"Ground-looped again?!" the
adjuster asked the agent phoning in the third loss
for Joe Klutz. Joe owns a Piper Super Cub.
Apparently he should have invested in some cross
wind landing lessons. Yes, ground loop damage is
covered if Joe purchased the appropriate hull
(physical damage) insurance for his aircraft. But,
of course, insurance companies must do their
normal investigation to determine that the terms
and conditions of the insurance contract were
lived up to before they can pay the claim.
During the adjuster's
preliminary discussion with Mr. Klutz, it was
developed he had carried a passenger on the flight
in question--Mr. Mike Moment. The adjuster, being
a thorough person by nature, obtained Mr. Moment's
telephone number and gave him a call.
During the conversation with
Mr. Moment, who was still a little dizzy from his
ride in the back seat of the Cub, the adjuster
learned he had paid Mr. Klutz for the flight. That
is, he was charged a fee for the gas & oil
used in the flight to share Klutz' ground-loop.
A quick research of the
insurance contract showed the insured, Mr. Klutz,
breached the "approved purpose" clause which said,
"Any use of the aircraft is approved except a use
for which a charge is made." No coverage. Claim
Many aircraft owners take
friends for a flight and ask them to share the
expenses. In so doing they could be jeopardizing
their insurance protection. Of course, there are
exceptions to this rule.
More and more insurance
carriers have modified the approved purpose
section of their Pleasure and Business policy to
permit expense reimbursement excluding any charge
for a profit. Occasionally they make a small
premium charge for this broadening of the policy.
One should read their policy to see if some sort
of expense reimbursement is approved and determine
just what charges can be made that will not void
the policy in question. Not all expense
reimbursement wordings are the same. They may
differ from carrier to carrier.
Recently, I took on a new
client who knew just what he wanted. He read
nearly every clause in the policy to ensure it met
his needs. The client had indicated he did take
friends with him from time to time and passed
along some of the expenses of operating the plane.
His charge was broken down into the following
categories: Fuel and Oil for the flight, Hangar
Rent, Annual Insurance Premium, Depreciation, and
Engine Maintenance. Sounds reasonable, doesn't it?
Unfortunately, he went far beyond what most
insurers consider expense reimbursement.
Most policies permitting
expense reimbursement limit the charge to the
following areas: (1) Fuel and Oil for the flight
in question. (2) Hangar & Tie Down costs
away from the aircraft's home airport. (3)
Insurance obtained for that specific
flight. I. E. Mexican Trip coverage. (4)
Landing Fees, Airport Taxes, and similar
assessments for that particular flight. By this
wording, my client would be charging for items
which would void his coverage.
In researching this area it
was learned not all insurance companies who permit
expense reimbursement have it so well defined. The
underwriters and adjusters draw a jagged and
inconsistent line between the gray area of
operating expenses and exceeding operating
In speaking with an FAA
attorney for the Western Region, it was developed
the FAA has specific regulations for only the
commercial (Part 135) operators and those
non-commercial operators of large or turbine
powered multi-engine airplanes (Part 91.501 sub
part d). This provides even more confusion for the
private pilot in his Super Cub as he is not in
either category. The attorney's opinion was the
operator of a light aircraft was moving into the
profit making area if they were charging for such
items as their full time hangar or tiedown space,
the cost of maintenance, depreciation, or annual
This applies even if the plane
is used on business.
To avoid this 'gray area
gotcha', it is recommended you confirm your policy
permits expense reimburse, you understand what you
can charge for and not void your coverage, and
keep all charges within policy guidelines. This
should help to prevent hearing those terrible
words, "NO COVERAGE. CLAIM DENIED."