The Massachusetts high court’s ruling Thursday that an insurer’s duty to defend doesn’t include an obligation to prosecute a client’s counterclaims could increase litigation costs for policyholders by forcing them to hire separate attorneys to manage a case’s defensive and offensive strategies, attorneys say.
In a 5-2 decision, the Massachusetts Supreme Judicial Court said that the plain language of eyewash and lens cleaner maker VisionAid Inc.’s policy with Mount Vernon Fire Insurance Co. was unavoidable: Mount Vernon had only a duty to “defend” and pay “defense costs.” The duty to defend does not, on its own, include a duty to pay for counterclaims, the majority found, and the duty to pay for defense costs is the same thing as the duty to defend.
“The defense attorney, even when appointed by an insurer, still has ethical obligations and professional duties to the policyholder and not the insurer,” said Sherilyn Pastor, leader of McCarter & English LLP’s insurance coverage group.