McKinley

In this bad faith action arising from an insurance subrogation claim, plaintiff Melissa McKinley (McKinley) appeals the trial court’s judgment that she was not covered under the insurance policy at issue. The trial court determined that since McKinley was not an insured under the policy for the damage in question, the insurer, defendant XL Specialty Insurance Company (XL Specialty or XL), did not act in bad faith by bringing an unsuccessful subrogation action against her by way of arbitration. We agree and shall affirm.

Background

On July 9, 2001, McKinley, a licensed pilot, rented a plane from Todd Aero for the purpose of receiving advanced flight instruction. McKinley signed a written rental agreement the same day and proceeded to fly the plane with her instructor pilot, Kathrynne McPherson, who was an approved pilot under the requirements of the policy. Regarding the issue of financial responsibility, the rental agreement states: “The Pilot renting the aircraft assumes full financial responsibility for any loss, theft, casualty or damage caused to the aircraft or components thereof while being rented by Pilot.”

While the flight went smoothly, the same could not be…