Applying Pro Rata Allocation To Defense Costs

Law360, New York (August 5, 2011, 3:18 PM EDT) -- In its landmark decision in Boston Gas Co. v. Century Indemnity Company, 454 Mass. 337 (2009), the Supreme Judicial Court of Massachusetts (SJC) rejected joint and several allocation of environmental indemnity losses in favor of a pro rata approach.

However, the Boston Gas court did not specifically address the question of how defense costs should be allocated, and policyholders and insurers have continued to wrestle with that issue absent further direction from the SJC. As explained below, the analysis underlying the SJC’s decision in Boston Gas...
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