{"id":1670,"date":"2013-06-01T06:37:46","date_gmt":"2013-06-01T12:37:46","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=1670"},"modified":"2013-05-28T16:38:53","modified_gmt":"2013-05-28T22:38:53","slug":"nevada-adopts-the-manifestation-rule-in-first-party-property-cases-involving-progressive-damage","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/nevada-adopts-the-manifestation-rule-in-first-party-property-cases-involving-progressive-damage\/","title":{"rendered":"Nevada Adopts the Manifestation Rule in First Party Property Cases Involving Progressive Damage"},"content":{"rendered":"<p>Michael Mills &#8211; May 24, 2013<\/p>\n<p>In 1977, the Jacksons bought a home.\u00a0 Over time, small cracks appeared in the walls.\u00a0 The Jackson\u2019s investigating engineer said that the home had suffered structural damage because of negligent construction.<\/p>\n<p>The Jackson\u2019s homeowner policy was with State Farm.\u00a0 State Farm disagreed with the Jacksons.\u00a0 State Farm said that the loss was from earth movement.\u00a0 The State Farm policy in place at the time the Jacksons reported the damage excluded coverage for both negligent construction and earth movement.\u00a0 However, the policy in place when the Jackson\u2019s first bought the house did not exclude damages for negligent construction.<\/p>\n<p>When State Farm denied coverage on the homeowner\u2019s policy the Jacksons sued.\u00a0 The Jacksons argued that the first policy issued to them by State Farm should control and since their engineer said that the damage was caused by negligent construction, then it should be covered.\u00a0 The trial court said no and found in favor of State Farm.<\/p>\n<p>In Jackson v. State Farm Fire and Cas. Co., 108 Nev. 804, 835 P.2d 786 (1992) the Nevada Supreme Court considered the Jackson\u2019s appeal.\u00a0 State Farm argued in favor of the adoption of the \u201ccontinuous exposure\u201d rule.\u00a0 California Union Ins. Co. v. Landmark Ins. Co., 145 Cal.App.3d 462, 193 Cal.Rptr. 461 (Ct. App. 1983).\u00a0 Under that rule, the carrier in whose policy period the progressive damage first became apparent would remain on the peril until the damage was finally and totally complete, even if the policy tried to limit the exposure.\u00a0 Under this rule, the various insurers would apportion the loss from the date of first occurrence to the date of discovery by the insured.\u00a0 Prudential LMI Ins. v. Superior Court, 51 Cal.3d 674, 274 Cal.Rptr. 387, 798 P.2d 1230, 1243 (1990).\u00a0 That would have meant that State Farm was on the loss for only a small period of the time.<\/p>\n<p>On the other hand, the Jacksons argued for the \u201cmanifestation rule\u201d.\u00a0 Under that theory, the carrier whose policy was in effect when the damage was first manifest is liable for the loss.\u00a0 Id.\u00a0 In other words, if the Jacksons could prove (1) that the loss first manifested itself while State Farm policy that did not exclude negligent construction was in force AND (2) that the loss was caused by negligent construction and not simple earth movement, then State Farm would have to pay.<\/p>\n<p>The Nevada Supreme Court decided that in the first-party context the \u201cmanifestation rule\u201d was the better rule.\u00a0 Quoting the case of Home Ins. Co. v. Landmark Ins. Co., 205 Cal.App.3d 1388, 253 Cal.Rptr. 277, 282 (Ct. App. 1988) the court said<\/p>\n<p>The manifestation rule in the first party context promotes certainty in the insurance industry and allows insurers to gauge premiums with greater accuracy.\u00a0 Presumably this would reduce costs for consumers because insurers will be able to set aside proper reserves for well-defined coverages and avoid increasing such reserves to cover potential financial losses caused by uncertainty in the definition of coverage.<\/p>\n<p>The case went back to the trial court to determine when the loss first manifested itself and which policy was in effect at that time.<\/p>\n<p>The question of whether the \u201cmanifestation rule\u201d or the \u201ccontinuous exposure rule\u201d would apply in a third party context has yet to be decided in the State of Nevada.\u00a0 See Gary G. Day Construction Co., Inc., v. Clarendon America Ins. Co., 459 F.Supp.2d 1039 (2006).<\/p>\n<p>via <a href=\"http:\/\/nevadacoveragelaw.com\/nevada-adopts-manifestation-rule-party-property-cases-involving-progressive-damage\/\">Nevada Adopts the Manifestation Rule in First Party Property Cases involving Progressive Damage. | Nevada Coverage and Bad Faith Law<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Michael Mills &#8211; May 24, 2013 In 1977, the Jacksons bought a home.\u00a0 Over time, small cracks appeared in the walls.\u00a0 The Jackson\u2019s investigating engineer said that the home had suffered structural damage because of negligent construction. The Jackson\u2019s homeowner policy was with State Farm.\u00a0 State Farm disagreed with the Jacksons.\u00a0 State Farm said that&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/nevada-adopts-the-manifestation-rule-in-first-party-property-cases-involving-progressive-damage\/\">Continue reading <span class=\"screen-reader-text\">Nevada Adopts the Manifestation Rule in First Party Property Cases Involving Progressive Damage<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4,172,3],"tags":[19,354,353,152],"class_list":["post-1670","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-construction-law-2","category-insurance-claims","tag-construction-defects-2","tag-first-party-property-cases","tag-manifestation-rule","tag-nevada","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Nevada Adopts the Manifestation Rule in First Party Property Cases Involving Progressive Damage - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/nevada-adopts-the-manifestation-rule-in-first-party-property-cases-involving-progressive-damage\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Nevada Adopts the Manifestation Rule in First Party Property Cases Involving Progressive Damage - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Michael Mills &#8211; May 24, 2013 In 1977, the Jacksons bought a home.\u00a0 Over time, small cracks appeared in the walls.\u00a0 The Jackson\u2019s investigating engineer said that the home had suffered structural damage because of negligent construction. 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