A Superior Court ruling illustrated the potentially draconian consequences of a violation: finding an insurer liable for more than $90 million in bad faith damages, in a case that might have settled under $3 million with proper handling.
Insurers in Massachusetts have long struggled with the demands of MGL ch. G.L.c 176D, § 3(9)(f), which requires “prompt, fair and equitable settlements of claims in which liability has become reasonably clear.” Last month a Superior Court ruling illustrated the potentially draconian consequences of a violation: finding an insurer liable for more than $90 million in bad faith damages, in a case that might have settled under $3 million with proper handling.
The claimant, John Rooney, was a mason who fell off a scaffold at a construction site. He sued the general contractor. The general contractor, in turn, sought coverage as an additional insured under a series of Liberty Mutual policies issued to Rooney’s employer – the masonry company – with combined aggregate limits of $19.5 million.
Reprinted courtesy of Eric B. Hermanson, White and Williams and Timothy J. Langan, White and Williams
Mr. Hermanson may be contacted at hermansone@whiteandwilliams.com
Mr. Langan may be contacted at langant@whiteandwilliams.com