Casualty insurance companies, upon being notified of a covered accident and injury, have a legal obligation to properly and timely investigate and then effect a fair settlement If you are injured in an accident in Massachusetts because of the negligence of another who has insurance and responsibility for the injury is reasonably clear, the insurance company has an obligation to settle the case fairly and promptly.
Under Massachusetts law, it is an “unfair claim settlement practice” for an insurance company to fail “to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.” M.G.L. c. 176D § 3 In circumstances where it is reasonably clear that another person is at fault for the accident and has insurance coverage, the insurance company must act promptly, fairly and equitably in attempting to settle the claim against the responsible party and to justly compensate the injured. Failure to do so, by the insurance company, may result in significant consequences or damages for the insurance company.
Anderson v. National Fire Ins. Co. of Pittsburgh PA is one example of a recent Massachusetts decision out of the SJC applying M.G.L. c. 93A and c. 176D to an insurer. On September 2, 1998 Odin Anderson was crossing the street in Boston when he was struck and injured by a bus. The bus was owned by Partners Healthcare Systems, Inc. as was operated by a Partners employee. As a result of the accident, Mr. Anderson suffered serious injuries including a fractured skull and intracerebral hemorrhage. Mr. Anderson, through counsel, attempted to reach a settlement with the defendants. The defendants rejected the plaintiff’s demand for settlement and refused to enter into settlement negotiations. In May 2001, Mr. Anderson sued Partners and the employee who was operating the bus at the time of the accident. In March 2003, Mr. Anderson filed a separate action under M.G.L. c. 176D, §3 and M.G.L. c. 93A, §9(3), alleging “willful and egregious failure to conduct a reasonable investigation of the plaintiffs’ claims, and failure to effectuate a prompt, fair, and equitable settlement, notwithstanding that liability had become ‘reasonably clear’ by the time the plaintiffs filed their initial complaint.”