Most businesses, including apparel manufacturers and retailers, pay premiums for insurance. When a claim that is potentially covered arises: do not let your insurance company leave you naked. Insurers and insurance brokers may tell you that a claim is not covered when there really is coverage under one or more policies. Accordingly, when there is an unusual claim, you should not rely on the advice of your insurance broker and you should definitely not rely on the advice of your insurer. Instead, consult with insurance coverage counsel who can assist you with obtaining the coverage to which you are entitled under your policies.

A case in point is a July 13, 2012 opinion from the California Court of Appeal that potentially benefits the entire apparel industry: Travelers Property Casualty Company of America v. Charlotte Russe Holding, Inc., et al. (“Charlotte Russe”). The Charlotte Russe opinion reaffirmed the broad coverage of a duty to defend under an insurance policy. In most cases, the costs of defense are going to exceed the costs of a settlement by an “innocent” apparel manufacturer or retailer.

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