Case Shows Need To Check Insurance Coverage

A federal court in Texas recently ruled that a 1976 King Air C90 that crashed before its resale was finalized was not covered by insurance because the purchase was not yet complete when the accident occurred. According to a report in a recent issue of the Lawyer-Pilots Bar Association Journal, two days after a successful acceptance flight, the buyer wired funds to an escrow account with instructions to release the money to the seller. However, on the day the funds were sent to the escrow account, the turboprop twin was destroyed in a crash landing (Oct. 9, 2001), and the pilot was seriously injured. The seller’s insurance company denied the damage claim, asserting that the seller was no longer the “sole and unconditional owner as required for coverage,” prompting the seller to sue the insurance company. The court decided in favor of the defendant, ruling that the seller indeed was not the sole and unconditional owner, “rejecting arguments that a bill of sale was never executed or delivered.” The court stated that the law in Texas is clear that delivery of a bill of sale “is not a condition precedent for the transfer of ownership.”