Law360, New York ( December 19, 2014, 1:18 PM EST) -- Commercial property insurance coverage protects policyholders against the consequences of "physical" loss or damage to their insured property. Insurers have long argued that such coverage is narrow, applying only where the insured property sustains some physical damage resulting in a structural alteration of the property requiring repair or replacement. Consequently, insurers have urged that coverage is unavailable, even when the policyholder's property is unusable or uninhabitable as a result of the loss event, unless the structure of the property was altered. A New Jersey federal court recently rejected the insurance industry's narrow application, however, holding in Gregory Packaging Inc. v. Travelers Property Casualty Co. of America, No. 12-4418 (D.N.J. Nov. 25, 2014), that certain types of loss are still within the scope of coverage afforded under commercial property policies, even though there may be no physical loss of or damage to the insured property that requires some form of repair or replacement. This article discusses the recent decision in Gregory Packaging and the principles underlying that decision. The article also discusses the reasons presented by insurers in support of a more restrictive policy application....