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EAA Insurance Solutions: Additional Insured Requests
By Bob Mackey, Senior Vice President, EAA Insurance Solutions Administered by Falcon Insurance Agency, Inc.
Adding an additional insured to your policy means the additional insured will be covered just as you are, unless there is some stipulation that states otherwise. (We will dig into this a little later.) For the time being just know that adding an additional insured with no stipulations means all your insurance will also apply to that person.
When might an airplane owner be asked (or required) to add an additional insured?
- An airport owner may require it as a condition to base your airplane at the airport or to simply use the airport.
- A hangar owner or tiedown owner may require additional insured status as condition of the hangar or tiedown rental agreement.
- A flight school or flight instructor may request additional insured status prior to providing flight lessons, taking a BFR check-ride or a check-ride for an endorsement.
- A maintenance shop or mechanic may require additional insured status before performing any maintenance on your airplane.
- An employer might ask to be an additional insured if an employee uses his airplane instead of a company vehicle for business trips (this could also extend to a non-owners insurance policy).
- A volunteer or service organization might ask to be added as an additional insured if an airplane owner uses his airplane for the purpose of the organization.
These are just a few examples, certainly not an all-inclusive list, but I am sure you get the idea. Any person, persons, organization, or entity might ask for one reason or another to be added to your airplane insurance as an additional insured.
What does the insurance company think about having to add an additional insured? Well that depends on the situation, who wants to be an additional insured, and to what degree the additional insured will be covered.
Typically an additional insured will require that the airplane ownership insurance apply to the additional insured but only for any alleged negligence of the airplane owner. For example, adding an airport owner as an additional insured but only for alleged negligence arising out of the airplane owner’s negligence may be acceptable to the insurance company. However if the airport owner, or any additional insured for that matter, requires coverage for any and all negligence, this could cause a concern for the insurance company because it creates a very broad range of potential risk exposures not anticipated in the original underwriting of the risk. That could make the insurance company uncomfortable enough to refuse to provide additional insured status.
Another way to think about this is to ask yourself, “Am I asking my insurance company to either give away free insurance for the additional insured or am I asking the insurance company to take on a risk beyond what would be considered normal in the scope of your aviation activities?
Think of it this way: if you call a plumber and they show up at your house to fix the leaking faucet you called about and the first thing they say is you should contact your insurance agent to have them added to your homeowners insured policy, close the door and call another plumber. In other words think it through and ask your insurance broker whether or not the additional insured request make sense.
Any time you as an airplane owner come across a situation where you’re being asked to add an additional insured, first get the details, which should be spelled out in a contract or agreement or other document between the airplane owner and the person, persons, organization, or entity asking to be made an additional insured.
Next, read the entire agreement or contract to make sure you have a clear understanding of what is being asked of you and your insurance company. Then call your insurance broker (who works for YOU) give him a copy of the entire agreement or contract and have him help you understand what is going on and then they can approach the insurance company to determine if adding an additional insured is appropriate.
One last item: always keep in mind when you agree to add an additional insured, and you may not have a choice in some circumstances such an airport or hangar requirement, you will potentially be diluting your insurance protection because now your airplane insurance will be to one degree or another covering you and the addition insured. This is not to say it is okay or not okay to add an additional insured, you will need to discuss this with your insurance broker, who should explain any negative impact to you.
One other thing to keep in mind: money. Depending on how the insurance company views the impact of adding an additional insured, there could be a cost to you. Some insurance companies will automatically charge a fixed amount to add an additional insured, while others may not. In rarer situations where the additional insured is endeavoring to potentially transfer significant risk exposures to you and your insurance company, your insurance company could refuse to extend insurance to the additional insured. If your company does extend coverage, it may ask for a substantial premium. If this happens your insurance broker should be able to explain the reason your insurance company is reacting so adversely. Keep in mind there is more often than not an exception to the normal request for adding an additional insured.
If you have more questions about additional insureds feel free to contact Bob Mackey or any of the aviation insurance professionals with EAA Insurance Solutions administered by Falcon Insurance Agency, Inc.
As an EAA member you have exclusive access to a great resource with EAA Insurance Solutions. Call 866-647-4322 and talk directly to an aviation insurance professional, or to receive a free no-obligation quote for aircraft insurance visit the EAA Insurance Solutions web page. Whatever you do, make sure your aircraft insurance fits. With EAA Insurance Solutions you will find the right insurance at the best price!
Bob Mackey is senior vice president with Falcon Insurance Agency, the official administrators of EAA Insurance Solutions. If you have any comments about this article or if would like to see a specific aviation insurance topic addressed in a future article, send him an e-mail.