Ace has decided he may need NON OWNED AIRCRAFT LIABILITY INSURANCE. He rents aircraft from several Fixed Base Operators (FBO's) and he doesn't want the bother of keeping track of whether or not these FBO's provide RENTER PILOT LIABILITY INSURANCE for their renter pilots.

The agent he contacts learns from Ace that he is a private pilot with an aircraft single engine land rating. Ace has 350 logged hours which were all in single engine, fixed geared land airplanes with usually no more than four seats in them. Ace tells his agent he will only be flying Cessna 150's and 172's. The agent sells him a policy which meets his requirements and does not limit him by aircraft make and model. Ace bought $500,000 worth of BODILY INJURY, PROPERTY DAMAGE and PASSENGER LIABILITY COVERAGE which is in force when he is flying airplanes he does not own that are single engine land, fixed geared with no more than four seats, and a maximum of 200 horse power. This means he can fly not only Cessnas, but also some models of Pipers and Beeches to name a few and have coverage.

Now let's see if Ace understands the policy he purchased. He rents a Piper Cherokee 235 from Taped Together Flying Service on a beautifully IFR day. Ace neglects to tell his companion that he doesn't have his instrument rating yet. At 500 feet AGL, in the soup, and making a left turn Ace became disoriented and crashed from the classic departure stall. Ace was an ass, but he survived. Only the passenger and one person on the ground died.

In the analysis of this accident many of us would say the insurance company should not have to pay because Ace broke an FAA regulation. This would be an essential point for anyone to ask about their aviation insurance policy. Most of the better companies have deleted this kind of exclusion from the Pleasure & Business contracts due to the realization (and some persuasion by the courts) that in nearly all losses at least one FAR is broken. Ace is saved from that stand point.

The way Ace's policy is written, there would be coverage for the damage he caused on the ground, the people injured outside the airplane and because he bought PASSENGER LIABILITY, he would have some protection from the law suit brought by his friend's widow. But what about Ace? He was hurt too. Aviation Liability policies are intended to help offset the financial devastation which can be brought about by one's legal responsibility to others. There would be no money for Ace's injuries as he did not buy MEDICAL COVERAGE, which is intended to pay minor medical bills for all occupants of the airplane regardless of negligence.

In fact, there would be no coverage or money for Ace's accident at all! His policy was only in force while he was operating aircraft of 200 horse power or less per the requirements indicated in paragraph number two. Ace broke the underwriting guidelines by flying an airplane with 236 horse power. Had he adhered to the policy guidelines or informed his agent that he now wished coverage for more sophisticated planes, Ace would have had $500,000 available to pay the damages caused by his negligence. The moral here is know thy policy.

Now we have Craig, the proud owner of a 1982 Beech Bonanza. Just prior to closing the deal on his airplane Craig wisely purchased HULL and LIABILITY COVERAGE from his local aviation insurance specialist. He paid only $120,000 for a plane which Blue Booked for $160,000 at that time. The run out engine and lack of radio gear must account for the difference. It must have been the new paint job that caught his eye!

Craig holds a commercial license with an instrument rating. He has 750 hours of which 150 were in retractable geared airplanes and about 25 hours in Beech Bonanzas. Craig's qualifications are precisely what many insurance companies look for in providing coverage for retractable geared airplanes. His agent has little difficulty in finding him excellent coverage inexpensively with the promise to the insurance company that the hull coverage will be increased when the plane comes out of maintenance.

Six weeks later the airplane rolls out of the shop with new radios, a new engine, and even a polished chrome spinner! While taxiing to the tie down area, there was a fire caused by an electrical short. Craig gets out but his airplane is totaled.

"Well, who cares? I've got insurance." Yes, Craig does have insurance. But does he have enough? Craig forgot to call his agent to have the value of the airplane increased. Instead of collecting a check for $160,000 less the in motion deductible of $250, he will only be reimbursed $120,000 less the $250. Craig is not happy with his agent, his insurance company or himself because he is out of $40,000.

Pilots, being of the human persuasion have the opinion, "It can't happen to me, or if it does, I'll be dead and won't give a damn." Unfortunately, it does happen to us. It is possible to sustain or cause a substantial loss and be left around to suffer for it. There are some of us who do believe this and purchase some sort of an insurance policy.

It is important to know the limitations of that policy and to make it work for you should a loss occur. Don't spend your hard earned dollars for nothing. Live within the conditions of the policy and have it amended when those conditions no longer meet your needs. Make that policy worth the paper it's written on.

Soaring Magazine 2-93
(Updated 9/30/03)