Is the insured entitled to coverage if it substantially complies with a policy's pilot warranty requiring completion of ground and flight courses? The Ninth Circuit, applying California law, answered no in Trishan Air, Inc. v. Federal Ins. Co., 2011 U.S. App. LEXIS 3003 (9th Cir. Feb. 16, 2011).
Trishan Air, Inc. purchased an aviation insurance policy from Federal. The policy included a pilot warranty that required pilots to complete ground and flight courses, including simulator training, for the make and model of the covered aircraft. The pilot warranty covered not only chief pilots, but also second-in-command pilots. A binder for the policy included a pilot warranty endorsement that called for these training requirments.
After an accident involving one of Trishan's corporate jets, Federal denied coverage because the co-pilot had not undergone the required training. Trishan sued alleging breach of contract. It argued that the co-pilot had received approximately 8-10 hours of training consisting of static cockpit simulation of procedures, emergency procedures, instrumentation and other operations of the aircraft. Trishan's expert testified that this training was very similar to simulator training and in some cases better. Nevertheless, the district court granted summary judgment in favor of Federal because Trishan had not strictly complied with the pilot warranty.
The Ninth Circuit affirmed. California courts required strict compliance with insurance warranties. Trishan argued that the warranty was a mere condition of the insurance policy, requiring only substantial compliance. This argument, however, ignored the dichotomy between conditions relating to basic coverage, such as notice provisions, and conditions, like the pilot warranty, that were an element of the fundamental risk insured. If Trishan's argument was accepted, an insured could assert that merely substitute performance, based on the insured's subjective selection, was all that was needed to receive coverage.