Your insurance company is responsible for defending you if someone sues you after a Massachusetts motor vehicle accident, or a slip and fall accident at your home in Boston. Right? Sure, however, insurance companies often decline to defend you under what they call a “reservation of rights.” In those cases, they may defend you but not guarantee to pay a judgment, or they may not hire a Massachusetts trial lawyer to defend you.
In a case handed down by the Massachusetts Appeals Court, the Court said that when Northern Security Insurance Company failed to defend a landlord being sued, and then failed to pay the attorney that the landlord hired privately, Northern Security owed the landlord the reasonable attorney fees for that attorney. Northern Security wanted to pay a reduced, contract rate, of insurance. The Court held that because Northern Security did not have a contract with that attorney, they had to pay the reasonable rate. Further, they had to do it timely. See Northern Security Insurance v. R.H. Realty Trust.
The Court also determined that Northern Security Insurance was in violation of Massachusetts General Laws, Chapter 93A, the consumer protection statute, which requires all businesses, including insurance companies, to operate with fairness and without deception. The fact that the insurance company failed to pay even the lower rate that they “offered,” and failed to pay the costs, was found to be a violation of 93A. “Northern Security unnecessarily and unreasonably delayed payment for fourteen months …it refused to negotiate…it disregarded advice from its own counsel and claims manager…and…it intentionally delayed payment of its bills in the hope of unfairly securing and advantageous financial outcome.”