29th Jan 2018

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Delay damages – CGL liability policy

Consequential damages

Delay damages arising from “property damage” [§ P107 PROPERTY DAMAGE [§ P107:2 When strictly economic losses – Intangible, economic losses – are covered under insured’s third party liability policy]] falls under the insuring clause, which obligates the insurer to “pay those sums that the insured becomes legally obligated to pay as damages because of … property damage” to which this insurance applies. Courts generally interpret this phrase to mean payments made to compensate a party for direct and consequential injuries caused by the acts of another. [Global Modular Inc. v. Kadena Pacific (2017) 15 Cal. App. 5th 127, 145]

Delay damages incurred during remediation

Remediation is that period of time spent completing the repairs on property that has been damaged. Remediation delay constitutes a consequential loss and as such is part of the policy covered damages. [Global Modular Inc. v. Kadena Pacific (2017) 15 Cal. App. 5th 127, 145]

References in bold are to Mr. Cornblum’s text CALIFORNIA INSURANCE LAW DICTIONARY AND DESK REFERENCE, 2017 Edition, published by ThomsonReuters (1-800-344-5008 to order 3-Volume text).

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