Bad faith is the unreasonable failure of an insurance company to honor the terms of an insurance policy and deal with a policyholder in good faith. Insurance companies who are found to have acted in bad faith can be liable for punitive damages in addition to contract damages. Some states have bad faith statutes called "Unfair Insurance Claims Practices Acts."
Carpenter, Boss Sue ACE Over Workplace Lawsuit
December 9th, 2014 - A disabled carpenter and his former employer have sued ACE Insurance Group Inc. in an effort to get the insurer to provide defense and coverage for a lawsuit involving his career-ending workplace injuries.
Ivan Holle was working in 2007 for Select Build of Illinois LLC on a residential carpentry project that was subcontracted to Realen Homes LP. On May 30th, 2007, a wall fell on Holle, injuring his neck, back and shoulder and ending his career as a carpenter.
On April 27th, 2011, Holle sued Realen Homes in state court in Chicago. At some point during this period, Realen Homes declared bankruptcy.
Enter the ACE Group unit. It had issued a liability policy to Building Materials Holding Corp., which operated Select Build (known at the time of the accident as RCI Construction) as an affiliated company.
Select Build was a named insured on the ACE Group unit’s policy. Realen Homes, meanwhile, had a master contract with RCI Construction and was named on the policy as an additional insured.
The ACE policy contains a deductible per occurrence provision. However, the plaintiffs contend that this clause pertains only to claims involving named insureds. It does not, they allege, pertain to additional insureds such as Realen Homes.
If the court were to side with the plaintiffs, ACE could be liable for as much as $1.9 million per occurrence. There was no indication in this suit, which was filed in Cook County Circuit Court, of the amount that Holle is demanding in his separate lawsuit.
Plaintiffs additionally asked that the court declare that Select Build has no duty to pay a $100,000 deductible on Holle’s underlying suit, and that it does not have any duty to reimburse ACE for the defense of Realen Homes in that action.
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