Aviation Insurance Market Update

[EricJ]

2 hours ago, Jerry 5TJ said:

After 30+ years flying I’m working towards my initial CFI.  Passed the first written (FOI) yesterday.  Who-eee. 

I’m already concerned re liability especially for primary students.  This thread is not encouraging.  On the one side are owners militant against adding a named CFI to their insurance.  The other point of view apparently being that instructor liability is large and the insurance coverage expensive and full of gaps.   

I'm finding similar issues around A&P liability if you do work on someone else's airplane.    This is complicated by the fact that many of the local airports require large liability policies with the municipality as a named insured if you want to do maintenance at that airport.   The cost of the policy is high enough (several AMUs) that you have to commit to fixing a LOT of airplanes just to pay for the insurance.    So there's really no such thing as working on the occasional airplane as issues come up with friends and hangar neighbors.   You have to either commit to doing it for a significant fraction of the time and collecting enough $$ to pay for the ins., or leave yourself exposed to the risks.

 

[ArtVandelay]

I don’t understand why CFIs don’t form LLCs to limit their liability? While it doesn’t protect you if you do something wrong (ie you were flying the plane), it would protect you if the student is flying.

[elimansour]

14 minutes ago, ArtVandelay said:

I don’t understand why CFIs don’t form LLCs to limit their liability? While it doesn’t protect you if you do something wrong (ie you were flying the plane), it would protect you if the student is flying.

I am not sure that would work.  The instructor is individually the CFI (even if he provides services through an LLC) and has to sign the logbook/ endorsement individually.  I think he or she would always have individual liability based on the sign off.

[ArtVandelay]

I am not sure that would work.  The instructor is individually the CFI (even if he provides services through an LLC) and has to sign the logbook/ endorsement individually.  I think he or she would always have individual liability based on the sign off.

Has there ever been a case where the CFI was held responsible for what a student does, in his own plane. It appears that schools are sued because planes weren’t airworthy, 1 case they included the CFI for not taking control. But I couldn’t find where instructor was held responsible when not in their schools airplane.

 

Tom

[RobertGary1]

9 minutes ago, ArtVandelay said:

Has there ever been a case where the CFI was held responsible for what a student does?


Tom

I would suspect so. That's the reason CFI insurance additionally includes coverage for malpractice.

Here is a case where a lawyer said the instructors simulation of an engine failure didn't prepare him for the real world (prop failed to feather).

https://caselaw.findlaw.com/mo-court-of-appeals/1157634.html

-Robert

Edited October 22, 2019 by RobertGary1

[jetdriven]

where can you buy malpractice insurance for a CFI?

[Andy95W]

3 hours ago, RobertGary1 said:

I would suspect so. That's the reason CFI insurance additionally includes coverage for malpractice.

Here is a case where a lawyer said the instructors simulation of an engine failure didn't prepare him for the real world (prop failed to feather).

https://caselaw.findlaw.com/mo-court-of-appeals/1157634.html

-Robert

But in this appeal, the judgment in favor of Flight Safety was upheld.  Regardless, the individual instructor was never named, only the large (deep pockets) school.

But I agree- I really wouldn't want to have to pay all of the lawyers' bills just to prove that I wasn't negligent in my instruction.

[RobertGary1]

3 hours ago, Andy95W said:

But in this appeal, the judgment in favor of Flight Safety was upheld.  Regardless, the individual instructor was never named, only the large (deep pockets) school.

But I agree- I really wouldn't want to have to pay all of the lawyers' bills just to prove that I wasn't negligent in my instruction.

Yea it’s not so much about who wins or losses the suit it’s about avoiding being jn the fight. It’s better if it’s just a squabble between insurance companies. Everyone I’ve known who’s been involved in a lawsuit has described it as emotionally draining. 
-Robert 

[carusoam]

Where did being aggressive ever get proper answers to a question?

 

The reasons owners want to have their CFII named on their insurance...

So the insurance company is OK having the instructor doing the job...

I am typically PIC while I’m getting trained in my own plane, aren’t I?
 

My insurance, my coverage, my plane... all good.

knowing the insurance my mechanic has, or my CFI has... that would be pretty hard to review while discussing who is PIC.

Something has gone off the rails..?

Best regards,

-a-

[MooneyMitch]

1 hour ago, RobertGary1 said:

Everyone I’ve known who’s been involved in a lawsuit has described it as emotionally draining. 

That’s an understatement !!!

[chriscalandro]

I believe we’ve discussed this recently as well and it’s a bit off topic but,

on a training flight the instructor is ALWAYS pic. 
 

 NTSB or the Board), in one of its earlier cases clearly states that regardless of who is manipulating the controls of an aircraft during an instructional flight, the CFI is always deemed to be the pilot in com- mand.19 The Board even goes so far to state that it makes no difference what level of proficiency a student may have attained, the flight instructor is still the pilot in command. 
 

I agree it’s important for a Cfi to protect themselves with a robust insurance policy. But I maintain that should be the Cfi responsibility, not mine. Especially when my protections are potentially compromised like examples I’ve previously mentioned. 
 

if you’re my friend and a Cfi, and I trust you, no problem. 
 

if you’re some guy hired off the internet to do ifr training, you’re on your own. If you’re going to solicit your services and act as a business you should have the protections in place to protect yourself and not make it my responsibility. 
 

every other business works this way. Your Cfi business shouldn’t be an exception. 

Edited October 23, 2019 by chriscalandro

[carusoam]

Chris,

Are you sure when I’m getting a BFR, my CFI is PIC?

When training for the IR, I thought I remembered being PIC in my plane... while the CFII was responsible for the IR clearance...

Using a CFII, for instrument proficiency flights, would they automatically be PIC?

I probably need to review the rules of who is PIC, when...

Something seems a bit fuzzy with the logic being used...

Best regards,

-a-

[RobertGary1]

5 hours ago, carusoam said:

Chris,

Are you sure when I’m getting a BFR, my CFI is PIC?

When training for the IR, I thought I remembered being PIC in my plane... while the CFII was responsible for the IR clearance...

Using a CFII, for instrument proficiency flights, would they automatically be PIC?

I probably need to review the rules of who is PIC, when...

Something seems a bit fuzzy with the logic being used...

Best regards,

-a-

If both pilots are rated for the flight either can be pic. We’re supposed to discuss that with the student before hand. However if metal is bent the cfi will always be held accountable for “lack of proper supervision” regardless of who is pic. 
it also means that when flying with friends you really need to clearly establish if the flight is training or just buddies flying. You don’t want to fix it up by providing ad hoc instruction. It may also irritate people. You need to know when to turn it off. 
 

-Robert  

[Vance Harral]

Having a clear discussion about who is acting PIC when an owner pilot flies with a CFI is a great idea.  But the majority of the value in that conversation regards who will direct operation of the aircraft in the event of an emergency.  It has little - and in some cases zero - value in the context of everything else being discussed here.

As mentioned above, the FAA/NTSB start with a basic presumption that a CFI is the acting PIC, when it comes to certificate action.  My understanding of the case law is that this is only a starting presumption, and may not necessarily lead to the CFI being disciplined.  So if you're looking to protect your certificate, there "might" be some value in relating a PIC agreement to the board.  But the mere fact an agreement was made is not particularly protective.  In many cases, both heads are actually on the table, and both parties might be disciplined.

More importantly, liability lawsuits - including those initiated by an insurance company in the course of subrogation - are not subject to FAA/NTSB jurisdiction.  The judge/jury is not obligated to use the FARs or NTSB case law as precedent, and almost certainly won't care about a verbal PIC agreement, especially if the details of that verbal agreement are disputed (as is often becomes the case when an incident occurs).  A party attempting to deny liability might have a stronger case if there was a PIC agreement in writing, but who knows?  I can easily envision a jury being convinced that The Old Gray Eagle CFI should have protected The Hapless Owner regardless of what was said or written.  The point is, all this talk of agreements and rulings about who is the acting PIC, based on FARs and NTSB case law, really has very little bearing on insurance claims and liability law.

Where the rubber hits the road is, flight training in piston airplanes simply doesn't pay a living wage.  Never has, likely never will.  Therefore, everyone who does it is either a young and low-net-worth individual instructing as a temporary gig on their way to something better, or a retired/hobbyist CFI who doesn't need the money.  The latter can lay out whatever terms they want, and most of them now insist on named insured/waiver of subrogation, for all the reasons mentioned in this thread.  Owners unwilling to accept those terms are welcome to stand on principle, but it restricts their pool of instructors to the young/low-net-worth set.  Some of those folks are excellent instructors and I don't mean to imply otherwise.  But on average, they are less experienced.  They are also more likely to mis-understand the named pilot/open pilot clause on someone else's insurance, and mistakenly think they are covered, when in reality they are subject to subrogation by the owner's insurance company.  Those of you in this thread who now understand the difference will have to make your own moral decisions about whether their ignorance is in any way your responsibility.

[kortopates]

^^ Great reality check @Vance Harral !!

[chriscalandro]

When I said it before in a different thread everyone said i was wrong and it turned into the big thread. Much like when people tell me I'm wrong for not wanting to add a CFI to my insurance. 

[Vance Harral]

19 hours ago, jetdriven said:

where can you buy malpractice insurance for a CFI?

It's part of some - but not all - CFI policies.  It sometimes goes by different names, e.g. "negligent instruction" or "previous instruction liability".  SAFE offers it as a benefit, see https://www.safepilots.org/programs/cfi-liability-insurance.  The "standard" Avemco CFI policy does not include malpractice coverage, but if you purchase Avemco CFI coverage through NAFI it does.

The best one-stop treatise I've seen on liability  management for CFIs is at https://www.aviationattorney.com/publications/primer-aircraft-flight-instructor-liability

Edited October 23, 2019 by Vance Harral

[Parker_Woodruff]

Some Answers coming when I get a chance...on the road at NBAA

[chriscalandro]

3 minutes ago, Parker_Woodruff said:

Some Answers coming when I get a chance...on the road at NBAA

Thank you sir!

[Parker_Woodruff]

On 10/21/2019 at 9:01 PM, MikeOH said:

Just got my renewal offer: up over 20% ($1300 up from $1050 last two years)

Global through Falcon.  I asked Falcon for an explanation but, so far, not even the courtesy of a response!

I can give you some reasons and probably just as good or better of a deal  just PM me and we can go through it. 

[donkaye, MCFI]

2 hours ago, chriscalandro said:

When I said it before in a different thread everyone said i was wrong and it turned into the big thread. Much like when people tell me I'm wrong for not wanting to add a CFI to my insurance. 

No problem.  You're just likely to not get premier instruction.  Any instructor worth his weight who has accumulated any wealth, understands the risk of having no insurance or being underinsured and not have a waiver of subrogation, probably the most important thing I look for before deciding to take on a student, especially after one recent horrible accident we are all aware of here on Mooneyspace..

[Parker_Woodruff]

On 10/22/2019 at 10:19 AM, chriscalandro said:

So every time you do training you ask to be added to the policy but you still have all this coverage?  Plus there are CFI specific policies?

Also, I've had good luck with avemco. My rates decreased this year, and I've never had a problem with adding anyone or my choice for transition training. 

I have never heard of a pilot adding a CFI to their policy instead of the CFI just being under his or her CFI policy. Not something I'd ever do. 

Avemco will have a "Per Person" limitation on the liability coverage as opposed to "per passenger".  Just something to note.

Like Mike, I also carry a non-owned CFI policy (also covers me when flying for personal use in a friend's airplane).  I normally don't go through the extra steps of requesting additional insured and waiver of subrogation for aircraft worth less than $250,000 or so - I guess that's a risk I'm personally willing to take.

The coverage dilution is a risk if there is a total judgement greater than the policy limit.  If Mike is Additional Insured (AI) on John Doe's insurance policy, the $1MM liability limit is the max that will be paid.  If a $1.2MM judgment is reached where each party is responsible for $600K in a loss, then the Policyholder and the AI will each be out an additional $100K.  So yes, the coverage for the policyholder would be diluted in that case.

Chris, The one case where it is almost always necessary to add the CFI as a Named Pilot is if the CFI does not meet the open pilot requirements for flying the aircraft - this helps your policy maintain coverage integrity when you are flying the aircraft if you do not meet the policy requirements at that present time.  Some policies will allow any CFI regardless of experience, but not all. 

One thing to note...many times by adding a named pilot, you're effectively adding that pilot as an Insured and sometimes giving them a waiver of subrogation.  Go read the "Who is Covered" section of your aircraft policy to see what I mean.  Sometimes "Who is covered" as an insured is even "anyone using the aircraft with your permission".

 

On 10/22/2019 at 8:20 AM, mike_elliott said:

In fact, my policy asks I forward certs to them also now (new this year) 

This practice is definitely helping keep your rates down in the face of a hardening insurance market.

 

[Parker_Woodruff]

On 10/22/2019 at 11:38 AM, kortopates said:

I think you misunderstand, your policy only covers "you" as long as your CFI has appropriate experience in make and model - under the open pilot. But without being a named insured the CFI is not protected from your insurance company should they chose to subrogate against your CFI.  

Not necessarily.  But it is a good idea for the CFI to request Add'l Insured and Waiver of Subrogation since he/she probably won't get to read the policy wording.  See above explanation regarding "who is covered"

[Parker_Woodruff]

On 10/22/2019 at 11:01 AM, jetdriven said:

Those Cfi policies are worthless.  They pay if you are sitting in the plane with the student. However, what about a student on a solo? Or a solo XC? Or when he later has an incident as a licensed pilot?  There is no coverage for that. 
The worst nightmare is when a solo student has an accident and the FAA hauls you up.  Or you sign off a BFR then the guy crashes a week later. 

Byron: Most CFI Non-owned aircraft policies include coverage for Negligent Instruction for these exact reasons.  It's professional liability, too.

I carry $250,000 Non-owned Hull and $1MM Each Occurrence liability limited to $250,000 each passenger bodily injury.  The Non-owned Liability is extended by endorsement to cover the professional liability when I'm in progress with the student (he's out on a solo) or long after they've left my instruction.

Like Mike, I also got a pretty substantial premium increase this year as the limits I carry are outside the norm.  But the coverage is very well rounded for what I do.

[Parker_Woodruff]

22 hours ago, ArtVandelay said:

I don’t understand why CFIs don’t form LLCs to limit their liability? While it doesn’t protect you if you do something wrong (ie you were flying the plane), it would protect you if the student is flying.

I have an LLC strictly for my professional flight instruction.  It's more for accounting convenience.  I don't trust it to provide me any extra protection when I am personally at the flight controls.  I have good insurance to provide my legal defense.