Jetrader - September/October 2011 - 43

Have Faith
By Don Mitchell, Partner; Smith, Gambrell & Russell, LLP

Imagine you’re an engine leasing company. You lease an engine to an operator and require that it be insured against loss on an agreed value basis1. You are sole loss payee and a contract party on the lessee’s policy. The engine is financed so the agreed value is set at or above the outstanding loan amount. Because of where the engine is in its life cycle, that value is higher than its current market value. Lo and behold, the engine ingests a bird on take-off and is declared a total loss. You request payment of the agreed value from the operator’s insurer. They decline. Instead, they offer you the value of a replacement engine in like condition. Because the market value of the lost engine was far less than the agreed value, they say, they should only have to pay for a replacement. You demand payment of the agreed value—after all, why should you accept less than the agreed value? Doesn’t the insurer know the difference between insured and agreed values? Shouldn’t they? In addition to whatever rights may exist under common law, the various states of the United States have passed “bad faith” statutes specifically governing the conduct

of insurers in the administration, adjustment and settlement of insured claims2. These laws require that insurers act in good faith in the handling and settlement of claims and prohibit insurers from acting solely in their own self-interest. They require insurers to act promptly, respond quickly and settle claims fairly. While these statutes among the states are not uniform in language, they are uniform in purpose with the goal of ensuring that insurers don’t unreasonably delay settlements and that insureds receive the full benefit of their bargain under their insurance contracts. Refusing to settle a claim is not, in itself, bad faith. An insurer could contest liability or coverage. The insured may be acting in bad faith by attempting to “set up” the insurer for a bad faith claim (by setting unreasonable deadlines or excessive demands). The existence of bad faith must therefore be determined on a case-by-case basis. An insurer will be found to be acting in bad faith when (1) not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with

In addition to whatever rights may exist under common law, the various states of the United States have passed “bad faith” statutes specifically governing the conduct of insurers in the administration, adjustment and settlement of insured claims.
due regard for her or his interests; or (2) failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage3. Jetrader 43



Jetrader - September/October 2011

Table of Contents for the Digital Edition of Jetrader - September/October 2011

A Message from the President
Calendar/News
Q&A: Henri Courpron
State of the Regions: Europe
Paris Air Show Review
Thank You Sponsors
All About Growth
Predictive Maintenance in Aging Aircraft Systems
Have Faith
Parts on Demand
Culture of Accountability
Aircraft Appraisals
From the ISTAT Foundation
Aviation History
Advertiser.com / Advertiser Index
Jetrader - September/October 2011 - Cover1
Jetrader - September/October 2011 - cover2
Jetrader - September/October 2011 - 3
Jetrader - September/October 2011 - 4
Jetrader - September/October 2011 - A Message from the President
Jetrader - September/October 2011 - 6
Jetrader - September/October 2011 - 7
Jetrader - September/October 2011 - 8
Jetrader - September/October 2011 - Calendar/News
Jetrader - September/October 2011 - 10
Jetrader - September/October 2011 - Q&A: Henri Courpron
Jetrader - September/October 2011 - 12
Jetrader - September/October 2011 - 13
Jetrader - September/October 2011 - 14
Jetrader - September/October 2011 - 15
Jetrader - September/October 2011 - 16
Jetrader - September/October 2011 - 17
Jetrader - September/October 2011 - State of the Regions: Europe
Jetrader - September/October 2011 - 19
Jetrader - September/October 2011 - 20
Jetrader - September/October 2011 - 21
Jetrader - September/October 2011 - 22
Jetrader - September/October 2011 - 23
Jetrader - September/October 2011 - Paris Air Show Review
Jetrader - September/October 2011 - 25
Jetrader - September/October 2011 - 26
Jetrader - September/October 2011 - 27
Jetrader - September/October 2011 - 28
Jetrader - September/October 2011 - 29
Jetrader - September/October 2011 - 30
Jetrader - September/October 2011 - 31
Jetrader - September/October 2011 - 32
Jetrader - September/October 2011 - Thank You Sponsors
Jetrader - September/October 2011 - All About Growth
Jetrader - September/October 2011 - 35
Jetrader - September/October 2011 - 36
Jetrader - September/October 2011 - 37
Jetrader - September/October 2011 - Predictive Maintenance in Aging Aircraft Systems
Jetrader - September/October 2011 - 39
Jetrader - September/October 2011 - 40
Jetrader - September/October 2011 - 41
Jetrader - September/October 2011 - 42
Jetrader - September/October 2011 - Have Faith
Jetrader - September/October 2011 - 44
Jetrader - September/October 2011 - Parts on Demand
Jetrader - September/October 2011 - 46
Jetrader - September/October 2011 - Culture of Accountability
Jetrader - September/October 2011 - 48
Jetrader - September/October 2011 - Aircraft Appraisals
Jetrader - September/October 2011 - 50
Jetrader - September/October 2011 - 51
Jetrader - September/October 2011 - 52
Jetrader - September/October 2011 - From the ISTAT Foundation
Jetrader - September/October 2011 - Aviation History
Jetrader - September/October 2011 - 55
Jetrader - September/October 2011 - 56
Jetrader - September/October 2011 - Advertiser.com / Advertiser Index
Jetrader - September/October 2011 - 58
Jetrader - September/October 2011 - cover3
Jetrader - September/October 2011 - cover4
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