Insurance Question

rframe said:
It's a contract, the contract defines what "commercial operation" is, if you read it.
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Insurance policies (at least the ones that I have had for the airplanes I owned), defined "commercial operation" as the process of using your airplane for commercial operations, such as aircraft rental. The insurance companies actually have a different view of expenses than the FAA (at least where I have read the policies). As long as reimbursed expenses do not exceed operating expenses they normally do not consider it a commercial operation. As soon as you receive more than the operating expenses it is commercial. Obviously policies may be different.
 
Blackhawk said:
Q: Do I need to add my CFI to my policy in order to receive dual flight instruction?
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Dude, we're not making this up.

Again, from Avemco's web site (since we're using them as an example):

Q: I have been contracted to provide instruction in another person's airplane. Will the owner's insurance policy offer me liability protection if he names me as an approved pilot on that airplane?
A: No. Your being named as an approved pilot on their policy keeps their coverage in force when you operate their aircraft but does not automatically extend coverage to you. To do that you can purchase a CFI Non-Owned policy.
 
What that means, is the owner can add you as a named pilot and the owner will still get paid when the airplane is broken but the insurance company now sues you, the CFI, who was a "named pilot" to recover their losses.

If the owner hadn't added you as a named pilot, the insurance company wont even pay them.

That's all that the "named pilot" provision offers (usually).
 
Other insurance thoughts on the matter:
http://www.aircraftandmarine.com/news.aspx
[FONT=Verdana, Arial, Helvetica, sans-serif]July 2008 [/FONT]
A few months ago, we spoke about the “Open Pilot Warranty” clause and how it applied to CFI’s. Some pilots still believe that the CFI does not have to meet the requirements of this clause. If you are required to receive dual time prior to solo, then your CFI becomes PIC. It is therefore important that he meet the requirements of the “Open” Clause or be named. Some aircraft, usually experimental, have “NONE” or “NAMED PILOT ONLY” Stated in the Open Clause. If you are required to have dual time or any other time in which your CFI would become PIC ( i.e. BFR has lapsed), your CFI will need to be named as a named pilot in such a policy. This situation came up for one of our clients on an experimental aircraft policy that did not allow for anyone except named pilots to fly the aircraft. Our insured was transitioning to his insured aircraft and needed some dual hours. He thought that any CFI he chose would be covered by his policy, and that he did not even have to name that CFI. Just remember that in a situation such as this one, the CFI is PIC and will therefore have to be named since the policy reads: Named Pilots Only. CFI’s are like any other pilot. Any time they become PIC, they must either be named or meet the Open clause.

[FONT=Verdana, Arial, Helvetica, sans-serif]May 2008 [/FONT]
All CFI’s should purchase non owned insurance to cover their instruction. This is similar to Errors and Omissions insurance or Malpractice insurance. Before signing up with a CFI, please be sure to check your “Open Pilot Clause” to see if your CFI meets these qualifications. The Open Pilot Clause refers to “other” pilots who may operate your aircraft as PIC. The requirements for the CFI’s are usually the same as those for the Open Clause. Global Aerospace is the only company that does not follow suit. Their requirement for Grumman CFI’s is that they have 5 hours in the same make and model. They have no total time requirements. The only times your CFI would not need to meet the Open Clause is if you are receiving your BFR, and it has not expired, or you are receiving some recurrency training. If you are a student, getting IFR instruction, or transitioning to a more complex aircraft, your CFI will be PIC. Please make sure to review this clause.

http://www.flyingadventures.com/ima...uerman-President-Avemco-Insurance-Company.pdf
FA: With respect to insurance, what
precautions to do you recommend
before deciding to allow any other pilot
to fly your aircraft?
JL: The best situation is to name the other
pilot on your policy. Some policies contain a
provision called an Open Pilot Warranty. This
provision allows any pilot to fly your aircraft
if they meet certain minimum criteria. It is
prudent to have the pilot show you documents
and a log book to prove they meet the
requirements of your policy.
 
rframe said:
Dude, we're not making this up.

Again, from Avemco's web site (since we're using them as an example):

Q: I have been contracted to provide instruction in another person's airplane. Will the owner's insurance policy offer me liability protection if he names me as an approved pilot on that airplane?
A: No. Your being named as an approved pilot on their policy keeps their coverage in force when you operate their aircraft but does not automatically extend coverage to you. To do that you can purchase a CFI Non-Owned policy.
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That is on a different part of their website- the portion selling CFI non-owned insurance. Policies are different, some may actually exclude anyone but the named insured or may not cover the dual instruction depending on the company and the policy, so of course AVEMCO is going to write this.

From their owner's policy FAQ, however:

Q: Who is permitted to fly my aircraft?
A: Under Avemco's policy any pilot that you have named on your policy, mechanics employed by an FAA Approved Repair Station in connection with inspection or repairs of the insured aircraft, any CFI while accompanied by a named pilot, or any pilot that meets the qualifications of your open pilot clause (if your policy has one).

Since the portion I underlined in bold is in the same sentence as the pilots named on the argument that AVEMCO could exclude a CFI is just as valid as saying AVEMCO could exclude a named insured. If that is the case there is no point in having the insurance.
 
Blackhawk said:
From their owner's policy FAQ, however:

Q: Who is permitted to fly my aircraft?
A: Under Avemco's policy any pilot that you have named on your policy, mechanics employed by an FAA Approved Repair Station in connection with inspection or repairs of the insured aircraft, any CFI while accompanied by a named pilot, or any pilot that meets the qualifications of your open pilot clause (if your policy has one).
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"Permitted" means if these conditions are met the policy is in effect and they will pay the OWNER. If someone other than these authorized users is operating the aircraft, then the insurance company will not even be paying and will issue a "tough luck" letter to the owner.

This does not mean the insurance company will not seek subrogation (reimbursement) from those authorized users. It also does not mean any other liability coverage extends to the authorized users. Insurance is for the benefit of the policy holder... not for those using/operating the aircraft. This is why some ferry pilots and CFI's insist on a clause of non-subrogation before they will fly someone else's airplane.

There is a very good point in having this coverage: the owner gets paid
 
rframe said:
"Permitted" means if these conditions are met the policy is in effect and they will pay the OWNER. If someone other than these authorized users is operating the aircraft, then the insurance company will not even be paying and will issue a "tough luck" letter to the owner.

This does not mean the insurance company will not seek subrogation (reimbursement) from those authorized users. It also does not mean any other liability coverage extends to the authorized users. Insurance is for the benefit of the policy holder... not for those using/operating the aircraft. This is why some ferry pilots and CFI's insist on a clause of non-subrogation before they will fly someone else's airplane.

There is a very good point in having this coverage: the owner gets paid
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Again, using your logic they could seek subrogation against a named insured as well. Can you cite specific case law, or can anyone, where a CFI met the Open Pilot Clause, all other stipulations in the policy were met, yet the insurance company failed to cover the policy or came after the CFI in subrogation? Yes, there are cases where the person operating the aircraft did not meet the minimums and was not a named insured and the company failed to honer the policy even though a CFI was on board, but this had nothing to do with the CFI and everything to do with the other provisions not being met. Now I have seen policies where only the named insured are covered- my Super Decathlon was like this. I had a commercial stipulation but only a few CFIs were named insured and there was no Open Pilot Clause.
 
Sam, in every one of your examples, Avemco is talking about keeping the policy in force for the benefit of the owner. In the last FAQ you quoted,

==============================
any pilot that you have named on your policy, mechanics employed by an FAA Approved Repair Station in connection with inspection or repairs of the insured aircraft, any CFI while accompanied by a named pilot, or any pilot that meets the qualifications of your open pilot clause
==============================
may fly your airplane without voiding the insurance policy.

But where I think you're missing it is that "who may fly your airplane and still heep the policy in force" is a completely different question from "who is protected by the owner's insurance?" Owner's insurance (in the absence of some very specific endorsements that usually cost extra) protects the aircraft owner from liability and pays the aircraft owner for the costs of repair for hull damage.

So, using the language you qouted but keeping away from the CFI for a moment, if an FAA repair station mechanic takes your airplane for an inspection flight and breaks it with a hard landing or taxis into someone, the owner's insurance company will cover the cost of repairs; and then go after the mechanic shop for the damage they caused.

The policy allows the mechanic to test fly your airplane; it does not protect the mechanic shop from liability for damaging the airplane. That's what the mechnic shop's insurance policy is for.

I said a while back that this is a concept CFIs have trouble understanding - the difference between

(a) who is permitted to operate the airplane without voiding the owner's protection; and
(b) who is part of the group that is protected by the policy.

Like apples and oranges.

Hmm. Last month I did a seminar on FAA enforcement for a local flight school. Maybe it's time to do the CFI insurance seminar again.
 
Blackhawk said:
Again, using your logic they could seek subrogation against a named insured as well.
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Nope. The named insured is one of the people the insurance company has agreed to protect (so long as other policy conditions are not violated) and who has a specific contractual relationship with the insurer. All the people the insurance company surrogates against are people who the insurance policy is not designed to protect and who have no contractual relationship with the insurer.
 
MidlifeFlyer said:
Nope. The named insured is one of the people the insurance company has agreed to protect (so long as other policy conditions are not violated) and who has a specific contractual relationship with the insurer. All the people the insurance company surrogates against are people who the insurance policy is not designed to protect and who have no contractual relationship with the insurer.
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Can you cite a case?
 
MidlifeFlyer said:
Sam, in every one of your examples, Avemco is talking about keeping the policy in force for the benefit of the owner. In the last FAQ you quoted,

==============================
any pilot that you have named on your policy, mechanics employed by an FAA Approved Repair Station in connection with inspection or repairs of the insured aircraft, any CFI while accompanied by a named pilot, or any pilot that meets the qualifications of your open pilot clause
==============================
may fly your airplane without voiding the insurance policy.

But where I think you're missing it is that "who may fly your airplane and still heep the policy in force" is a completely different question from "who is protected by the owner's insurance?" Owner's insurance (in the absence of some very specific endorsements that usually cost extra) protects the aircraft owner from liability and pays the aircraft owner for the costs of repair for hull damage.

So, using the language you qouted but keeping away from the CFI for a moment, if an FAA repair station mechanic takes your airplane for an inspection flight and breaks it with a hard landing or taxis into someone, the owner's insurance company will cover the cost of repairs; and then go after the mechanic shop for the damage they caused.

The policy allows the mechanic to test fly your airplane; it does not protect the mechanic shop from liability for damaging the airplane. That's what the mechnic shop's insurance policy is for.

I said a while back that this is a concept CFIs have trouble understanding - the difference between

(a) who is permitted to operate the airplane without voiding the owner's protection; and
(b) who is part of the group that is protected by the policy.

Like apples and oranges.

Hmm. Last month I did a seminar on FAA enforcement for a local flight school. Maybe it's time to do the CFI insurance seminar again.
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Using your logic based upon AVEMCOs logic they could go after a named insured as well- they are listed in the same sentence as the CFI. Again, is there a case where this actually happened in the court records? I hear people talk about this, but I've never seen anyone actually list a court case where the CFI has been found liable when ALL the other provisions of the policy are met.
 
Blackhawk said:
Can you cite a case?
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Nope. Way too busy to research an issue like that for fun. So it's really just an educated personal opinion given for education.

Either you can understand who is protected under the policy or you can't.

Thread has now exceeded 30 posts - a sure sign that people are just talking past each other.
 
Only ones I could find that might pertain. First does not have a CFI, but a student pilot accompanied by a licensed pilot.
I think the last one was pertinent as the insurance company went after FSI and the actual CFI... not sure.

"In Marshall v. Peerless Ins. Co., 428 S.W. 2d 190 (Ky. 1968) the accident occurred when a student pilot was accompanied by a licensed pilot, not a flight instructor, in the other pilot seat. The student operated the controls throughout the flight until the other pilot took over just before landing. The other pilot was at the controls when the aircraft ran off the runway and the accident occurred. The policy excluded coverage when the aircraft was operated in flight by a student pilot unless such flight was with the specific advance of and under the direct supervision of a certified flight instructor. Despite this language, the Court held that the other pilot was qualified under the policy, had a set of controls and the authority to use them. Accordingly, the Court held that the other pilot, being pilot in command, met the requirements of the policy. The dissenting opinion noted the testimony of the student pilot who admitted that he was operating the controls until the other pilot decided he was in trouble and decided to do something about it, then stated: “The owners would have us say that one of them could set in motion the events which caused the damage but be free from the consequences because Hammonds took control at the last moment before the damage occurred. This we should not do.” In short, the dissenting judge would undoubtedly have applied the same rule as the courts in the Powell Valley and Beckwith cases.
There is other out of state authority which also declined to follow the Powell Valley and Beckwith rule. In National Union Fire Ins. Co. of Pittsburgh, Pa. v. Hudson Energy Co., Inc., 811 S.W.2d 552 (Tx. 1991) the Court upheld an award of damages and attorney fees against the insurer. In that case the aircraft was being operated by a student pilot and a certified flight instructor. At the time of the accident the aircraft was being operated simultaneously by both after the student pilot lost control. The Court held that the policy did not prohibit simultaneous operation by a qualified and non qualified person, approved the holding in the Peerless case, refused to enforce the exclusion, and enforced coverage under the policy."

http://ftp.resource.org/courts.gov/c/F3/16/16.F3d.362.92-3408.html


 
:rotfl: Same old blackhawk. Quote 6,000 sources of perceived relevance while looking past what really matters. You should reread what Mark said. Not one of your bagilion sources says "the instructor is covered." They all say "the policy remains in effect..." How many people need to tell you that you're reading right past this before you believe them?

On the same FAQ you quoted, in fact, a separate question cites what you choose to ignore. Quoted again here for simplicity (I manipulated the format for emphasis):

rfram said:
Again, from Avemco's web site (since we're using them as an example):

Q: I have been contracted to provide instruction in another person's airplane. Will the owner's insurance policy offer me liability protection if he names me as an approved pilot on that airplane?
A: No. Your being named as an approved pilot on their policy keeps their coverage in force when you operate their aircraft but does not automatically extend coverage to you. To do that you can purchase a CFI Non-Owned policy.
Click to expand...


PS Thank you Midlife and rframe. I learned something new.
 
shdw said:
:rotfl: Same old blackhawk. Quote 6,000 sources of perceived relevance while looking past what really matters. You should reread what Mark said. Not one of your bagilion sources says "the instructor is covered." They all say "the policy remains in effect..." How many people need to tell you that you're reading right past this before you believe them?

On the same FAQ you quoted, in fact, a separate question cites what you choose to ignore. Quoted again here for simplicity (I manipulated the format for emphasis):




PS Thank you Midlife and rframe. I learned something new.
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First, that is NOT the same FAQ I quoted. If you actually look at the top of the AVEMCO website you will see they list different products. If you look under the AVEMCO owner's policy FAQ link they state that their policy does cover a CFI giving instruction to someone listed on the policy. They then change their tune in the FAQ portion of the non-owner's policy because different policies from different companies do say different things. Like I wrote earlier, my Decathlon policy did NOT have an open pilot clause. Most flight school/FBO insurance, for example, clearly states that the renter is not protected against subrogation in the event of a loss- and there are court cases to back this up that I can reference. Interestingly, I don't know of cases where the insurance company tried to recover the loss from a CFI.
Court cases are very relevant when discussing such things. Again, while I've read the same articles not once have I read in such an article a reference to an actual case and the articles are almost always written by someone who is involved in the sale of non-owner insurance. Most of those articles end with "Oh by the way- we just happen to offer such insurance." If I was writing such an article I would list precedents and cases to support my argument and as a warning to others of what can happen. In the latter case I listed the insurance company tried to come after FSI and the CFI- but was smacked down. I've done a search and I can find no such case at this time. That has been my problem with this topic- people say things but do not quote any legal actions to support that claim. I can state on a website whatever I want as being a legal fact, but if I can't support it with case law it's just opinion.
I will state that I am not a lawyer and a lawyer may have more complete information. But I do think aviation attorneys would list specific cases.

Finally, not sure why you're getting your panties in a wad. So far I think it's been a pretty rational, fair and respectful discussion.
 
Blackhawk said:
.
I will state that I am not a lawyer and a lawyer may have more complete information. But I do think aviation attorneys would list specific cases.

.
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Not getting my panties in any wad, but just so's you know, Midlife is a lawyer. Not sure if he specializes in aviation law, but he's pretty knowledgeable about it nonetheless
 
Mike H said:
Not getting my panties in any wad, but just so's you know, Midlife is a lawyer. Not sure if he specializes in aviation law, but he's pretty knowledgeable about it nonetheless
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I do know that and have alot of respect for Mark's opinion. That's part of the reason I asked if he knew of any such cases. I really find it odd that in all the articles on the need for CFI non-owner insurance I have never once seen reference to such a case. If it's such an issue surely there are examples.
I am not telling CFIs they do not need insurance. Every policy is different. I just have not seen a case of a CFI not actually being covered by the open pilot clause, unless they did not meet the requirements of the specific open pilot clause. In those cases the courts have made clear that their rulings in favor of the insurance companies are based upon the failure of the CFI to meet those minimums and not qualify as an insured pilot.
 
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