FBO rental deductibles

FLpilot

New Member
Hey all, great forum! Just joined and wanted to start off asking everyone a question. The FBO I rent from states in their rental agreement, that if any damage is done to the aircraft, I am to pay the FBO's $5k deductible. Is this common? It sounds kinda steep for a high time 152 that probably costs less then $20k. What are you guys singing when you check out your planes? Thanks in advance.
 
Yeah, 5k does sound really high. Im sure that deductables vary with each insurance company, but the highest you will pay at my FBO is $500. You can minimize that by paying an extra dollar per rental hour to reduce it to $250, or you can pay an extra two dollars an hour to not pay anything. I dont think any students at the FBO pay the extra money.

About two years ago a student bent the prop when a crosswind got him, and I think the owner of the FBO actually got him to pay for the new prop somehow. I know the story was they didnt want to submit it to the insurance company, but I dont know how they got him to pay. Probably laid some kind of guilt trip on him.....
 
I've noticed that this is a trend that is becoming more and more common. It's just like car insurance - a policy with a $250 deductible is more expensive than a policy with a $1000 deductible so FBO's get huge deductibles to make their policies cheaper then stipulate in the rental agreement that you pay the deductible. $5000 seems a bit high for a 152 but not totally out of line with what I've been seeing recently. I don't remember exactly but I think when I rented a Duchess I "agreed" to pay the $10,000 deductible.(That's one of the reasons I very rarely ever fly that airplane)


Jason
 
The FBO I worked at required renters to pay up to a $5,000 deductible. That doesn't necessarily mean the deductible will be that much.
 
The FBO I used to rent from had a $2500 deductible. I have non-owned insurance and I just selected an amount for hull coverage enough to cover their deductible.
 
Watch out for these. Sometimes it sounds like the renter is =only= responsible for the deductible, no matter what. In =most= cases that's not true.

Most of the time these deductible agreements mean that if there is damage to the airplane while in the renter's custody but without the renter's fault, the renter agrees to pay the deductible. But, if the damage is the renter's fault, all bets are off.

In the following examples, assume the $5,000 deductible in the original post.

Example 1: Renter flies to another for a hamburger. While having lunch, a lineman runs a truck into the airplane, causing $20,000 damage. Renter pays the FBO's $5,000 deductible.

Example 2: Renter flies to another airport for a hamburger. Forgets to put the gear down for landing, causing $20,000 damage. Renter can be held responsible for the full $20,000.

Remember that most of the time, the FBO's insurance protects the FBO, NOT YOU!
 
Good point. For me, it is a trade-off between protection and cost. Getting non-owned hull insurace for enough to cover the entire value of the plane, in addition to non-owned liability insurance, would be very expensive. I figure I can afford to pay someone for totalling a 30 year old 152 or 172 if I have to, but medical bills, pain & suffering, etc. are a totally different matter.
 
That would explain the scenario in my post. I never dug very much for the whole story, and I dont intend to. I never thought it would work like that though.
 
[ QUOTE ]
Remember that most of the time, the FBO's insurance protects the FBO, NOT YOU!


[/ QUOTE ]

I carry a non-owned policy (liability + small amount of hull damage coverage) to supplement my FBOs. I had more coverage before they got a better deal (for the renters) insurance wise, and dropped it down some this year with the new (better) policy.

Another caveat: if you fly a plane that belongs to a private owner, by all means make sure they specifically name you on their policy! Don't settle for 'my insurance will cover you' - that's asking for trouble.

It was a bitter pill having to fork over all that money for insurance, but I've countered it with the thought that if I had no insurance and bent some metal, I could easily be left in financial ruin...all it takes is one botched crosswind landing.

Sarah
 
Actually a $5000 deductable is becoming standard pretty quickly for rental aircraft. The good news is a basic non owners policy that would cover a $5000 deductable and other possible liability is pretty cheap and you should have it if you are renting.
 
[ QUOTE ]
Actually a $5000 deductable is becoming standard pretty quickly for rental aircraft. The good news is a basic non owners policy that would cover a $5000 deductable and other possible liability is pretty cheap and you should have it if you are renting.

[/ QUOTE ]

This is true, but reference MidlifeFlyer's post. A $5k deductible isn't necessarily all you'll be responsible for if you are at fault for damaging a rental aircraft. As such, I choose to carry a bit more hull coverage than that.

Sarah
 
[ QUOTE ]
Another caveat: if you fly a plane that belongs to a private owner, by all means make sure they specifically name you on their policy! Don't settle for 'my insurance will cover you' - that's asking for trouble.

[/ QUOTE ]Watch out for this. It is a =very= common misconception that being listed as a "named pilot" on someone's insurance policy protects you.

Insurance contracts are highly technical documents. Terms like "open pilot warranty," "named pilot," "named insured," and "waiver of subrogation" mean very specific and very different things.

An "open pilot warranty" is a promise that the owner of the airplane makes to the insurance company that no one that doesn't meet certain stated minimums will be permitted to act as PIC of the airplane. But the insurance does not protect the "open pilot".

"Named pilot" only means that the insurance company agrees to permit a specific pilot to act as PIC of the airplane, even if that pilot doesn't not meet the "open pilot warranty." But the insurance does not protect the "named pilot".

Being listed as a "named insured" means that the insurance company will treat you as one of the people p[protected by the policy. a specific person as one of the owners of the airplane for insurance purposes. Of the three terms, this is the only one that protects the pilot, and there may be limitations.

"Waiver of subrogation" means that the insurance company will not sue, even though it has the right to. A simple way to understand this is in the automobile insurance context: If some other driver slams into your parked car, that other driver is liable for your damages, and you have the right to sue him, if necessary, in order to collect. If you have collision coverage, your insurance company takes care of your loss. But the insurance company also takes over your right to collect from the person who is really responsible. That right to take over your claim is called subrogation.


Here's some examples that illustrate the differences. A is the owner and the primary insured on the insurance policy. B is another pilot.

1. B does not meet the "open pilot warranty" on A's policy. There is an accident that is arguably B's fault. B was acting as PIC on the flight.

Result: A has no insurance coverage. Period. No hull coverage and no protection in case someone else or his property was damaged.

2. Same as 1 but B meets the "open pilot warranty".

Result: The insurance company covers A's claim for hull damage and protects A in case someone else or his property was damaged. The insurance company may go after B ("subrogate") to collect everything it paid for or to A. In addition, B has no protection in case the "someone else" whose person or property was damaged.

3. Same as #1, but B is a "named pilot".

Result: Same as #2. No difference.

4. Same as #1, but B is a "named insured" on A's policy.

Result: The insurance company covers A's claim for hull damage, protects both A and B in case someone else or his property was damaged, and will usually not subrogate against B.
 
thanks for the clarification, MidlifeFlyer, and all the information. I guess what I was meaning was 'named insured'.
 
Good post midlife.

As an insurance consultant, I can attest that it is a VERY tricky business. Only thing I would change about midlife's post is that in the last scenario, if you're added as a "named insured," the company cannot subrogate. At that point, you are an insured under the policy, so you're no longer a third party. All the other scenarios are dead on, even though the claim may be covered, the company can still come back and sue you for the costs that they paid on the claim.

The difference between a named insured and named pilot are a big misunderstanding in the industry, even among agents as aviation insurance is such a small and uncommon coverage and occurrence to most agents. If you want to fly someone's plane a be covered, either get your own policy, or get a certificate showing you've been added as a named INSURED, or at the very least get added as a named pilot, certify that you meet the open pilot qualifications, and draw up a contract between you and the airplane owner where he agrees to hold you harmless for any damages or liability from your use of the airplane regardless of negligence. Such a contract will waive the company's right to subrogate as long as you have it in writing BEFORE an incident.

Heath
 
Just an out-of-curiousity question for Heath (and/or MidlifeFlyer): when you mention getting your own policy when flying a privately owned aircraft, do you speak of a standard non-owned ("renters") insurance policy? I am just curious.

I think there's a lot of room for bad things to happen to those that aren't prepared in this realm - I personally know a LOT of people that have permission to fly privately owned aircraft (myself included) and always wonder about insurance specifics.

TIA.

Sarah
 
Depends on your personal situation as to what I'd recommend. If you have regular access to the same privately owned aircraft, I'd say get added as a named insured. Offer to pay the extra charge and you're good to go. If its just an occassional flight in a privately owned and then renting, I'd get named to their policy as a pilot, check that you meet the required minimums, if any, and get a contract of use in place that waives his right of subrogation, also known as a hold harmless agreement. Basically the contract just needs to read that he agrees to hold you harmless for any damage to the aircraft or any liability that results from its use, regardless of negligence. Then his policy will pay him for any accident, and he's signed away his rights, and therefore the company's rights, to sue you.

But of course, your own non-owned aircraft policy is sure-fire to cover you no matter what you fly, so long as the hull limit is high enough to cover the cost of what you're flying (because as has been pointed out, you are always responsible for the ENTIRE cost of the plane if its found to be your fault, which it always is!). Its commonly misunderstood that the FBO's deductible is all you're out. I've never seen a policy that the company didn't subrogate against the pilot after paying the FBO.

So yes, I'd recommend that the best bet is to have your own coverage in the form of a non-owned "renters" policy, unless you regularly fly the same plane and can get the terms mentioned above.

Heath
 
So, if someone was to rent planes from their local FBO that has a $2,500 deductible, what would you suggest they do? Get an additional insurance policy? I'm still confused about this.

Nick
 
Usually the same underwriter that sells the non-owned liability insurance will offer hull insurance that would cover you in case of a loss to a rented plane. You can choose the amount anywhere from just enough to cover the deductible to enough to cover a fairly expensive plane.

Trouble is, the hull premium runs about $100 per $10,000 of hull coverage, so you can easily double your total insurance premium depending on what you rent.
 
I see advertisements fairly often for AOPA's renters insurance. What do you folks think about that?
I'd like to know more about rental insurance before the next time I rent a plane which has a $2,500 deductible.

Nick
 
Nick, my renters policy is through AOPAIA. You can also try Avemco.

Heath and MidlifeFlyer, thanks for clarifying a lot of questions I had re: insurance.

Sarah
 
Back
Top