Ralph Lauren Corp. wants its insurer to pay up.
The brand was hit hard by the coronavirus pandemic, like just about every other fashion business, and saw first-quarter losses of $112 million as consumer culture was upended. Revenue is down 66 percent overall, compared to last year, and wholesale business has nearly evaporated, down 93 percent. While chief executive officer Patrice Louvet struck an upbeat tone around the financial position of the company early this month, full access to a large insurance policy would certainly help matters.
But its insurer, Factory Mutual, is allegedly trying to limit coverage within an “all-risk” policy Ralph Lauren got last year worth $700 million, which the company is trying to claim in full due to financial losses stemming from the pandemic.
Ralph Lauren said the insurer is arguing that a clause in its contract around “contamination” limits the scope of its coverage related to any claims around the coronavirus pandemic, meaning Ralph Lauren cannot draw on the full policy it’s paid for.
“To the extent Factory Mutual contends that the policy’s ‘contamination’ exclusion bars coverage for loss caused by ‘communicable disease’ or some other aspect of Ralph Lauren Corp.’s claim, the policy is ambiguous because it is susceptible to more than one reasonable interpretation and, therefore, must be construed in favor of coverage,” lawyers for the company argued.
And the company contended that it’s not only Ralph Lauren that’s getting the runaround when it comes to coronavirus-related insurance claims. The fashion brand said Factory Mutual has sent out “talking points” to all of its representatives to ensure that such claims are denied for all policyholders, constituting fraud and breach of contract.
“The Factory Mutual talking points are intended to defraud policyholders from the coverage that each is contractually entitled to for the physical loss and damage to property caused by COVID-19,” the complaint reads.
Ralph Lauren went on to characterize the denial of coverage around the coronavirus “unconscionable commercial practice” and generally “deceptive” with regard to its selling of a policy, claiming it would cover all risks related to losses or property damage.
The company is asking the court to declare it has access to the full $700 million amount of its policy, that there is no applicable exclusion, that Factory Mutual violated the New Jersey Consumer Fraud Act and for damages in excess of $75,000.
A representative of Factory Mutual could not be reached for comment.