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Costco insurance lawsuit settlement discussions are nearing completion after the retail giant informed a federal court that it has reached a tentative agreement over coverage tied to a customer injury at a California store.

According to a joint filing submitted Wednesday in U.S. District Court for the Western District of Washington, Costco Wholesale Corp. and Twin City Fire Insurance Co., a unit of Hartford, said they have agreed in principle to resolve the dispute and are finalizing remaining obligations under a written settlement agreement. The parties indicated they expect to file a formal dismissal within 30 days once those conditions are satisfied.

The Costco insurance lawsuit settlement stems from a personal injury case filed by a customer who alleged he was hurt while attempting to move a boxed grill at a Costco location in California in late 2023. Costco sought defense and indemnity coverage under a commercial general liability policy held by grill manufacturer Traeger Pellet Grills LLC, which named Costco as an additional insured vendor.

Twin City Fire Insurance Co. declined to provide coverage, prompting Costco to file suit in Washington state court in June 2025. The retailer argued that the insurer breached its contractual obligations and violated Washington’s Insurance Fair Conduct Act by refusing to defend or indemnify Costco in the underlying injury claim.

The insurer later removed the case to federal court and sought dismissal on jurisdictional grounds or, alternatively, transfer to California. Before the court ruled on those motions, the parties jointly requested a stay to pursue mediation, which ultimately led to the tentative settlement now before the court.

While the terms of the Costco insurance lawsuit settlement have not been disclosed, both sides confirmed that the agreement is expected to fully resolve the coverage dispute without further litigation. Representatives for Costco and Twin City did not immediately comment on the settlement filing.

Insurance coverage disputes involving additional insured provisions are common in retail injury cases, particularly when multiple parties are involved in the manufacture, distribution, and sale of consumer products. Such cases often turn on the precise language of supplier agreements and policy endorsements.

If finalized, the settlement will bring an end to litigation that has been pending for more than six months and will allow both parties to avoid continued legal costs and uncertainty. The court is expected to take no further action unless the dismissal is not filed within the anticipated timeframe.

The case remains administratively open pending confirmation that all settlement obligations have been fulfilled.

The dispute adds to a growing number of corporate legal battles covered by USA Herald’s Business section.

Court records related to the case are available through the U.S. District Court for the Western District of Washington.