Furniture Store Claims Insurer Owes $45M For Virus Closures

By Daphne Zhang
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Law360 (October 13, 2020, 7:16 PM EDT) -- A retail chain with 138 furniture stores has sued a group of nine insurance carriers, demanding almost $45 million in damages due to the insurers' alleged failure to cover the retailer's claims of hefty losses amid the COVID-19 pandemic.

Raymours Furniture Company Inc., which owns 16 furniture retail stores in New York City and over a hundred stores across seven Northeastern states, said the group of insurers failed to cover its losses due to state-mandated closure orders during the pandemic, according to a suit filed in New York state court on Friday. The furniture company is asking the court to hold that the insurers should pay over $44.8 million in damages.

Raymours said it has paid over $1.8 million in premiums to the insurers, who did not "substantively respond" to its claim for pandemic-related losses. The insurers named in the suit are Lexington Insurance Co., Interstate Fire & Casualty Co., Arch Specialty Insurance Co., Aspen Specialty Insurance Co., Ategrity Specialty Insurance Co., Allied World National Assurance Co., Evanston Insurance Co., PICC Property and Casualty Co. Ltd., and Starr Specialty Lines Insurance Agency LLC.

The furniture company obtained a multi-layered one-year property insurance program with a collective coverage limit of $150 million from the nine insurers in April 2019. Raymours said the program provides "all-risk" coverage for all losses that are not specifically excluded, and none of the policies contained any applicable exclusions for physical damage suffered during the pandemic.

"There is not an absolute virus exclusion in effect at that time of the loss," Joshua L. Mallin, an attorney representing Raymours, told Law360 on Tuesday.

When asked whether the policies have pollutant or microorganism exclusions, he said "there is some language in some of the policies that the carriers may try to read in that regard. It's much more vague and we do not believe it would apply to these situations."

In the complaint, the furniture chain said the policies cover physical loss or damage and business interruption, which is exactly what it experienced from the novel coronavirus and government closure orders. Raymours said it submitted a loss statement in late June but the insurers have failed to make any payments as of the date it filed the suit.

"Given the nature of the plaintiff's business, the spread of the COVID-19 virus led to significant economic damages," Raymours said in the suit. "Such damage both existed on surfaces found within the plaintiff's locations, surrounding premises, as well as in the breathable air circulating within the plaintiff's locations and surrounding premises."

In the suit, Raymours did not mention whether COVID-19 was found to be present at its furniture stores or whether its visitors or employees tested positive for the virus.

Representatives for the insurers could not be immediately reached for comment.

Raymours is represented by Joshua L. Mallin of Weg and Myers PC.

Counsel information for the insurers is not available.

The case is Raymours Furniture Company Inc. v. Lexington Insurance Co. et al., index number 655167/2020, in the Supreme Court of the State of New York, County of New York.

--Editing by Michael Watanabe.

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