Superior Court holds that insurer's demand for release of 93A/176D claim in exchange for settling underlying case violates 176D

In last month's Superior Court decision in Sterlin v. Commerce Insurance Company the insurer, Commerce, made an offer to settle of an automobile accident claim contingent upon receiving a release of its own liability for violation of Mass. Gen. Laws ch. 93A and 176D.

Judge Tucker held that such an offer was in itself a violation of those statutes. He wrote, "By seeking a release of itself upon the payment of its insured's benefits to the claimants, Commerce was in effect seeking to have the insurance coverage afforded to its insured, Mukesh Patel, cover its own liability to plaintiff for any statutory violations. Although the statute does not specifically define such actions as unfair claims settlement practices, it does set forth in § 3(9)(m) that it is a violation and an unfair claims settlement practice by 'failing to settle claims promptly . . . under one portion of the insurance policy coverage in order to influence settlements under other potions of the insurance policy coverage.' In a like manner, this court believes that an insurer's attempt to settle its own claims against itself by the payment of its insured's liability benefits is likewise a violation of the statute and an unfair or deceptive act or practice under G.L.c. 93A."