Understanding and Avoiding Claims for Unfair and Deceptive Insurance Settlement Practices

5/26/2015

Massachusetts has strict statutes regarding unfair insurance settlement practices. GL c93A and 176D allow the recovery of multiple damages and attorneys fees for unfair or deceptive acts or practices for the failure to effect prompt, fair and equitable settlement of claims in which liability has become reasonably clear. These statutes have become a regular source of leverage for plaintiffs attempting to negotiate higher settlements. Insurance companies fear the consequences of an adverse ruling on 93A and 176D because of the multiple damages and attorneys' fees that can be recovered. In a well reasoned opinion, Judge Gordon recently explained the manner in which the statutes operate and ruled that an insurer's offer, which fell far short of a jury's award, was not a violation of the statute.

We are often asked about the "right" approach to negotiating cases for which liability has become reasonably clear. This opinion, McCarthy v. Safety Insurance Company, Superior Court, Suffolk County (March 24, 2015) reiterates that an insurer's good faith, but mistaken, valuation of damages does not constitute a violation of chapter 176D. Based on the insurer's methodology, timing and good faith, the court ruled that there was no actual supporting evidence to show a violation of the statute.

If you have any questions regarding insurance coverage, the defense of claims or the handling of potential extra contractual liability, please feel free to contact David Governo at dgoverno@governo.com.

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