Aviation Insurance Market Update

[Parker_Woodruff]

So I'll write a summary of what I do as a CFI:

I carry a non-owned aircraft policy.  It's in the name of Airspeed LLC, Airspeed Insurance Agency LLC, and Parker Woodruff.  Why?

I might be flying as a CFI, I might be flying as an insurance agent.  And I might be flying in my friend @DonMuncy's plane just for fun, not under the operations of Airspeed LLC or the insurance agency.

It lets me fly any aircraft up to 7 seats, 12,500 pounds, SEL or MEL.  It covers me for aircraft physical damage up to $250,000 and covers my flight and professional liability to $1MM Each Occurrence limited to $250,000 Each passenger bodily injury.  It also has medical payments at $10,000 which would include myself if I needed it.

If I fly an aircraft worth more than $250,000,, I specifically request a Waiver of Subrogation.  I do this realizing that most aircraft insurance policies will not allow for subrogation on me as the CFI.  Here is why they won't:

1.  If I am a named pilot, I am often included as an Insured in the "Who is covered" section of the policy.
2. Many policies extend a waiver of subrogation to all named pilots.
3. It is nearly impossible for an insurance company to sue someone "who is covered"
4. I say all of the above knowing who insures the people I fly with and therefore I know the specifics of the policy language already.  For any other CFI out there, I highly recommend requesting the aircraft owner you're flying with add you as additional insured with waiver of subrogation.

[Parker_Woodruff]

On 10/22/2019 at 8:44 AM, MIm20c said:

After over a decade with Falcon I’m changing over two policies to the OP this year.  He has already given us a level of customer service unheard of in the industry.

I'm sorry the answer to your question wasn't what be both hoped to hear, but I'm glad I could help.  Looking forward to working with you.

[chriscalandro]

Thank you Parker. The way I’m reading this is that we’re all a little right and we’re all a little wrong. 
 

but this clears up a lot. Thanks!

[Parker_Woodruff]

1 minute ago, chriscalandro said:

Thank you Parker. The way I’m reading this is that we’re all a little right and we’re all a little wrong. 
 

but this clears up a lot. Thanks!

Glad I could help.  It mostly comes down to how much business risk the CFI wants to take on and how much liability risk the aircraft owner is comfortable with.

[chriscalandro]

I’ll add though,

it doesn’t change my mind about the hired gun CFI. From what I’m reading here it still sounds like adding the instructor to MY insurance makes MY policy responsible for a mistake made by the instructor. And that I don’t agree with. 
 

I believe a hired gun working as a business should have the appropriate coverages. If you want to include that in the training rate that’s fine  using the demonstration example again, if the instructor turns my airplane into a ball of metal while demonstrating something to me, you can bet I and my insurance will go after the damages. And I don’t think that’s wrong. I didn’t stall spin my airplane into the ground, you did. It’s the difference between sharing the liability and not having the liability. 
 

if you don’t want to comment on that, I get it. But I’d like to hear your opinion. 

Edited October 23, 2019 by chriscalandro

[Parker_Woodruff]

2 minutes ago, chriscalandro said:

I’ll add though,

it doesn’t change my mind about the hired gun CFI. From what I’m reading here it still sounds like adding the instructor to MY insurance makes MY policy responsible for a mistake made by the instructor. And that I don’t agree with. 
 

I believe a hired gun working as a business should have the appropriate coverages. If you want to include that in the training rate that’s fine  using the demonstration example again, if the instructor turns my airplane into a ball of metal while demonstrating something to me, you can bet I and my insurance will go after the damages. And I don’t think that’s wrong. It’s the difference between sharing the liability and not having the liability. 
 

if you don’t want to comment on that, I get it. But I’d like to hear your opinion. 

The loss you describe is unlikely, but it is not unreasonable to want the person providing training to have their own insurance coverage.  You will just have a smaller pool of CFIs to provide services to you.

You'll also have to note your policy will pay out first and they'll subrogate (if they can) on the CFI's policy.  So you'll have a bad loss ratio for awhile.  This is because the CFI's policy is only going to pay out if legally responsible or if the insurance company wants to settle, knowing their client is responsible for the occurrence.

I would accept this kind of legal and financial risk as a CFI as long as I knew my services were keeping within the terms of your insurance policy.  But it is also entirely reasonable for the CFIs here to go about their risk-averse strategies.

[chriscalandro]

I agree. I also think the scenario is very different between then scenarios of someone you know and trust and someone on the internet you don’t know who offered to do the training. 
 

anyway, thanks again!

[mike_elliott]

 

 

Quote

 

THanks Parker, As you suggest, I require to be added as named insured with a WOS or the "whos covered" section forwarded, in addition to having a non owned with limits usually for more hull and liability than the client. In fact, it is the highest limit policy I can get for coverages in a New, 800,000 single engine piston. The fact that I now am asked to supply this to the company (Allianz) is new this year along with the increase from 3200/year. I dont mind at all, as it has been a long standing policy for Mooney Pros, Inc. and my personal instruction.

Again, this training requirement puts all the lawyers on the same side of the table, as the clients' insurance is always primary with or without it, as you state. If a client is worried that I will do something that could exceed the limits of what he is covered for, then we simply wont fly together. He should consider his limits being a bit low if this is troubling (most people really are underinsured here anyway, IMO), They can get someone else with a much higher risk profile than I to learn from, that is his call to make and my decision that it wouldn't be a good client/instructor fit anyway, as is this case.

I still dont understand how the policy is diluted, however, if added as named insured additional pilot.

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.

If a policy holder did not have the CFI on the policy, he would be out $200K in this scenario vs. the 100K. in your scenario, the only one that can even be construed as dilution. The only way the policy holder is protected is if he isn't named in the suit (don't think that has ever happened, but I haven't slept in a HI lately either). Granted, the insurance company would GO AFTER the CFI to collect their "hedged" bet for 1 Million without this waiver, but the policy holder is still out 200K vs. 100K

The only moral time this scenario makes sense is if a CFI deliberately and maliciously causes harm. Any mechanical, most control and judgement errors would be on the owner/student..

 

Again thanks, and I look forward to flying with you in Joes plane!

 

 

[Bravoman]

 Just got the renewal quotation for my Mooney. My most competitive quote by far was from USAIG,  my previous carrier for several years now. It went up about 70 bucks.  I guess I can’t complain too much. My broker is Falcon. Some of the other carriers, such as Star and Old Republic, were hundreds of dollars more.

[Parker_Woodruff]

6 hours ago, Bravoman said:

 Just got the renewal quotation for my Mooney. My most competitive quote by far was from USAIG,  my previous carrier for several years now. It went up about 70 bucks.  I guess I can’t complain too much. My broker is Falcon. Some of the other carriers, such as Star and Old Republic, were hundreds of dollars more.

USAIG is a good company with good claims service.  So are Old Republic (I used to work for them as an underwriter) and Starr.

[RobertGary1]

15 hours ago, Parker_Woodruff said:

USAIG is a good company with good claims service.  So are Old Republic (I used to work for them as an underwriter) and Starr.

It’s funny how it works. Over the decades I’ve had usaig for a number of years but at my recent renewal they were double what Global was. I figure it’s part of the ebb and flow of which parts of the market each company wants that year and possible how they want to balance their portfolio between higher risks and lower risks. 
 

-Robert

[jwilcoxon78]

On ‎10‎/‎23‎/‎2019 at 4:31 PM, Parker_Woodruff said:

1.  If I am a named pilot, I am often included as an Insured in the "Who is covered" section of the policy.
2. Many policies extend a waiver of subrogation to all named pilots.
3. It is nearly impossible for an insurance company to sue someone "who is covered"
4. I say all of the above knowing who insures the people I fly with and therefore I know the specifics of the policy language already.  For any other CFI out there, I highly recommend requesting the aircraft owner you're flying with add you as additional insured with waiver of subrogation.

Parker,  your first point is not quite the case.  While a  named pilot is considered an "insured" under the policy, they do not have the same rights as a Named Insured.  Being considered an insured under the policy grants them rights of protection for liability under the policy but not necessarily protection against subrogation for damage to the Named Insured's aircraft that they might be liable for.  There is typically a "No Benefit to Bailee" provision in the policy. 

This is why your point two is sometimes contained in a policy. 

My thoughts, and as you've highlighted, always have a non owned policy to cover the damage to any aircraft you might be flying and/or make sure you have a waiver of subrogation in the borrowed aircraft's policy. 

[Bob_Belville]

3 hours ago, jwilcoxon78 said:

My thoughts, and as you've highlighted, always have a non owned policy to cover the damage to any aircraft you might be flying and/or make sure you have a waiver of subrogation in the borrowed aircraft's policy. 

I suppose this would be a separate policy... or can there be provision in the owned aircraft policy? 

tag @Parker_Woodruff

[jwilcoxon78]

43 minutes ago, Bob_Belville said:

I suppose this would be a separate policy... or can there be provision in the owned aircraft policy? 

tag @Parker_Woodruff

The policy you have for your Mooney could have, or have added, a non-owned provision. 

[RobertGary1]

1 hour ago, jwilcoxon78 said:

The policy you have for your Mooney could have, or have added, a non-owned provision. 

Yep. Mine calls it substitute aircraft. But it still must be the same purpose. So since I don’t have instructional insurance on my Mooney I have no coverage on that policy when I’m instructing in other planes either

 

-Robert 

[Parker_Woodruff]

2 hours ago, Bob_Belville said:

I suppose this would be a separate policy... or can there be provision in the owned aircraft policy? 

tag @Parker_Woodruff

 

1 hour ago, jwilcoxon78 said:

The policy you have for your Mooney could have, or have added, a non-owned provision. 

Yes, but the coverage will typically only cover non-owned flying for the purpose of use stated in the policy.  For personal pleasure and business flying, this will not cover CFI work.

[Bob_Belville]

27 minutes ago, Parker_Woodruff said:

 

Yes, but the coverage will typically only cover non-owned flying for the purpose of use stated in the policy.  For personal pleasure and business flying, this will not cover CFI work.

Thanks, I am neither a CFI or commercial so when I fly another plane it is pleasure or business. I assume that would include moving a friend's plane to/from a maintenance shop or to ferry someones plane, w/o compensation of course. 

[Parker_Woodruff]

Just now, Bob_Belville said:

Thanks, I am neither a CFI or commercial so when I fly another plane it is pleasure or business. I assume that would include moving a friend's plane to/from a maintenance shop or to ferry someones plane, w/o compensation of course. 

Yes, just be sure to pay attention to any policy limitations: horsepower, max seats, landing gear configuration, max value covered, etc.

[jwilcoxon78]

1 hour ago, RobertGary1 said:

Yep. Mine calls it substitute aircraft. But it still must be the same purpose. So since I don’t have instructional insurance on my Mooney I have no coverage on that policy when I’m instructing in other planes either

 

-Robert 

Just make sure you're referring to a Non-Owned coverage as opposed to substitute aircraft coverage.  Substitute aircraft coverage is typically used as language to provide coverage to assist the Insured with the extra expense of renting a substitute aircraft while your aircraft is down for covered repairs.  This would not mean that you are covered for any physical damage you may cause to any aircraft rented during this time. 

[RobertGary1]

2 hours ago, jwilcoxon78 said:

Just make sure you're referring to a Non-Owned coverage as opposed to substitute aircraft coverage.  Substitute aircraft coverage is typically used as language to provide coverage to assist the Insured with the extra expense of renting a substitute aircraft while your aircraft is down for covered repairs.  This would not mean that you are covered for any physical damage you may cause to any aircraft rented during this time. 

That's not exactly the description my agent has used. He says its more liberal than that.

-Robert

[DualRatedFlyer]

On 10/23/2019 at 3:57 PM, chriscalandro said:

I agree. I also think the scenario is very different between then scenarios of someone you know and trust and someone on the internet you don’t know who offered to do the training. 
 

anyway, thanks again!

Have been interested in the questions you have posted and the answers Parker gave. 

 

Out of personal curiosity, and as a CFI, how many instructors have you found that fit your requirement set of not being on your insurance?  Of those you have found, how much higher have their rates been usually?  Are you verifing they have these extra coverages, or just chocking it up to their problem to ensure they are covered?

I keep thinking about the crews I had come quote trees to cut down in my yard. There a ton of tree guys out there and a lot of them are doing it with no insurance. If I chock it up as their problem not mine, then I am only shooting myself in the foot when the defecation hits the oscillation, regardless if they are a close friend or random Craigslist contractor. 

[chriscalandro]

Would you add those tree people o your home insurance?

I've never had any issue with any instructor. My C is my first airplane and I've flown with 2 instructors in it. One specifically told me he was insured and the other didn't say anything. I'm about to fly with a 3rd now that I've moved and want to start my instrument rating, he's insured and does a lot of instructing and flying of airplanes around the field for a few different operations. 

 

All of them are around 50$ an hour. None of them know each other so I figure there's no collusion.

I've never even had anybody ask, which I why I originally said I had never heard of this practice being to norm before. 

Edited October 26, 2019 by chriscalandro

[RogueOne]

2 hours ago, DualRatedFlyer said:

Have been interested in the questions you have posted and the answers Parker gave. 

 

Out of personal curiosity, and as a CFI, how many instructors have you found that fit your requirement set of not being on your insurance?  Of those you have found, how much higher have their rates been usually?  Are you verifing they have these extra coverages, or just chocking it up to their problem to ensure they are covered?

I keep thinking about the crews I had come quote trees to cut down in my yard. There a ton of tree guys out there and a lot of them are doing it with no insurance. If I chock it up as their problem not mine, then I am only shooting myself in the foot when the defecation hits the oscillation, regardless if they are a close friend or random Craigslist contractor. 

That’s a BINGO.

[Parker_Woodruff]

Carrying commercial non-owned coverage solidified my price increase from $40/hour to $50/hour in 2018.  The demand for my CFI services dictated an increase to $60/hour for 2019.

I'm flying enough that I've started turning down flying based on minimum aircraft standards.  My first question: Does your aircraft have shoulder restraints?

[DualRatedFlyer]

17 minutes ago, Parker_Woodruff said:

Carrying commercial non-owned coverage solidified my price increase from $40/hour to $50/hour in 2018.  The demand for my CFI services dictated an increase to $60/hour for 2019.

I'm flying enough that I've started turning down flying based on minimum aircraft standards.  My first question: Does your aircraft have shoulder restraints?

Wait --- isn't it the instructors job to bring his own shoulder restrains??  I shouldn't have to pay for your equipment.  /S