Nine insurance companies are now under legal fire in the latest installment of the troubles facing Lumber Liquidators.
The company, which is facing more than 100 class action lawsuits regarding its laminate flooring, has sued its insurers after several of the companies refused to defend Lumber Liquidators in its court battles. By not providing coverage for the tens of millions of dollars Lumber Liquidators is spending to defend itself against the lawsuits, the company says insurers are in breach of their contract.
“Lumber Liquidators obtained liability insurance that promised to cover it if it found itself involved in litigation, but Lumber Liquidators’ insurers are arguing that some of the fine print in those policies lets them off the hook,” the company told
Business Insider.
“Lumber Liquidators is asking the court to make these insurers live up to their promises.”
The company said it notified its insurance carriers as each lawsuit was filed, as the policies require. However, coverage was denied within weeks although “no exceptions, exclusions or limitations in the policies preclude coverage for the underlying lawsuits.”
Exact language included in the commercial general liability policy was not shared, though the lawsuit asks the court to order the carriers to provide coverage. Lumber Liquidators also seeks unspecified damages, claiming that disputes with insurers have prevented it from adequately dealing wih its own legal worries.
The carriers named include units of
Travelers Companies,
Liberty Mutual Group and
CNA Group.
Lumber Liquidators has been under fire after a “60 Minutes” program on CBS revealed that the company’s laminate flooring – sourced in China – contains excessive levels of formaldehyde. The company was investigated by the Consumer Product Safety Commission and the Department of Justice, and the flooring was taken from shelves last week.
Already, shares are down 59% year-to-date.
Lumber Liquidators filed the lawsuit on April 27 in Dane County Circuit Court in Madison.
