Massachusetts Developments

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In two separate cases, federal courts have upheld the carrier’s denial of coverage for claims by an employer alleging that the insured induced a breach of their former employee’s employment contract. …
Read More Courts Find That Employment Claims Are Excluded By Contractual Liability Exclusions

The Massachusetts Appeals Court recently held that an insurer’s refusal to pay any fees incurred by independent counsel hired by the insured was in bad faith, but also held that the insurer was only liable for reasonable fees that the insured actually paid, not counsel’s full rate. …
Read More Massachusetts Appeals Court Finds Insurer In Bad Faith In Fee Dispute

Massachusetts Governor Deval Patrick has signed H.960 into law.  The legislation permits commercial property carriers to exclude coverage for fire damage that follows from an act of terrorism, directly or indirectly. …
Read More New Massachusetts Law Permits Property Carriers to Exclude Terrorism-Caused Fire Loss

In OneBeacon America Insurance Co. v. Swiss Reinsurance America Corporation, 09-CV-11495-PBS (D.Mass. December 23, 2010), a motion was brought by petitioner OneBeacon to vacate an arbitration award on the basis that the arbitrators were guilty of misconduct for refusing to permit necessary discovery and hear certain evidence. The main issue in the arbitration itself concerned contract interpretation, but OneBeacon relied upon industry custom and practice to support its case. …
Read More Massachusetts Federal Court Addresses Manifest Disregard of the Law Standard, Finds that Panel’s Decision to Limit Discovery and Witness Testimony did not Provide a Basis to Vacate Award

The Massachusetts Appeals Court recently ruled that the state’s statute governing insurance companies’ claims settlement practices applies to captive insurers.  See Lemos v. Electrolux North America, Inc., et al., No. 09-P-943 (Mass. App. Dec. 2, 2010). …
Read More Massachusetts Appeals Court Holds That Bad Faith Statute Applies To Captive Insurers

Reversing a district court holding to the contrary, the First Circuit has declared that Massachusetts public policy does not prohibit D&O carriers from insuring against damages allegedly incurred by one class of shareholders as a result of an unfair benefit conferred on another class of shareholders.  Rather, the Court held that the terms of the policy had to be given their plain and ordinary meaning.  The  Court then remanded the case for an allocation proceeding. …
Read More First Circuit Remands D&O Coverage Dispute for Allocation

The Massachusetts Division of Insurance (“MDOI”) recently amended its surplus lines laws to allow for the approval of alien unauthorized insurers in the state. Previously, Massachusetts required that alien surplus lines insurers maintain a trusteed surplus in the US of $20 million and file financial information on an annual basis following US accounting principles which effectively made obtaining surplus lines eligibility in the state prohibitive for alien insurers. …
Read More Massachusetts Amends Laws to Permit Alien Surplus Lines Insurers

The Massachusetts Appeals Court recently affirmed the Superior Court’s granting of an insurer’s motion to dismiss after finding that the standard mortgage clause in a business owner’s policy did not confer coverage on a mortgagee for loss of rent where the mortgagor had executed an assignment of rent in the event of default. …
Read More Massachusetts Appeals Court Affirms Dismissal of Action Against Business Owner Policy by Mortgagee

In a case of first impression, the Massachusetts Appeals Court has ruled that an insured’s waiver of its carrier’s subrogation rights can survive the completion of a construction project.  Middleoak Ins. Co. v. Tri-State Sprinkler Corp., No. 09-P-1265 (Mass. App. Ct. Aug. 5, 2010).  The court’s decision puts Massachusetts in the majority of jurisdictions to have considered the issue. …
Read More Massachusetts Court Says Subrogation Waiver Can Survive Project Completion