Hot Topics for Asset Recovery / Aviation Insurance Claims. 64 th NBAA Annual Meeting & Convention October 10, 2011 Las Vegas, Nevada

Transcription

1 Hot Topics for Asset Recovery / Aviation Insurance Claims 64 th NBAA Annual Meeting & Convention October 10, 2011 Las Vegas, Nevada

2 Please Note The following material is provided for informational purposes only. It is not insurance or legal advice and does not create or imply a client relationship between any parties present. Before acting on any issue of concern, you should first consult your insurance agent or broker and coverage counsel. None of the scenarios or details provided depicts or is intended to depict actual incidents or events.

3 For Any Aviation Claim The Cast You The Broker Coverage Counsel The Insurance Company The Underwriter The Claims Adjuster

4 Scenario Lightning strikes your 1998 GV on approach, frying the avionics. The landing is rough - damaging the left main landing gear, injuring employee flight attendant and the high-profile passenger. After EMTs take the injured parties to local hospital, you call your CFO and corporate risk manager to decide next steps. In the meantime, FO has authorized FBO to move and house the aircraft in their WW II era hangar. Not five minutes later FBO s roof collapses with your jet in it along with at least two others.

5 1) MITIGATE YOUR LOSS 2) NOTICE, NOTICE, NOTICE!!!! 3) TIMELY SUBMISSION OF PROOF OF LOSS 4) BE MINDFUL OF CONTRACTUAL SUIT LIMITATION CLAUSES 5) PHOTOS AND VIDEOS 6) OTHER LOSS DOCUMENTATION TIPS 7) ASSEMBLE THE RIGHT TEAM

6 1) MITIGATE YOUR LOSS Immediately after a loss, do whatever is reasonably possible to protect other property from damage or damaged property from further damage. Your policy will require that you mitigate your damages. o Some mitigation costs may be covered. o Damage to property that could have been avoided through reasonable mitigation measures may not.

7 2) NOTICE, NOTICE, NOTICE!!!! Every liability and property policy covering your aircraft will have very strict notice provisions. Liability claims: Notice of an occurrence as soon as reasonably possible, and details of the loss. o You must also immediately forward copies of any complaints filed against you. Property Claims: your policy will likewise require timely notice of any loss or incident which might result in a loss.

8 2) NOTICE, NOTICE, NOTICE!!!! (continued) Timely notice of all occurrences, incidents, losses, lawsuits, etc. is critical! Some jurisdictions are policyholder friendly they require insurer to demonstrate prejudice. Other jurisdictions, however, are not - - compliance with notice provisions treated as a condition precedent to coverage. Insurer can avoid coverage based on the technicality of late notice even if no resulting prejudice.

9 3) TIMELY SUBMISSION OF PROOF OF LOSS For property claims, in addition to notice, your policy will also likely require you to submit a detailed and sworn proof of loss. Often times, the policy will require submission of the proof of loss within 90 days following the incident. Compliance with the proof of loss requirement is essential to prevent the insurer from seeking to avoid its coverage responsibilities on technical grounds.

10 3) TIMELY SUBMISSION OF PROOF OF LOSS (con t) What if it is impossible to fully quantify and calculate the loss within the required time frame? Communication with your insurer is key! o Requests for extensions of time are routinely granted given the appropriate circumstances. Confirm all extensions in writing. If your insurer is unwilling to provide an agreed extension, submit what you can within the required time and reserve all of your rights to make necessary supplements.

11 4) BE MINDFUL OF CONTRACTUAL SUIT LIMITATION CLAUSES Your policy may contain a contractual suit limitation clause which provides that any suit against the carrier for loss under the policy must be brought with a set period of time. o Usually 1 to 2 years after the occurrence which led to the loss.

12 4) BE MINDFUL OF CONTRACTUAL SUIT LIMITATION CLAUSES (continued) Even though the period may be shorter than the applicable statute of limitations, courts generally enforce these provisions. The limitation clause can be tolled for the time between the submission of your proof of loss and the insurer s coverage denial. o Tolling either by statute or by policy language.

13 4) BE MINDFUL OF CONTRACTUAL SUIT LIMITATION CLAUSES (continued) If you and your carrier are unable to fully resolve your property loss in a timely manner, you must be aware of any such suit limitation provisions and ensure that suit is commenced before expiration of the stated period. Failure to comply may give your insurer another technical, yet enforceable, basis to avoid its coverage obligations.

14 5) PHOTOS AND VIDEOS Before any repair or remedial work is done, you must document the nature and extent of the damage to your aircraft. To ensure that you have adequate proof, take photos and videos of the all of the damage and all surrounding areas. Invite your insurer and/or its adjusters to do the same. o But only under your supervision and control.

15 6) OTHER LOSS DOCUMENTATION TIPS Identify, segregate and schedule all damaged property. Assign damaged component parts identification numbers for tracking purposes. Try to recall dates of purchase and dates of repair. Assemble flight and repair/maintenance logs. Locate receipts and otherwise document replacement costs. If necessary, begin to document business interruption and/or extra expense costs.

16 7) ASSEMBLE THE RIGHT TEAM When faced with a significant loss, be assured that your insurer will be using its all of its vast resources in an effort to minimize its own exposure. You too have many resources at your disposal to assist you in your efforts to maximize the value of your claim and your ability to recover that amount. Experts: Sometimes your aircraft can sustain damage that cannot be seen or measured by the untrained eye. Qualified experts are trained and paid to find, document and explain the damage you might otherwise not be able to support.

17 7) ASSEMBLE THE RIGHT TEAM (continued) Outside Adjusters and Consultants: Depending on the size, nature and complexity of your claim, outside adjusters and consultants may be necessary. They can help you to properly document the damage and costs associated with your loss and quantify any time element claim you may have.

18 7) ASSEMBLE THE RIGHT TEAM (continued) Your Insurance Agent: Your insurance agent can play a critical role in the claims process. He or she will know your business, your policy and the issuing company(ies). Your agent can act for you as a claims advocate and, where appropriate, work a relationship angle to ensure that your claim is given the proper treatment by higher level claims personnel.

19 7) ASSEMBLE THE RIGHT TEAM (continued) Coverage Counsel: Coverage counsel may be enlisted to assist in all facets of your coverage claim. Advice can be provided on claim documentation, negotiations can be had on time extensions as well as substantive issues, and critical review and analysis can be performed on your policy to ensure that you understand all of the various coverages that may apply and that you get maximum claim value

20 General Issues THIRD PARTY LIABILITY ISSUES Injury to passenger general liability policy designed to cover bodily injury of this type. Duty to defend and indemnify policy obligations to pay defense costs and amounts incurred in settlements or judgments. o Defense under reservation of rights may lead to a conflict of interest and entitle policyholder to control defense and independent counsel of its choice. Voluntary settlement provisions. Subrogation issues.

21 General Issues THIRD PARTY LIABILITY ISSUES Injury to employee flight attendant likely excluded under general liability section of aircraft liability and property policy. Instead, tender to workers compensation carrier.

22 General Issues EXTRA EXPENSE COVERAGE Property coverage extension for actual cost incurred chartering, leasing or renting a replacement aircraft which exceeds policyholder s normal operating costs. Generally available only for reasonable amount of time it takes to make necessary repairs. Generally inapplicable to total loss situations. Usually subject to sub-limit

23 General Issues REPAIR VERSUS REPLACE Like kind and quality Betterment You make repairs Someone else makes repairs

24 CONTRACT INSURANCE REQUIREMENTS In connection with your ownership and/or operation of an aircraft, it may be necessary for you to enter into various agreements. Lease Agreements Management Agreements Pilot Services Agreements Hangar/Storage Agreements

25 CONTRACT INSURANCE REQUIREMENTS These agreements are likely to impose very specific insurance coverage requirements. By requiring you to maintain appropriate levels of property and liability insurance coverage, these third parties are attempting provide themselves with an extra level of protection in the event of a loss and/or liability exposure involving their services. Substantial compliance with these insurance requirements is very important. o If there are gaps in the types of coverages required or in the amount of limits available, who will the third parties look to?

26 CONTRACT INSURANCE REQUIREMENTS YOU!!!

27 THE BOTTOM LINE You pay significant premiums for your policies. Thus, when it comes time to present a claim and realize the value of your payments and coverage you purchased, you must take the steps necessary to protect and preserve your rights and to package your claim the best way to maximize its value. Assume your carrier will challenge everything and be ready to respond.

28 SIX MONTHS LATER Passenger settled within limits of liability Flight attendant is back to work FBO carried enough hangarkeeper s liability insurance Damages not as severe as first thought parts replaced Extra expense provision addressed supplemental lift Policyholder is set to renew with same carrier rates are not going up they even might go down

29 Hot Topics for Asset Recovery / Aviation Insurance Claims Cliff Maine Tel: cmaine@btlaw.com Adam Hollander Tel: ahollander@btlaw.com Brint Smith Tel: bsmith@johnfthrone.com 64 th NBAA Annual Meeting & Convention October 10, 2011 Las Vegas, Nevada