A retailer sued Farmers Insurance in Los Angeles Superior Court for denying a business interruption claim on the very same day the claim was made.
The Great Frame Up is a national chain of framing stores with 100 locations throughout the United States. A franchisee of the Great Frame Up located in in Northridge, California brought a class action lawsuit against Farmers Insurance after its business interruption claim was denied over the phone the very same day the claim was made.
A recent survey found that 87% of small businesses in America are "hurting" because of the recent outbreak, and many are turning to their business interruption insurance policies which were purchased to help mitigate unforeseen circumstances. However, this lawsuit claims that while Farmers (which boasts more than $17 billion in assets) was willing to accept premiums from millions of businesses, the insurance giant is unwilling to abide by the terms of its own policies or the laws of the states it does business in.
The class action alleges Farmers Insurance is employing a strategy to summarily deny any claim for loss of business income made by small business in the hopes that they will not pursue litigation. The suit alleges Farmers employed the same tactic after the 1994 Northridge earthquake.
"According to California insurance law, insureds are entitled to a fair and thorough investigation of claims, but Farmers chose to deny this completely legitimate claim sight unseen," said attorney Mike Arias, managing partner of Arias Sanguinetti Wang & Torrijos.
On March 19 of this year, California Governor Newsom ordered all "non-essential" business closed to help deal with the Coronavirus outbreak. This was done to prevent the spread of the COVID-19 pandemic which to date has cost roughly 100,000 American lives. The Great Frame Up #672 was deemed non-essential and its doors were shut as a result. As it is an "in-person" business, it has not made a single sale in more than two months since the government-ordered shutdown. On April 8, 2020, the company reported a claim to Farmers which denied the claim over the phone that very same day and followed up with a written denial on April 9. When The Great Frame Up #672 hired an attorney to find out exactly why the claim was unjustly denied without any investigation, Farmers refused to cooperate and refused to provide any justification for its denial.
The Great Frame Up #672 purchased a Uniform Business owners Policy which it alleges should have covered the government ordered lock down. There is an "Additional Coverages" clause which the complaint alleges covers business income should a business sustain losses "due to the necessary suspension of your 'operations' during 'period of restoration.'" The lawsuit seeks to represent a class of other retail and service business in California, who like the plaintiff, do business in-person with customers but were not considered "essential" under the California's statewide stay-at-home order.
About Arias Sanguinetti Wang & Torrijos, LLP
With offices in Los Angeles, the Bay Area, Las Vegas and Montreal, Arias Sanguinetti Wang & Torrijos represents clients in complex litigation in state and federal courts throughout the United States. Some of our practice areas include: Class Actions, Mass Torts, Major Personal Injury, Employment Law, and Intellectual Property Rights.
Source
:https://www.prnewswire.com/news-releases/class-action-filed-against-farmers-insurance-over-same-day-business-interruption-claim-denial-301067478.html:
