Farmers Insurance Denied Business Interruption Claim Without Investigation, Faces Lawsuit

Farmers Insurance is facing a class action lawsuit filed in Los Angeles Superior Court over a business interruption claim the company denied on the same day it was filed.

A franchisee of The Great Frame Up — a national chain of framing stores — based in Northridge, CA 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 — a strategy to dissuade those small businesses from pursuing litigation.

The lawsuit also alleges that this is not the first time Farmers has employed the tactic, saying that the insurer tried to pull the same thing 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 Arias Sanguinetti Wang & Torrijos LLP managing partner Mike Arias in a statement.