Between the Lines

A Discussion of Case Law and Statutory Law Affecting Commercial Lines of Insurance


Insurer’s Duty to Defend Trumps Contract and Professional Services Exclusions

In insurance contracts, the term “‘arising out of’ must be read expansively” – even when used in exclusions, according to a new superior court decision. Nonetheless, Judge Judith Fabricant ruled that an insurer could not escape its duty to defend by relying on exclusions for claims “arising out of” breach of contract or failure to render professional services, simply because there is an allegation of such conduct.

Judge Fabricant noted that the duty to defend is broad. Thus, claims against the insured which do not “depend upon” excluded conduct (such as breach of contract or failure to render professional services) do not fall within the exclusion. Simply put, the duty to defend covers suits in which at least one claim is independent of conduct that is excluded.

In this case, a defamation claim was separate from claims alleging breach of contract and and failure to render professional services. The suit involved three compounding pharmacies thatsued Harvard Pilgrim Health Care (HPHC) alleging that its decision to stop reimbursing prescriptions for compounded drugs (1) breached HPHC’s contract with subscribers; (2) adversely impacted the pharmacies; and (3) defamatorily told the public that their practices were unsafe. HPHC turned to its general liability insurer for a defense.

Despite the defamation claim, the insurer denied coverage, citing its “breach of contract” and “professional services” exclusions. HPHC brought a coverage action and moved for judgment on the pleadings, which Judge Fabricant has granted. (Please note that Anderson & Kreiger represent HPHC in this dispute.)

Photo Credit: Courtney Rhodes

About the Author

Steven L. Schreckinger – Partner

Steve litigates complex insurance cases, and represents corporations in legal malpractice claims.

Please contact him with questions at or (617) 621-6537.

Posted In: Duty to Defend

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