Nordstrom Suit Tests Whether Civil Unrest Is Single Insurance Occurrence or Multiple

By | March 11, 2021

“Nordstrom asks the court to declare that the nationwide civil unrest that followed George Floyd’s killing constitutes a single ‘occurrence’ under each of the defendants’ policies,” says the lawsuit, which was filed Friday at the U.S. District Court in Seattle.

Rioting erupted in more than 20 U.S. cities after the May 25 killing of Floyd, which was videotaped by bystanders and broadcast on national television. Verisk’s Property Claim Services projected that insured losses would reach $2 billion — a new record for damages associated with civil unrest.

Nordstrom says in the lawsuit that it suffered at least $25 million in damages to all of its 350 stores in the U.S. and Canada due to “looting, property destruction and arson” that began on May 28, 2020. Even stores that weren’t attacked had to boarded up and closed for some time, the lawsuit says.

The department store chain, which is headquartered in Seattle, filed claims seeking $20 million in reimbursement from its insurers: XL Insurance America, Ace American Insurance Co., American International Group Specialty Insurance Co., Continental Casualty Co. and Ironshore Speciality Insurance Co.

Nordstrom says each policy provides a specific percentage of a $25 million quota-share layer of coverage with a $1 million per-per-occurrence deductible. The carriers have paid only $4.7 million, including a $2 million “unallocated advance,” on Nordstrom’s claims.

The lawsuit says the insurers “refused to recognize” that the civil unrest is a single occurrence as defined by the policies.

“Instead, in a transparent effort to keep most of the loss within Nordstrom’s deductible, the insurers claim that each destructive event is a separate ‘occurrence,'” the lawsuit says.

Nordstrom says its policies purchased from XL, Ace and Continental define “occurrence” as a “loss, or a series of losses or several losses, attributable directly or indirectly to one cause or disaster or to one series of similar causes or disasters arising from a single event. All such losses are to be added together and the total amount of such losses shall be treated as one occurrence, regardless of the period of time or area over which such losses occur.”

The retailer’s AIG and Ironshore polices define occurrence as any one loss, disaster, casualty, or series of losses, disasters, or casualties, arising out of one event. In the context of civil commotion, vandalism and malicious mischief, the ‘one event’ from which the ‘series of losses’ flow ‘shall be construed to be all losses arising during a continuous period of 72 hours,'” the suit says.

Nordstroms says it filed a claim on June 2 and provided supporting documents to prove its loss.

“Although the insurers have not taken a formal position as to the number of occurrences implicated by Nordstrom’s nationwide civil unrest claim, they have indicated they believe the claim involves multiple occurrences and, therefore, multiple $1 million per-occurrence deductibles,” the suit says.

Franklin Dennis Cordell, the Gordon Tilden Thomas & Cordell in Seattle, is representing Nordstrom, according to federal court records. He did not respond to a request for comment on Monday.

U.S. District Judge Ricardo S. Martinez has been assigned to the case.

About the photo: A member of the National Guard stands in front of a Nordstrom store as it is boarded up Monday, June 1, 2020, in Santa Monica, Calif., a day after unrest and protests over the death of George Floyd, a black man who died in police custody in Minneapolis on May 25. (AP Photo/Marcio Jose Sanchez)

Topics Lawsuits

About Jim Sams

Sams is editor of ClaimsJournal.com, the online resource and daily newsletter for property/casualty insurance claims professionals. ClaimsJournal is a member of the Wells Media Group. Sams can be reached at jsams@wellsmedia.com More from Jim Sams

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