No Physical Damage Necessary for CGL to Cover Economic Loss of Nightclub

Most CGL policies cover physical injury to a property, which may include the loss of use of the property or loss of use of a property that is not physically injured. Thee Sombrero, Inc, a commercial property owner, successfully sued Crime Enforcement Services, a private security service for Sombrero’s nightclub, for breach of contract and negligence. CES’s insurance company, Scottsdale, denied coverage. The Court of Appeals for the State of CA, Fourth Districtordered Scottsdale to cover the over $900,000 judgment against CES because the security company’s actions caused Sombrero to lose its nightclub permit. Read more about the case and discussion on other types of insurance that might have also covered the loss of income.