It Happened AGAIN!
By Bob Mackey, representative for the EAA Aircraft Insurance Plan, Administered by Falcon Insurance Agency
February 19, 2009 — I recently spoke at a gathering of EAA members attending a builder’s workshop at Sonex Aircraft in Oshkosh. I spent some time touching on a few important tips for getting the right airplane insurance at the best price and also answered several questions. Afterwards a gentleman – who has built a Sonex - approached with a question. “My instructor told me that before he can give me my flight review he needs to be named as a pilot on my insurance policy. Will this cause the cost of my insurance to go up?”
I replied with a question of my own: “Why does the instructor feel he needs to be named on your insurance as an approved pilot?” to which he answered, “Well, he said that if he was named on my policy then he would be covered by my insurance.”
I told him that it doesn’t quite work that way. (I also thought to myself, “It’s happening again!”)
If you own an airplane it is extremely important that all pilots who fly your airplane either be a named approved pilot on your policy or that they meet the Open Pilot Warranty. The latter is a clause that appears on some policies stating general requirements (certificate, ratings, hours, etc.) for pilots to fly or operate your airplane. If you have this clause in your airplane insurance policy and someone flies or operates your airplane that is not a named approved pilot or does not meet the Open Pilot Warranty, then you very well may have a coverage problem should an accident occur. You should carefully read the “Definitions” in your policy, where “Insured” is addressed.
There’s something else you discover here, too. The definition of “Insured” excludes coverage to certain pilots. These include, but may not be limited to, the following, depending on how your airplane insurance policy is written: Pilots who are in the business of
- Aircraft manufacturing,
- Aircraft maintenance,
- Aircraft repair,
- Sales (aircraft, engines, components, accessories, etc.),
- Airport (including hangar),
- Flight school,
- Flight service, and/or
- Aircraft or pilot service.
(This applies if the pilot is doing any of the above while flying your airplane.)
That’s a pretty broad list and needless to say it can be construed to include many aviation activities. So why exclude insurance to pilots doing these things, and where or how do pilots who are doing these things get coverage?
One way to have your policy amended to include coverage for your flight instructor is to have the insurance company expand your insurance to include the flight instructor. This is done by adding the flight instructor as an Additional Insured and obtaining a Waiver of Subrogation from the insurance company. This means your insurance company is expanding your airplane insurance to also cover the flight instructor (Additional Insured) and the insurance company is agreeing to waive its right to seek recovery for damage to the airplane caused by the flight instructor (Waiver of Subrogation). This will probably cost you more money.
Is there any other way the flight instructor can be insured while they are flying with you in their role as an instructor? Yes, there are a couple of ways. One way is to be covered under an insurance policy held by the flight school where the instructor works. Usually if a flight school hires individuals who own their own airplanes, the flight school insurance will apply under non-owners liability and hull insurance. The problem here is that, in some situations, if the flight instructor is an independent contractor, the flight school’s insurance may not extend coverage to the individual flight instructor. This is an important item independent flight instructors should discuss with the flight school or flight schools where they teach.
It is also important that flight instructors (both employee and independent contractors) know whether or not their flight school has non-owners liability and hull insurance.
There is another way for flight instructors to make sure they’re covered no matter what role they’re playing – teaching in a flight school (as an employee and as an independent contractor); teaching on their own airplane; or providing a free flight review for a friend. EAA and NAFI (National Association of Flight Instructors) worked together to develop an insurance plan designed to cover flight instructors in all of these scenarios.
The NAFI Plan offers liability insurance and hull (physical damage) insurance for non-owned aircraft, and professional insurance. The plan applies whether the flight instructor is covered by the flight school’s insurance or not. Further, when flight instructors arrange their own insurance through the NAFI Plan, they know that they are insured and will not have to wonder, “Am I insured?”
Call 866-243-NAFI (6234) to find out more about the NAFI Plan, or visit the NAFI website.
To recap: If you have your own airplane, you need to make sure anyone who you allow to fly or operate your airplane is a Named Approved Pilot or meets the Open Pilot Warranty (if you have this clause in your airplane insurance policy).
If you are a flight instructor, have yourself added to the airplane owner’s insurance policy as an Additional Insured with a Waiver of Subrogation; be insured by the flight school’s insurance; or you can arrange for your own insurance through the NAFI Plan.
Airplane owners need to make sure their airplane insurance is valid and flight instructors need to make sure they are protected as well. Airplane owners can get answers and help from the EAA Aircraft Insurance Plan at 866-647-4EAA (4322) and flight instructors can obtain assistance and insurance by contacting the NAFI Flight Instructors Insurance Plan at 1-866-243-NAFI (6234).
Happy and safe flying!
Bob Mackey is a Senior Vice President with Falcon Insurance Agency and he works with the EAA Plan and NAFI Plan. If you would like to see a specific topic addressed in a future article you may send your recommendation to Bob at email@example.com