Aviation Insurance

Bernoulli Fan

Bernoulli Fan

Controller
Is public liability (or any other type of) insurance required in the United States for aircraft rented from an FBO? I found out today that a twin at a nearby airport hasn't flown in many months because the demand is too low to pay for the insurance. The guy I was talking to didn't elaborate on what type of insurance that would be, and when I asked why the owner didn't sell the plane, he said the market was not good for twins.

In my opinion, the market for twins is not going to get any better. If no insurance is required by law, why not rent it without insurance? Couldn't renters sign a form saying they would not sue and would pay for any third party damage they caused? When I went skydiving, I had to sign (and swear on video) to similar statements. If it's good enough for skydiving, it should be good enough for renting an airplane. This airplane, and many others like it in the country I'm sure, is going to decay on the ramp until it is a tax write-off.

For me, this is just an extension of my extreme distaste for the insurance culture in which we live. Simple mistakes get turned into million dollar lawsuits, and prices of every good and service are driven up because of that culture. Insurance companies are for-profit, and ironically, while insurance started as a way for people to band together and collectively stave off ruin, it has now become a reason to fear guests in your home, passersby on a wintry sidewalk, and uncoordinated shoppers in your store. [/rant]

Curious about other opinions, laws, and or considerations for insuranceless flying. What about a personal aircraft?
 
Bernoulli Fan said:
If it's good enough for skydiving, it should be good enough for renting an airplane.
Click to expand...

Here is the 'why':

Skydiver hits a house when chute fails:

"Whump!" - 1 death, possible roof damage, participant assumed all risks.

Twin hits a house after less experienced rental pilot loses engine and tries to climb:

"ROARING FIREBALL TWO BLOCKS WIDE" -10 deaths, including pilot and three friends, a family of four from the first house destroyed, and an elderly couple whose house was also destroyed in the ensuing blaze. Two houses are completely destroyed, another is clipped just prior to impact, an engine goes through the living room of another, and a fourth and fifth also suffer fire damage.

Now, kidding aside, as far as the insurance culture, and the litiguous society we find ourselves in, I agree with you 110%. I do believe that we should be insured because of the above scenario, but the costs have become so egregious that some activities (such as aircraft ownership, and flying twins) have become cost prohibitive solely because of the cost of insurance. Insurance companies have moved away from simply providing indemnification from loss, and into large, publicly-traded, for profit companies. Take a look at several of the home and auto insurance companies out there. Notice how many of them have also started offering banking, investments, and other financial "products" in the past 15 years. -wtf? Now my premiums are not only conributing to a pool to protect other insured from loss, but also feeding a population of investors with no interest in the company but to make money off of it.

I blame a lot of this on the rise of 401ks bringing the concept of market trading to the population as a whole, which has in turn prompted a lot more companies to go public because of the influx of available investors' money into the market. Then begins the vicious cycle of the investors demanding higher returns from the board of directors, who in turn increase customer costs to drive revenue, which ultimately comes from the same people investing. Our whole economy has turned into a ponzi-scheme - get in, get yours, and get out before it implodes. :disgust:

Don't even get me started on the frivolous lawsuit epidemic.
 
A friend who had an Pitts S2B and gave training and aerobatic flights in it, said his "commercial" insurance was $6k/year... He said it paid it off by doing enough training and flights over the year but come on... $6,000 per year for a single-engine 2-place aerobatic airplane for an instructor with 10,000+ hours in high-performance airplanes? Unbelievable.
 
Okie_Pilot said:
Unbelievable.
Click to expand...

Indeed.

Back to the OPs question about laws, I looked into this a couple years back and found little regarding laws requiring aircraft insurance. I could have been looking in the wrong places, but unlike manditory automotive coverage in many states, I had a difficult time finding a similar blanket requirement for aircraft. I would guess if there is any legislation on this, it is buried in some other regulations regarding commercial business usage or something.

When I took aviation law in school, we only discussed the limits of hull insurance and renter's insurance. We never discussed, nor could I find in the book anything about mandated insurance. This doesn't mean it is not required, but I would think it would have come up in there.

From my experience running a contracting business, the business world is much more free to take risks than the general public from a legislative point of view. I had contractor's insurance, but there was no law requiring me to do so. I did so solely to protect myself from litigation, which is the main reason why I would imagine most FBO's have insurance, if not already required to do so based on any business or aircraft loans they have.

Like anything else, the more people are involved, the more money there is to be made, and thus more legislation will be passed to force that money to be spent. I am required by law to have automotive insurance, but not aircraft insurance. I can certainly see the day when the insurance companies try to get it mandated through legislation though. This would be an interesting scenario for AOPA, since they are both a pilot/owners advocate, and an insurance agency. :eek:
 
The problem with covenants not to sue is they are only binding on the pilot. When Joe average pilot snuffs himself out in an airplane, Joe's wife (brother, mother, etc.) thinks he's the world's greatest pilot and there's no possible way Joe did anything wrong, so the airplane must be at fault. Joe's wife then sues the airplane owner for liability in Joe's wrongful death.

I had a Seneca on lease-back about 6 yrs ago. Even then, my insurance was ~$1300/mo, the vast majority of which went to liability protection.
 
Wouldn't an NTSB finding that pilot error was the cause of the crash nullify any of his family's lawsuits? Or are there enough GA crashes of "undetermined causes" that it is still a risk?

As for the twin crashing through four houses, isn't that what homeowner's insurance is for? :)
 
There's no laws or rules mandating aircraft insurance. The FAA could care less. I've often thought of dabbling in flight instruction or renting my plane. I came to the conclusion that it's not worth it. There are ways to mitigate risk. LLC's and the like. Even insurance. But the cost to insure any sort of commercial operation makes it a non-starter (for me). Part of the reason is I have a high income job and have a lot to protect. If you were a young CFI looking at putting your plane to work, I'd say go for it. You aren't worth much and aren't much of a target. A guy like me with my assets....big target. And I'm not trying to brag but it's just not worth it for me and there is no way I can insure it. I never heard of the video liability waiver and that's interesting. Certainly skydiving is highly risky. Much more so than flying. Maybe I can let people fly my plane but interview them on video and make them promise not to sue me.
 
Bernoulli Fan said:
As for the twin crashing through four houses, isn't that what homeowner's insurance is for? :)
Click to expand...

The homeowner's insurance does cover the homeowner but I guarantee you that the insurance company is going to turn around and sue the aircraft owner to recoup their losses. Plus the Homeowner probably still has a 2-5% deductable and that is worth going after.
 
jasonb47 said:
Here is the 'why':

Skydiver hits a house when chute fails:

"Whump!" - 1 death, possible roof damage, participant assumed all risks.

Twin hits a house after less experienced rental pilot loses engine and tries to climb:

"ROARING FIREBALL TWO BLOCKS WIDE" -10 deaths, including pilot and three friends, a family of four from the first house destroyed, and an elderly couple whose house was also destroyed in the ensuing blaze. Two houses are completely destroyed, another is clipped just prior to impact, an engine goes through the living room of another, and a fourth and fifth also suffer fire damage.

Now, kidding aside, as far as the insurance culture, and the litiguous society we find ourselves in, I agree with you 110%. I do believe that we should be insured because of the above scenario, but the costs have become so egregious that some activities (such as aircraft ownership, and flying twins) have become cost prohibitive solely because of the cost of insurance. Insurance companies have moved away from simply providing indemnification from loss, and into large, publicly-traded, for profit companies. Take a look at several of the home and auto insurance companies out there. Notice how many of them have also started offering banking, investments, and other financial "products" in the past 15 years. -wtf? Now my premiums are not only conributing to a pool to protect other insured from loss, but also feeding a population of investors with no interest in the company but to make money off of it.

I blame a lot of this on the rise of 401ks bringing the concept of market trading to the population as a whole, which has in turn prompted a lot more companies to go public because of the influx of available investors' money into the market. Then begins the vicious cycle of the investors demanding higher returns from the board of directors, who in turn increase customer costs to drive revenue, which ultimately comes from the same people investing. Our whole economy has turned into a ponzi-scheme - get in, get yours, and get out before it implodes. :disgust:

Don't even get me started on the frivolous lawsuit epidemic.
Click to expand...

Aircraft insurance for private use isn't
That high. It's the commercial use that drives the premium up. I pay just over 500 a year for full hull and liability on the Cherokee
 
Bernoulli Fan said:
Is public liability (or any other type of) insurance required in the United States for aircraft rented from an FBO? I found out today that a twin at a nearby airport hasn't flown in many months because the demand is too low to pay for the insurance. The guy I was talking to didn't elaborate on what type of insurance that would be, and when I asked why the owner didn't sell the plane, he said the market was not good for twins.

In my opinion, the market for twins is not going to get any better. If no insurance is required by law, why not rent it without insurance? Couldn't renters sign a form saying they would not sue and would pay for any third party damage they caused? When I went skydiving, I had to sign (and swear on video) to similar statements. If it's good enough for skydiving, it should be good enough for renting an airplane. This airplane, and many others like it in the country I'm sure, is going to decay on the ramp until it is a tax write-off.

For me, this is just an extension of my extreme distaste for the insurance culture in which we live. Simple mistakes get turned into million dollar lawsuits, and prices of every good and service are driven up because of that culture. Insurance companies are for-profit, and ironically, while insurance started as a way for people to band together and collectively stave off ruin, it has now become a reason to fear guests in your home, passersby on a wintry sidewalk, and uncoordinated shoppers in your store. [/rant]

Curious about other opinions, laws, and or considerations for insuranceless flying. What about a personal aircraft?
Click to expand...

You could purchase non owned insurance to cover the airplane and yourself and see if they will let you fly it then. A lot of flight schools around here make the renters carry non owned insurance
 
Inverted25 said:
Aircraft insurance for private use isn't
That high. It's the commercial use that drives the premium up. I pay just over 500 a year for full hull and liability on the Cherokee
Click to expand...

The aircraft I primarily fly costs far far less than my car to insure. And I only carry liability on the car, and have never had a claim.

When it is used commercially, the cost to insure an aircraft goes up substantially, as any customer harmed is likely to sue and get a large settlement.
 
drunkenbeagle said:
The aircraft I primarily fly costs far far less than my car to insure. And I only carry liability on the car, and have never had a claim.

When it is used commercially, the cost to insure an aircraft goes up substantially, as any customer harmed is likely to sue and get a large settlement.
Click to expand...

This is why if I ever end up getting a tailwheel to do tailwheel endorsements it will be dual only.
 
Homeowner's insurance deductible: People are going to sue for $15,000? Doesn't seem worth it to me. Lawyers' fees will take half of it.

I found this on a lawyer website today:

If your life has been impacted by an aviation accident, it is important to understand the conditions surrounding this event. You should be familiar with your legal rights and the actions you may be able to take against those who are responsible for the chaos you have endured. By speaking with a compassionate aviation attorney you can alleviate some of the suffering you have gone through. Do not hesitate to move forward towards a brighter future. Speak with an experienced lawyer today.
Click to expand...
 
Check my math. According to AOPA, a 2007 underwriters' study on aviation accidents, and some other Internet articles I found, the rate of fatal general aviation accidents is somewhere between 13 and 18 per 1 million flight hours. Let's say, due to low demand, your twin flies 30 hours per month. That's 154 to 213 years between fatal accidents for your airplane.

Based on those numbers, I'd rent without insurance if my other option was letting my $100,000 asset decay on the ramp. Assuming I was able to quality control my renters and I wasn't a big target like DE727UPS. :p
 
Inverted25 said:
Aircraft insurance for private use isn't
That high. It's the commercial use that drives the premium up. I pay just over 500 a year for full hull and liability on the Cherokee
Click to expand...

I agree, private insurance is not that high, but the OP was referring to the FBO, which implies the need for a commercial policy if they are renting aircraft.

Inverted25 said:
You could purchase non owned insurance to cover the airplane and yourself and see if they will let you fly it then. A lot of flight schools around here make the renters carry non owned insurance
Click to expand...

Non-owned is not expensive, and everyone should have it, but the purpose and intent of it is kinda like "front-end" gap insurance. It is designed to cover the deductible of the flight school's policy, not the cost of repair or replacement. Many people do not have it because it is not advertised properly. They look at AOPA or Avemco renters(non-owned) insurance which is offered up into 100s of thousands and say "I cannot afford to cover the $250k g1000 Cessna I rent, that would be thousands per year, if I wreck it, I am owned anyway"

No they cannot afford to cover the entire hull loss, but that is not the intent of this insurance. The actual intent is to cover the FBO's deductible, and possibly loss of revenue while the ship is being repaired/replaced. Most reputable FBOs have a good relationship with their insurance company, and they work together to evaluate risk management of their policy. In this manner, the FBO will not allow the insurance company to subrogate (come after you) to recoup their losses.

How do I know this? I bent some rented aluminum a couple of years ago. I did not have non-owned insurance, and I got owned for a few thousand to cover the FBO deductible and their estimated loss of revenue for about six weeks. For $175 a year in renter's insurance, I could have been covered for this. I am now.

But to make the point, non-owned is not intended to cover the aircraft completely, it is to cover you for the difference after insurance that the FBO incurs.
 
Bernoulli Fan said:
Check my math. According to AOPA, a 2007 underwriters' study on aviation accidents, and some other Internet articles I found, the rate of fatal general aviation accidents is somewhere between 13 and 18 per 1 million flight hours. Let's say, due to low demand, your twin flies 30 hours per month. That's 154 to 213 years between fatal accidents for your airplane.

Based on those numbers, I'd rent without insurance if my other option was letting my $100,000 asset decay on the ramp. Assuming I was able to quality control my renters and I wasn't a big target like DE727UPS. :p
Click to expand...


1) General Aviation is a broad term, and includes owned aircraft, small box-flying outfits, sightseeing, pipeline patrol, and other activities flown by professional pilots depending on the source. These operations combined fly millions of hours per year. Can you filter those numbers down to a rate for rental pilots alone? I would imagine the rate is higher, especially if you can also filter it to rented twins.

2) Take care using only the "fatal" statistics alone. The non-fatal injury rate is much higher, and can result in a disabled survivor who spends the rest of their life litigating with you for their loss.

Make no mistake, I feel your pain. Any discussion of twin ownership or training quickly defers to insurance costs, but until we can stop frivolous lawsuits and make people accountable for the risks they take, it is part of the industry.
 
It's kind of messed up but my biggest fear about having a crash is surviving and having the pants sued off of me.
 
JordanD said:
It's kind of messed up but my biggest fear about having a crash is surviving and having the pants sued off of me.
Click to expand...
Wait until you have a family and then your biggest fear is they will be sued to the poor house if you have a crash, surviving it or not...
 
You must log in or register to reply here.
Back
Top