Farmers Insurance is facing a class-action lawsuit in Los Angeles Superior Court over a business interruption claim the company reportedly denied on the same day it was filed. According to a report in Insurance Business Magazine, a franchise of Northridge-based The Great Frame Up, which is a national chain of framing stores, filed the lawsuit after its business interruption claim was denied over the phone.
The class action alleges that Farmers Insurance is summarily denying any claims for loss of business income made by small businesses as a strategy to dissuade those small businesses from pursuing litigation. The lawsuit also states that this is not the first time the insurer has employed this tactic. Farmers apparently tried to employ the same strategy back in 1994 after the Northridge earthquake.
Denial Without Investigation or Assessment
Under California insurance law, those who are insured are entitled to a “fair and thorough investigation of claims.” But the lawsuit says Farmers chose to deny this claim without even taking a good look at it. The franchise was one of many “non-essential” businesses in the state of California ordered to close on March 19 by the state government in response to the COVID-19 pandemic’s spread. Since the lockdown, the store says it has not made a single sale.
The complaint states the store had purchased a uniform business owner’s policy, which alleged to cover the government lockdown. The franchise also maintains that its policy has an “additional coverages” clause that covers businesses’ incomes should a business suffer losses due to “the necessary suspension of your operations during a period of restoration.”
The franchise reported a claim to Farmers on April 8 over the phone and the insurer immediately denied it. Farmers also sent a written denial to the store the following day. When the store hired an attorney to look into why the claim was denied with any investigation or evaluation, Farmers allegedly refused to cooperate and provided no justification for the denial.
Suing Your Insurer Over a COVID-19 Claim
At Bisnar Chase, our business interruption lawyers believe there are plenty of avenues you can take like filing a COVID-19 business interruption lawsuit if your claim has been denied. Especially when a claim is denied instantaneously, it raises a red flag, telling you that your insurance company tossed it out without doing their due diligence in investigating it.
As a law firm that has fought insurance companies on behalf of injured clients, we know the game insurers play. We know they’ll attempt to deny claims and lowball claimants. They make their profits by paying out as little as possible. We believe that business owners should be supported and lifted up during these tough economic times. No company should be forced out of business because of unpredictable and uncontrollable circumstances. Contact our COVID-19 business interruption claim lawyers for more information about pursuing your rights.