Ralph Lauren Files Suit Against Insurer Over $700 Million-Worth Policy

Ralph Lauren Corp. is suing its insurance company for fraud and breach of contract.

In a filing on Friday with the United States District Court for the District of New Jersey, the American fashion label claimed that Factory Mutual Insurance Co. allegedly prevented it from drawing from the full amount as part of its “all risks” insurance policy. According to court documents, the policy — which Ralph Lauren obtained last May — provided up to $700 million in coverage and insures the brand’s property against “all risks of physical loss loss or damage,” with some exceptions.

Ralph Lauren said it had attempted to access its insurance in full but argued that Factory Mutual had refused to honor its obligations. Instead, the insurer allegedly cited a clause in the contract around “contamination,” claiming it limited the scope of the brand’s coverage related to claims around the COVID-19 outbreak.

“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 Ralph Lauren wrote in the filing.

Last week, the New York-based company reported first-quarter losses of $112 million and a 66% decline in revenues to $487 million. What’s more, its wholesale business in North America dropped by 93%, likely reflecting canceled spring orders and widespread declines at department store partners such as Macy’s and Hudson’s Bay Company.

In Friday’s lawsuit, Ralph Lauren added allegations that it wasn’t the only company that had been affected by the “contamination” clause. It claimed that Factory Mutual had sent out “talking points” to its personnel to ensure that such claims are denied for all policyholders, which it said also constitutes 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 lawsuit read.

In a statement to FN, Factory Mutual’s assistant VP of public relations, Steve Zenofsky, said, “FM Global is unable to discuss the topic in the news media because of the legal nature of the matter.”

Ralph Lauren has asked the court to give it access to the full $700 million amount as part of its insurance policy, as well as damages in excess of $75,000.

Access exclusive content