Class Action Filed Against Farmers Insurance Over Same-Day Business Interruption Claim Denial

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.

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