What Is The Time for Responding to a Defense Tender?
An insurer must acknowledge and act reasonably promptly upon communications with respect to claims. Mass. Gen. Laws c. 176D § 3(9). There is no regulation, statute or case that further defines the term “reasonably promptly.”
An insurer must affirm or deny coverage, reserving any appropriate defenses, within a reasonable time after having completed its investigation related to a claim. Mass. Gen. Laws c. 176D § 3(9). There is no regulation, statute or case that further defines the term “reasonable time.”
Does Reserving Rights Create a Conflict of Interest?
A potential conflict may arise between an insured and insurer when an insurer defends under a reservation of rights. Even if no actual conflict ever materializes, the threat of conflict is so great that a reservation of rights defense is often treated as an actual conflict. Magoun v. Liberty Mut. Ins. Co., 195 N.E.2d 514 (1964).
Does a Reservation of Rights Create Additional Duties?
An insurer is required to notify an insured of a reservation of rights and to obtain the insured’s consent before proceeding. Salonen v. Paanenen, 71 N.E.2d 227 (Mass. 1947).
What Must Be Done If A Conflict of Interest Exists?
An insured may reject a defense under a reservation of rights, secure independent counsel and control it own defense. Magoun v. Liberty Mut. Ins. Co., 195 N.E.2d 514 (1964).
Who Is Responsible for Fees of Independent Counsel?
An insurer must pay reasonable fees and costs of the insured’s counsel. Northern Sec. Ins. Co., Inc. v. R.H. Realty Trust, 78 Mass. App. Ct. 691 (Mass. App. Ct. 2011).
What Are Independent Counsel’s Obligations?
No cases found.
What Settlement Duties Exist?
What Actions May Result in a Claim for Bad Faith?
Statutory bad faith action: Consumer Protection Statute: Mass. Gen. Law c. 93A § 1, et seq. provides a private right of action to “any person whose rights are affected by another person violating the provisions of M.G.L. c. 176D.” Mass. Gen. Law c. 93A § 9(i). This provision allows for first party claims, Green v. Blue Cross and Blue Shield of Mass., Inc., 47 Mass. App. Ct. 443, 447 (Mass. App. Ct. 1999) and third party claims, Clegg v. Butler, 676 N.E.2d 1134, 1140 (Mass. 1997).
Massachusetts does not recognize a common law-based tort of bad faith. Commonwealth v. De Cotis, 316 N.E.2d 748, 758 (1974).
Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?
Damages that may be awarded to a first party claimant for a single violation of Chapter 93A may include attorney’s fees. Columbia Chiropractic Group, Inc. v. Trust Ins. Co., 712 N.E.2d 93, 96 (Mass. 1999).
Are Punitive Damages Recoverable in Insurer-Insured Dispute?
Yes, Section 9 damages under Chapter 93A may be trebled for a knowing or willful violation. Murphy v. Nat’l Union Fire Ins. Co., 781 N.E.2d 1232, 1235 (Mass. 2003).
Alternative Coverage Options
An insurer must defend its insured until the underlying claims are clearly outside the scope of its coverage or until it secures a declaration that it has no coverage obligation. Sterilite Corp. v. Continental Cas. Co., 458 N.E.2d 338, 341 (Mass. App. Ct. 1983).
Relevant Statutes
Declaratory Judgment – Mass. Gen. Laws c. 231A §1
“The supreme judicial court, the superior court, the land court and the probate courts, may upon appropriate proceedings make binding declarations of right, duty, status and other legal relations sought thereby, either before or after a breach or violation thereof has occurred in any case in which an actual controversy has arisen and is specifically set forth in the pleadings and whether any consequential judgment or relief is or could be claimed at law or in equity or not; and such proceeding shall not be open to objection on the ground that a merely declaratory judgment or decree is sought thereby and such declaration, when made, shall have the force and effect of a final judgment or decree and be reviewable as such . . .”
Unfair Claims Settlement Practices – Mass. Gen. Law c. 176D § 3(9).
Consumer Protection Statute – Mass. Gen. Law c. 93A § 1, et seq.