What is Non Owner Liability Insurance?

If you borrow a friend's car, you're probably covered by their car insurance; But if you borrow their aircraft, you are probably not covered by their aircraft insurance.

Same if you rent an aircraft from your local aeroclub; Are you prepared to pay out tens or even hundreds of thousands of dollars if there is an accident?

What is Non-Owner Liability Insurance?

Most non-owner pilots are under the assumption that when they hire or borrow an aircraft from either an aeroclub or a friend, the insurance carried by the aeroclub or friend covers them; They couldn't be more wrong indeed, with very few exceptions, the insurance carried by the owner of the aircraft covers the owner, not a hirer or borrower.

Most aviation insurance policies include a subrogation clause which means, in exchange for paying a claim to the policyholder [aircraft owner]; the insurance company can recover the cost of the claim against the negligent pilot.

Often non-owner pilots who hire or borrow aircraft either assume, or are told by the aeroclub or owner, that their insurance covers non-owner pilots. In some cases this may be true, but how can you be sure?

Word of mouth from the aeroclub or aircraft owner isn't enough because, even if they offer to let you read their policy, which is unlikely, do you have the expertise to understand it - indeed, have they paid their premium?

Unless, you're an insurance professional, someone else's insurance coverage can be a bit of a mystery. In some cases non-owners will be told that if you hire an aircraft you are only responsible for whatever hull deductible [excess] is in force. While this may be true in some circumstances, their word won't protect you from a misunderstanding or, if the insurance company chooses to sue you in subrogation for negligence and loss.

Even if the accident is not your fault, you are financially under the gun. Let's say you are on short final and the engine simply stops, leading to a landing short of the runway that results in damage and injury. It isn't your fault - the engine stopped - but you may still be liable for the damage, not to mention for any physical injuries to your passengers, or bystanders.

In these types of circumstances, your best friend can become your former best friend, especially when it comes to tens of thousands of dollars of loss.

That's why we have 'Non-Owner Liability Insurance' - it's both affordable and essential in these litigious times. Coverage includes limits of several millions of million dollars per accident meaning, you as Non-Owner have the same and/or similar protections as would the owner of the aircraft if they had been flying the aircraft at the time of accident.

Even if your aircraft is owned by a company or trust, you as pilot in command could be denied insurance coverage - indeed, when an insurer is looking to reduce and/or recover their loss, they'll often use any 'loophole' they can - and you could be that loophole.

Even if you are taking flight instruction from a friend in that friend's aircraft you might be exposed to a claim; - Let's face it you need this coverage, pure and simple.

Depending on the non-owner pilot's requirements coverage with variable limits and premiums can be obtained for a relatively small charge in comparison to the risk. Non-Owner Liability Insurance can be purchased through Civil Aviation Insurance, in a simple online process.

If you're not sure about it, one of our aviation insurance professionals will be more than happy to discuss your needs and help you come up with adequate affordable coverage.

Let's have a look at a couple of Non-Owner incident/accident scenarios in the following Chapters 1. to 7:-

Chapter 1.
Let's Have a Close Look at What Can Go Wrong on an Otherwise Perfect Day in the Air

What a great day to be flying! The sun is shining and - with the exception of the low-level gusty winds that a clear, autumn day can provide - it's invigorating to be in the air. You and your neighbor, who has been bugging you to take him flying, are really enjoying your day.

And what an aircraft! The single-engine Cessna you recently checked out in at the local Aero Club has it all: modern instruments, good handling qualities, and that great "new-aircraft smell" with the scent of leather seats - what could go wrong?

You're coming in for the day but, a sudden, gusty crosswind catches you and you dig a wing tip into the ground and skid into the perimeter fence knocking out a power cable, causing damage to the aircraft that will cost over $30,000 to repair and resulting in a six-hour power blackout for two-hundred local homes and businesses.

What's worse is that your passenger is injured and requires medical care, including physical therapy. He is not happy camper and sues you and the aeroclub for negligence.

Your "friendly aeroclub comrades" turn out to be a little less than friendly when they also sue you for financial damages resulting from loss of use of the aircraft while it is being repaired. They also claim a loss of value for the aircraft: Because it was damaged, its value will be less when the aeroclub goes to sell it or trade it in.

Finally, various local home owners and business people in the district are suing you because the loss of electricity led to damages to their property, including tons of spoiled food in non-functioning freezers.

Chapter 2.
You're Covered, Right? - Think Again

Unless the non-owner pilot is specifically covered under the aircraft's insurance policy, the costs of this mishap, including the expense of hiring a lawyer to represent you, could all be yours.

The insurance company represents the aircraft's owner, not you; and after paying the owner, they will likely come to you for the money which in some cases has led to bankruptcy.

How about this, what happens if the aircraft was insured, but the cover excluded 'hire' - that means the insurance company would most likely deny liability to the owner and the injured parties would come after you an the owner personally, - to add salt to wounds, the owner may well then sue you separately and additionally for their loss of use of the aircraft.

Chapter 3.
What about if I had Non-Owner Liability Insurance - Where would I stand?

Well, after the accident, one of the first calls you make is to your insurance broker, in this case Civil Aviation Insurance.

We'll provide the initial assistance ahead of the insurance company and their assessors.
Unless, you have done something really, really bad to exclude cover, the damage to the aircraft will be covered, the medical costs for you and your passenger will be covered and if subrogation raises its ugly head, the insurance company will take care of that as well, including the neighborhood's spoiled food and loss-of-use claims from the aeroclub and/ or owner.

It is good to have professional legal and insurance people on your side in a case like this; and because you have Non-Owner Liability coverage, you will have their help and expertise.

Chapter 4.
So, Why didn't the Aeroclub Guy Tell Me I wouldn't be Covered?

Like their customers, many Aeroclubs are not aware that the problem exists. If they do know it exists, they are not usually eager to talk about it out of fear that the cost of non-owner insurance might scare the customer away.

Chapter 5.
But, I'm an Instructor at the Aeroclub on Weekend's - What do you mean I'm not Covered?

Many flight instructors are simply 'freelances' trying to build up their hours, they do it more for the love of flying and teaching then the money.

Most established flight schools have liability coverage for their instructors built into their policies, but most will have no coverage if you go and instruct in aircraft not owned and operated by the school. Even if you are an employee of the flight school, it is likely that if you instruct in "that Baron a student owns and wants to work on instrument approaches," you are doing so without insurance coverage.

The liability here can be enormous. Not only are you liable for what happens during the flight, you may be confronted years later when your student has a mishap and blames your instructional technique and content.

A freelance flight instructor who flies in the student's aircraft is really hanging it out there in terms of liability. That little $20/hour instructing gig you had could lead to financial ruin without proper coverage.

It isn't exactly cheap, but Flight Instructor insurance for liability is also available though Civil Aviation Insurance. This coverage usually covers the financial aspects of an instructing mishap, but remember that your licenses and ratings are in jeopardy as well. If you have or get at a later date, a job with an airline - an enforcement action based on an instructional accident could affect your other ratings.

Chapter 6.
Who Really Needs Non-Owned Aircraft Liability Protection?

Here is a list of some of the key Non-Owner aircraft exposures:
1. A person or organisation that charters an aircraft (pilot furnished by the aircraft owner), whether for personal or for business use.
2. A pilot who hires an aircraft from the aircraft owner or aeroclub.
3. A student pilot taking instruction in someone else's aircraft.
4. A CFI providing flight instruction in a customer's aircraft.
5. A pilot who borrows an aircraft, from a friend.
6. An engineer who is test-flying a customer's aircraft, even just for taxying.
7. Someone who is ferrying or delivering an aircraft for someone else.
8. An aeroclub or flying school providing flight instruction in a customer's aircraft.
9. An independent professional contract pilot operating an owner's aircraft.
10. A person who is operating the aircraft when a loss occurs, even if accompanied by the aircraft owner.
11. A member pilot of a syndicated aircraft owners group.
12. A pilot operating an aircraft owned by a trust or company, even if you own the company and/or you're the beneficiary/appointer of the trust.

These are only some of the key exposures for non-owner pilots. In terms of your risk exposure, there is very little - if any - difference between being a hirer of an aircraft or just someone who borrowed a friend's aircraft.

Chapter 7.
Summary

If you hire or borrow an aircraft, your exposure to liability is both real and confusing.
Relying on someone else's insurance coverage can be foolish and costly.

Article by Charles Pratten - Managing Director of Civil Aviation Insurance