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."
Trucker Loses Finger, Sues ACE Over Refusal to Pay Damages
October 15th, 2014 - A California truck driver has sued ACE American Insurance Co. after it allegedly refused to compensate him for the loss of his pinky finger while at work.
Manuel Zatarain Sr., of suburban Los Angeles, is a truck driver who had purchased an occupational accident plan policy from the ACE Group unit. That policy was in force on June 26th, 2010, when Zatarain delivered a load of bottled water to a Target store in Orange, California. At the time, he was operating a truck as an independent driver for Ceva Logistics.
Zatarain said Target supplied him with an electric pallet jack, to use to haul the water from the truck to the Target storage facility. While he was doing so, however, the pallet jack malfunctioned and smashed his right hand against the wall of the truck trailer.
Zatarain was rushed to a hospital, where his badly mangled right pinky finger was amputated.
In August of 2010, Zatarain filed a claim with ACE for loss of earnings, coverage of medical expenses and the loss of his finger. As of now, however, Zatarain said ACE has been in breach of its contract for its refusal to pay for the loss. He claimed the insurer unreasonably and without proper cause denied his claim.
Zatarain estimated his damages to be $103,366.
In addition to breach of contract, Zatarain accused ACE of breach of its implied obligation to deal in good faith. On the two counts, he asked in a California state court lawsuit that ACE be ordered to pay general as well as compensatory damages. He also requested exemplary and punitive damages and for compensation for mental suffering and emotional distress.
The case has been removed to U.S. District Court in Santa Ana, Calif.
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