(Article from Insurance Law Alert, December 2025)
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Holding
A trial court erred in dismissing a coverage suit stemming from an owner’s temporary dispossession of an aircraft because this incident constitutes a direct physical loss under the terms of the policy. U.S. Specialty Ins. Co. v. D S Avionics Unlimited LLC, 2025 Neb. LEXIS 105 (Neb. Sup. Ct. Nov. 7, 2025).
Background
DSA owned a Piper PA-30 aircraft which was covered by a policy issued by U.S. Specialty. DSA delivered the aircraft to a mechanic for maintenance, but the mechanic was unable to access the hangar due to a dispute with the airport owner over allegedly overdue rent. The mechanic was ultimately able to access the hangar and move the aircraft to an outdoor location, but when DSA arrived to retrieve it, a truck was parked in front of it, preventing its removal. The airport owner refused to move the truck, citing the overdue rent payment from the mechanic.
DSA submitted a statement of loss to U.S. Specialty, which denied the claim on several bases, including that there was no “direct physical loss” or “accident” as required by the policy. Thereafter, U.S. Specialty sued, seeking a declaration of no coverage and DSA counterclaimed, alleging breach of contract and bad faith.
Ruling on cross-motions for summary judgment, the trial court held that DSA’s claim was not within the scope of coverage. DSA appealed and while the appeal was pending, the aircraft was released to DSA by court order in a separate proceeding more than 3 years after the truck had blocked it from moving. On appeal, the Nebraska Supreme Court reversed the trial court decision, finding that dismissal of the case was premature and remanding the matter.
After a hearing, the trial court ruled in favor of U.S. Specialty again, finding there was no covered “loss” or “accident” under the policy. The Nebraska Supreme Court reversed.
Decision
The Nebraska Supreme Court held that DSA’s claim was within the scope of coverage because an “accident” caused the direct physical loss of the aircraft. The court reasoned that the blocking of the aircraft by a truck was an “accident,” defined by the policy as “a sudden event during the policy period, neither expected nor intended by [the insured].” The court emphasized that the incident was not gradual and was neither expected nor intended from the standpoint of DSA.
While the court acknowledged that intentional acts are typically excluded from coverage and not within the scope of the term “accident,” the policy at issue expressly defined “accident” to be interpreted from the perspective of the insured, i.e., whether the insured, itself, expected or intended the event(s). The court likewise rejected the assertion that public policy precludes coverage for the intentional act at issue, noting that DSA, the insured, did not intend or expect the incident to occur.
Finally, the court rejected U.S. Specialty’s contention that there was no “direct physical loss” because DSA ultimately recovered the aircraft. In so ruling, the court distinguished cases involving COVID-19-related business losses, noting that such scenarios did not involve the physical dispossession of property.
Comments
The ruling is driven largely by the language of the policy, namely, the express requirement that “accidents” are to be interpreted from the expectations and intentions of the insured. Thus, for policies without such qualifying language, intentional acts are often deemed outside the scope of coverage.