact trigger theory

According to FindLaw, Kentucky insurers have a duty to act with good faith when handling a claim. "Good faith" means that insurers must thoroughly investigate each claim, respond to each claim promptly, to pay or deny the claim within a reasonable time frame and, if denying the claim, to provide a thorough explanation detailing the reasons for the denial. FindLaw further details what breach of duty may look like.

If an insurer breaches its duty to an insured by engaging in conduct that constitutes an unfair settlement practice, the law considers it to have acted in bad faith. When bad faith occurs, the insured has the option to file a bad faith lawsuit. When this happens, it is then up to the insurer to prove that it did not, in fact, act in bad faith, and up to the insured to prove that the wording of the policy does provide for claimed damages.

It is not uncommon for the courts to determine that the insured's burden to prove coverage under his or her policy is an insurmountable task due to the difficulty in determining the triggering event of an injury or harm. In these instances, the courts turn to trigger theories.

According to the International Risk Management Institute, the courts recognize four trigger of coverage theories. Those are exposure, continuous trigger, manifestation and injury-in-fact.

Under the injury-in-fact theory, otherwise known as actual injury theory, coverage begins as soon as the personal injury or property damage underlying the claim actually occurs. IRMI uses the case involving as an example.

In this case, GenCorp filed a claim for the spill of hazardous waste on its property. To the courts, it was clear that the point of injury was when the spill occurred. As a result, the courts compelled the insurer to provide coverage from the point of injury onward. Of course, not every case is so cut and dry, but the general principle still applies.