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Nordstrom’s the Latest to Sue Over Property Insurance Coverage

The year 2020 was marked by the coronavirus pandemic and a period of civil unrest, both of which contributed to much loss by retailers, with Nordstrom Inc. the latest to test the insurance waters.

On Friday, Nordstorm filed complaint in a federal court in the Western District of Washington against five insurers alleging breach of contract. The insurers include XL Insurance America Inc., AIG Specialty Insurance and Continental Casualty Co. It said the civil unrest sparked by the tragic death of George Floyd at the hand of Minneapolis police officers in May 2020 resulted in “property damage, looting and business interruption loss estimated at almost $25 million.”

The dispute centers over the meaning of the word “occurrence” as written in the underlying policies. How that word is defined will mean the difference between a single $1 million per-occurrence deductible or multiple $1 million per-occurrence deductibles.

The retailer is seeking damages and a declaration of rights, duties and liabilities under the insurance policies issued to Nordstrom by the insurance firms. Nordstrom also said it provided timely notice of its loss to the insurance firms last June. The insurers have paid Nordstrom $4.7 million, including an “unallocated advance of $2 million.” Nordstrom has requested reimbursement form the insurers in the amount of $20 million. It noted that the insurance companies have indicated that they believe the claim involves multiple occurrences, and therefore multiple $1 million per-occurrence deductibles. Nordstrom’s position is that the nationwide civil unrest arose out of a single occurrence under the policies.

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Executives at the insurance firms could not be reached for comment by press time.

While Nordstrom seems to be the only one so far filing a lawsuit in connection with the civil protests, at least two others have court cases pending against insurers for nonpayment of claims stemming from the pandemic.

Last September, after 60 years in business,, off-price retailer Century 21 Stores filed for bankruptcy and shut down, stating that the decision was because its insurance providers didn’t pay out $175 million to cover losses stemming from the Covid-19 business disruption. The off-pricer filed a lawsuit against several insurance firms for alleged failure to compensate the company for losses under the policies. The matter is still winding its way through in the court system.

Ralph Lauren Corp. filed its claim against Factory Mutual Insurance Co. in August in a federal district court in New Jersey. The fashion firm is seeking payouts for claims based on financial losses due to pandemic-related store lockdowns.  Ralph Lauren said it saw a 93 percent drop in its wholesale business and at 77 percent decline in sales at its North American store base. The insurance company has since filed a response, noting that the fashion brand’s $700 million policy doesn’t cover losses unless there’s a direct link to Covid-19.