Non-Owner Liability Insurance

Whether you rent an aircraft or borrow one from a fried, did you know that, unlike auto coverage, their insurance may not protect you for bodily injury liability or physical damage?  If someone makes a claim against you for BI or PD, non-owned coverage will respond up to the limits you purchased.

Non-owner Aviation Insurance FAQ's

• Introduction
• What is non-owner's liability coverage?
• What is subrogation?
• What about the rental agreement I signed? I thought I only had to pay the deductible?
• What kind of aircraft am I permitted to use if I purchase a non-owner liability policy?
• What limits of bodily injury and property damage liability should I carry?
• What limits of aircraft damage liability should I carry?
• Do I or my immediate family have protection if we're injured?
• Is there a deductible on the aircraft damage liability coverage?
• What effect does pilot experience have on non-owner insurance premiums?
• Who should purchase a non-owner's policy?
• When should I purchase a non-owner's policy?
• Is my insurance still valid if my biennial flight review or medical certificate accidentally lapses during the policy term?
• I want to borrow a friend's aircraft. My friend said it would raise his insurance premium too much to add me as an approved pilot. Am I covered if I purchase a non-owner's policy to fly his aircraft even though I'm not an approved pilot on his insurance policy?
• Will a non-owner's policy protect me if I use a non-owned aircraft for other than my own pleasure and business use?
• If I rent a non-owned aircraft for an incidental business trip, how can I protect my employer?
• What happens if I have to report a claim?
• What is an A.M. Best rating? What rating should I look for in an insurance company?
• How can I recognize the differences in non-owner insurance policies?
• If I have a non-owner's policy and I later decide to purchase my own aircraft, can I cancel my non-owner's policy?
• My FBO told me that I'm covered under his insurance policy when I rent his aircraft. Why do I still need renter's insurance?

Introduction

Many pilots have a misconception that aviation insurance policies, like automobile policies, are “standardized”; that all policies are alike. In addition, many non-owner pilots think they are covered under someone else’s insurance policy when they use a non-owned aircraft. This is far from true, which is why we’ve developed these "frequently asked questions" to help you make an educated decision when purchasing protection for yourself. Your own needs may vary from those of other pilots, and you should take them into account when choosing which coverage and policy to buy. An important factor to consider when selecting an insurance policy is the financial stability of the company that writes your insurance. Request a sample policy prior to making a purchase, and compare it to your current policy if you’re already insured. Do the necessary research to ensure making the best decision.

  Q: What is non-owner’s liability coverage?

A: It is a liability insurance policy to protect you as a non-owner pilot against claims arising from bodily injury or damage you may have caused to others or to their property when using a non-owned aircraft. Your insurance company’s commitment is to defend you if you are sued, and if you are at fault, to pay for the damages according to the terms of the policy. This coverage is not first party medical or life insurance, but rather, liability coverage for claims made against you by third parties for which the law holds you legally liable. This includes damage to the non-owned aircraft if you purchase aircraft damage liability coverage. Bodily injury and property damage liability coverage and aircraft damage liability coverage are generally the two types of coverage you can purchase under a non-owner policy.

A: It is the right of an insurance company to recover from a legally responsible third party, such as a non-owner pilot, for the payment of a covered claim to its policyholder, such as a flight school. This right to “subrogate” is found in almost every insurance policy and upon payment of a claim entitles the insurance company to all of the policyholder's legal rights of action against responsible third parties for the loss paid. It is common practice for insurers of flight schools to “subrogate” against renter pilots to recover their payment for damage over the deductible.

A: Yes, you probably will be responsible for the deductible. If you purchased aircraft damage liability coverage you will be reimbursed up to $1,000 of the owner’s deductible regardless of fault. However, it is not the only thing you may be responsible for. Some operators hold their renters responsible for loss of income during the time the aircraft is down for repairs and depreciation of the aircraft’s value due to its damage history. In addition, if the operator’s insurance company pays for the damage above your deductible, they can subrogate against you for the cost of the damages they paid.

  Q: What kind of aircraft am I permitted to use if I purchase a non-owner         liability policy?

A: Most, if not all, policies state that the non-owned aircraft must have a standard airworthiness certificate, United States or Canadian registry, fixed wings and may not have a turbine engine. However, the maximum engine horsepower, the aircraft’s seating capacity, and your ability to use multi-engine and pressurized aircraft varies significantly among insurance companies. Be sure you tell your insurance company the type of aircraft you will be using. If you rent or borrow rotorcraft or seaplanes, these aircraft can be endorsed your policy for an additional charge.

   Q: What limits of bodily injury and property damage liability should I          carry?

A: Because different people have different needs, there is no standard recommended amount of liability coverage you should carry. You need to consider factors such as your personal assets, earnings, liability limits you carry on your other insurance policies such as auto or homeowners, whom you carry as passengers, and how much insurance you can afford, among others. You might want to ask your insurance representative about the most popular limits purchased by owners of comparable aircraft, although this will probably not be the principal factor on which you rely. Obviously, buying the most coverage you can reasonably afford is your safest bet.

  Q: What limits of aircraft damage liability should I carry?

A: A guideline in the selection of your aircraft damage liability policy limit would be the value of the non-owned aircraft you usually fly. Buying coverage for the highest value non-owned aircraft you fly is your safest bet.

A: The non-owner liability insurance policy responds only if you are legally liable for an accident, and in many cases, a lawsuit may need to be brought against you for your negligent injury to third parties. Several policies provide a limited amount of liability coverage for family members. In the event you want additional protection for claims and lawsuits by your own family members, you can increase the coverage for an additional charge. On the other hand you may decide to use that extra money to purchase first party medical or life insurance coverage instead.

  Q: Is there a deductible on the aircraft damage liability coverage?

A: This may vary among companies.

  Q: What effect does pilot experience have on non-owner insurance          premiums?

A: Generally none. Premiums are based on the limits of coverage you select.

A: Any pilot who rents or borrows someone else’s aircraft should purchase a non-owner's policy. Even if you are receiving dual flight instruction and not acting as pilot in command in a non-owned aircraft, you may be held responsible for any damages or injuries arising from your negligence. Do not make the common mistake of assuming that you are covered under the owner’s insurance policy, or that not being pilot in command relieves you of liability if you contribute to the cause of an accident, or that you won’t be sued in any event.

A: When you first start your flying lessons.

Q: Is my insurance still valid if my biennial flight review or medical certificate accidentally lapses during the policy term?

A: Not always; it varies from policy to policy. Your insurance coverage will likely remain valid if your flight review & medical were current at the time you purchased or renewed your policy.

A: Yes. You have liability coverage from your non-owned aircraft insurance policy. However, your friend will have no coverage under his insurance, because you were not an approved pilot on that policy. Although your friend wasn’t flying his aircraft at the time of the accident, he may still be sued and will have to pay all his legal costs and any judgment out of his own pocket. Therefore, while you are protected under your policy for your benefit, you should still either be a named pilot in his policy or meet the qualifications of his open pilot clause, if it is provided.

A: Generally, no. Non-owner policies do not provide coverage if you use a non-owned aircraft for anything for which you get money or other benefits, such as carrying passengers or cargo for hire, rental, and aerial photography; or for any special uses like parachute jumping, maintenance test flights, and traffic patrol.

A: For an additional premium, most insurance companies can add your employer to your policy as an additional insured. Your employer cannot be named if it is an aviation business however. In that instance your employer should have its own aviation-related commercial business coverages.

A: Call the toll-free number 24/7 and a claim representative will assist you anywhere in the world.  Your carriers' adjusters are trained professionals and will quickly and professionally handle your claim. After a claim is reported, you can expect to be contacted by an representative who will gather information for review to determine the most appropriate means of resolution. When considering an insurance policy, it is of critical importance to find out which company performs the claims adjusting services; standards vary widely. This is when you will call on your insurer to provide the services provided for in the policy. The best written, best priced policy is of little value if your company lacks in performance on the claims end.

A: The A.M. Best rating reflects an insurance company’s financial strength and its ability to meet its obligations to policyholders. The rating categories range from A++ and A+ (Superior) to F (in liquidation). It is recommended that you select an insurance company that holds an A++ or A+ (Superior) rating, and specializes in aviation insurance.

A: Because aviation insurance is not regulated extensively by state law, policy language varies considerably. In fact, many companies are not always licensed in all states in which they do business (surplus lines companies), nor are their policies necessarily approved in all states. Be sure to ask for a sample policy in an easy-read format and review it to understand what is and is not covered. Since every renter pilot has different coverage needs, be aware that the least expensive policy may not provide the best protection to meet your needs. Also be aware that policies with the same "limits" will not in many instances provide the same coverage.

A: Yes.

A: How do you really know if you are covered? It is not safe to just ask the FBO about its coverage. Experience has shown that an FBO may not fully understand or realize that its insurance coverage does not generally extend to renter pilots. The only way to determine if coverage is provided by the FBO’s policy is to read and understand that policy. You also have to either rely upon the FBO or contact its insurance company directly every time you fly to verify coverage is still in force and has not been canceled for some reason, such as failure to pay the premium. Even if you live in one of the few states that require the FBO to carry renter’s liability coverage, there is a chance that the FBO may not be fully aware of the law, or the coverage may be inadequate for your needs. It’s most prudent not to rely on someone else’s insurance to protect your own assets. A non-owned aircraft liability policy is an easy, inexpensive way to give you peace of mind when dealing with the unknown hazards confronting the non-owner pilot. You want your carrier to handle the payment of legal defense costs if a renter pilot is sued over a covered loss even where the limits of liability purchased to cover the loss are tendered or exhausted by the payment of the limits.

NOTE: All policies have certain exclusions and limitations that apply. Always be sure to read your policy carefully and ask your agent to read a specimen policy before binding.