Does wealth inhibit ones ability to instruct?

[NJMac]

A friend of mine was trying to steer me away from instructing, just as something fun to do.  His argument was that your signature in a log book exposes you to unnecessary liability, especially if you have any amount of assets to your name.  His business has done extremely well and has created wealth.  Mine too, which was why he was giving me this council.  He was saying a deceased family member's lawyer would T up on a high net worth individual for signing off in their logbook at some point in the past.  

 

Any validity to this argument?  

 

[EricJ]

Just now, NJMac said:

A friend of mine was trying to steer me away from instructing, just as something fun to do.  His argument was that your signature in a log book exposes you to unnecessary liability, especially if you have any amount of assets to your name.  His business has done extremely well and has created wealth.  Mine too, which was why he was giving me this council.  He was saying a deceased family member's lawyer would T up on a high net worth individual for signing off in their logbook at some point in the past.  

 

Any validity to this argument?  

 

I think so, and it's why I'm hesitant to do much A&P work outside my own needs and a few people that I know.   The insurance and registrations required by most of the fields around here would wind up running about $4k/year, and I don't want to commit to having to fix enough airplanes to pay for that.   If you're doing it for a living then the $4k just becomes a necessary expense and you go on with it, but otherwise the financial picture doesn't make much sense given the cost of insuring vs the exposure without.    The main thing I have going for me is that I'm essentially retired and too old to be employable as an engineer any more, so I hope that circumstance helps protect my retirement savings, aka assets, from too much attack, but I wouldn't want to count on it too much.

I don't know what CFI insurance is like these days, maybe it's a little easier to make it work.   

But, yeah, it's always a consideration if you have any appreciable assets.

 

[jetdriven]

A&P insurance is more like 5500$, and if you want more than 1M/ 100k per person, its over twice that

[Parker_Woodruff]

You can get professional liability coverage as part of a non-owned CFI insurance policy. I’m going through this right now where I’m having to cut my coverage limit for it to make business sense to keep instructing (increased rates and less schedule availability are colliding). As far as physical damage to the plane, In some cases I’ll have to ask for Waiver of subrogation which I’ve almost never done  

What it means is I’m being selective who I fly with. If not maintained at Maxwell or SWTA, I don’t give instruction. And I fly in @smccray’s Bonanza but he has a good maintenance program.

[carusoam]

As a big net worth individual...

1) You may be a target for any lawyer looking for high net worth individuals...

2) You get the same feeling when you drive a car... or have people enter your business...

3) You get the same feeling when you are a low net worth individual as well...  because when you have very little, and a lawyer is trying to take all you have... it is still all you have...

4) Keep your insurance current... know what is covered... what isn’t...

5) it probably gets really uncomfortable when the accident includes the CFI... but the target is really a big airplane parts manufacturer...

6) We have a few CFIIs around here that may have some valuable input...

And... Thanks to Parker for explaining some of the details.... all of the time... 

PP thoughts only, not an insurance guy...

Best regards,

-a-

[ArtVandelay]

1. I would not advertise my wealth. Drive a pickup, not a Ferrari.
2. I would religiously follow FAA recommendations for what to cover, standards, etc. Take no short cuts.
3. Some states provide protection (retirement accounts, home, etc). So structure your wealth accordingly.
4. The instrument manufacturer or engine manufacturer or.... all have much more money than you most likely.
Somebody correct me, but have never heard of a CFI or DPE being included in a lawsuit. But I would not blame you for avoiding the problem by not teaching.

[Greg Ellis]

Lets say you are an A&P but not independent and you work for a larger maintenance shop.  Do you still have to carry your own insurance or are you usually covered by a larger policy owned by the shop?  I know this is probably different for each shop.

Same question about being a CFI.  If you are not independent and work for a larger flight school, are you covered by their policy?

I ask these questions because I have considered doing both of these things when I retire from my actual day job just to keep involved in aviation and to keep from getting bored (like my Dad is now).  But if the liability is so high that I would have to carry a separate insurance policy on my own...well I may just enjoy my retirement.  

[steingar]

Nice to know there are advantages to my ongoing poverty.

[Hank]

15 minutes ago, steingar said:

Nice to know there are advantages to my ongoing poverty.

Our biggest advantage is that the poverty is induced by owning a Mooney!  

[Parker_Woodruff]

2 hours ago, Greg Ellis said:

Lets say you are an A&P but not independent and you work for a larger maintenance shop.  Do you still have to carry your own insurance or are you usually covered by a larger policy owned by the shop?  I know this is probably different for each shop.

 

If you are a W-2 employee, you're covered.  If you're an independent contractor, there is often separate liability exposure.

[Jerry 5TJ]

1 hour ago, Greg Ellis said:

Same question about being a CFI.  If you are not independent and work for a larger flight school, are you covered by their policy?

Yes. And no.  Yes you have coverage under their policy.  But in the event of a claim the insurer may come back to you to recover some of the money. 

One reason I have my own CFI insurance policy is to protect me from claims by the flight school or the school’s insurer.  Loss of hull value or loss of use claims are possible.

CFI liability insurance for single engine piston is not very expensive for modest coverage.   It’s so cheap I guess (repeat, I guess) there must not be many successful claims against CFI for educational malpractice.  

The main worry that I hear stated around the airport is of a suit arising out of an old logbook signature, not while the instruction is taking place.  The former seems to be far less likely to be upheld.  

For more erudite opinion, have a look at this article from The Journal of Air Law and Commerce.  
 

 

[DXB]

14 hours ago, NJMac said:

A friend of mine was trying to steer me away from instructing, just as something fun to do.  His argument was that your signature in a log book exposes you to unnecessary liability, especially if you have any amount of assets to your name.  His business has done extremely well and has created wealth.  Mine too, which was why he was giving me this council.  He was saying a deceased family member's lawyer would T up on a high net worth individual for signing off in their logbook at some point in the past.  

 

Any validity to this argument?  

 

A high net worth makes you a potential target in many spheres of your life, whether it's driving, dating, or flying.  I'm not sure working as a CFI is all that special in that regard, and I'm not sure that it should be an overarching consideration in offering a valuable service from which you derive personal satisfaction - it's hard to put a price on that!

[midlifeflyer]

There is liability risk to everything. The question is, how much risk is acceptable to you. This is an old article but it's still pretty valid. 

Tiger by the Tail.

There are also state-to-state differences. When you are in the airplane, you will be liable. When you are not, some states have rejected the concept of instructor malpractice.

[donkaye]

So, success in life does inhibit flight instructing to some extent.  I will not teach the Private because I am not in the plane at all times.  Up until a year ago, I always was named an additional insured with waiver of subrogation.  With tightening by the insurance companies, in spite of my experience, yearly Basic and Advanced Wings Program participation, being a Gold Seal CFI, a 10 time Master with both NAFI and SAFE (20 Years), due to age I have not been able to get the additional insured and waiver in most cases.  I do have CFI Insurance with SAFE at a reasonable rate (a Group Policy) but there is a hull limit.  I have had to turn down several transition trainings in the more expensive airplanes, in particular Mark Brandemuehl, which still makes me angry and sad at the insurance company.  I just couldn't convince them to put me on his policy even with a prophetic email to them.  I'm told he received very good instruction, so maybe training with me would not have made a difference in his outcome, but...  

I do love instructing.  I've devoted the last 26 years of my life and over 6,300 hours to it, so I will continue to teach (and keep detailed records of what is done on each flight of any training) as long as I am in the airplane and it's cost would be mostly covered by my CFI policy.

[carusoam]

Thanks for sharing the great details Don!

The insurance companies need to keep looking into their artificial age limitations...

We have quite a few aging MSers... forced retirement is a crummy way to stop doing things...

Memories of Mark... 

Best regards,

-a-

[Hank]

Looks like I still have a few years to get a tail wheel rating and start biplane shopping. Closed-canopy biplane shopping . . . . 

And Deborah says no single-place planes allowed.   Farewell, WWI replicas from St. Louis . . . . .

[toto]

If it comes to forced Mooney retirement, I think I'd follow the Richard Bach example.. buy a SeaRey, fly the snot out of it, write a book about it.