It is well-recognized within the field of insurance coverage law that an insurer’s duty to defend its insured is a broad duty imposed on an insurance company under the insurance policy it issues to the insured. The duty to defend is much broader than the duty to indemnify, and requires the insurer to defend an insured if a claim alleged against the insured potentially falls within the terms of coverage afforded under the policy. Insurers face exposure to damages above the limits of an insurance policy when they breach the duty to defend and the facts surrounding the insurer’s breach rise to the level of bad faith.

Although many cases involving an award of extra-contractual damages against an insurer involve findings of bad faith on the part of the insurer, the Massachusetts Supreme Judicial Court’s recent decision in Boyle v. Zurich American Insurance Co., 36 N.E.3d 1229 (Mass. 2015), serves as a reminder that insurers face exposure to extra-contractual damages when they breach their contractual duty to defend an insured and fail to settle a case for the limits of the insurance policy even if the insurer’s wrongful conduct does not rise to the level of bad faith.

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