STORY FROM: Reinsurance & Arbitration

Mass. High Court Says Duty to Defend Does Not Require Funding of Counterclaims

BOSTON — The highest court in Massachusetts has held that the duty to defend does not require an insurer to prosecute or fund a policyholder’s counterclaims, explaining that to hold otherwise would be reading provisions into the policy that don’t exist.

On June 22, the Massachusetts Supreme Judicial Court determined that state law does not require insurers to prosecute an affirmative counterclaim, either pursuant to the contractual language or the common-law “in for one, in for all” rule. The court further held that the insurer’s obligation to pay defense costs is co-extensive with the duty to defend and therefore the ...

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