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Insurers say they are not obliged to defend Lumber Liquidators

If you follow business and insurance news, then you may have seen recent headlines about the claims against Lumber Liquidators. Customers were unhappy to learn that high levels of formaldehyde were found in the company's laminate flooring products, which were sourced from China.

Now Lumber Liquidators is facing multiple product liability lawsuits, and the company's insurance carriers have said they will not defend the retailer, which has brought suit against the insurers.

Specifically, Lumber Liquidators has brought breach of contract claims against Liberty Mutual, Wausau Business Insurance and other insurers. The retailer is trying to force the insurers to provide defense against the product liability claims and pay any settlements, judgments or damages resulting from the suits.

Already, Liberty Mutual has sued Lumber Liquidators in federal court in Virginia. The insurer says all of the related policies have a "total pollution exclusion" clause that lifts the insurer's obligation to defend the retailer. Liberty Mutual has also requested that Lumber Liquidators pay a retrospective premium to cover the cost of sending denials to the plaintiffs in the class-action claims against the retailer.

A regulatory filing reportedly indicates that Lumber Liquidators has "insurance against some forms of product liability claims, but such coverage may not be available or for the liabilities actually incurred."

You can read more about the insurance dispute in a recent article.

If you as an insurer are involved in a coverage dispute or facing a claim of bad faith, then don't hesitate to speak with an experienced insurance defense attorney. The insurance defense attorneys of Landrum & Shouse LLP have extensive experience in resolving insurance-related disputes through litigation and mediation.

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