EAA Insurance Solutions: Flying Aircraft You Don’t Own

September 14, 2017 - Steve hasn’t flown in several years but with a new job that gives him more spare time and a little additional income he has decided to get back into flying and maybe even start looking for an airplane. First, Steve contacts a local flight school and arranges to take some lessons and get his flight review current. In addition, Steve plans to get his medical back by going through the BasicMed process. Everything goes well until Steve has a minor landing accident during a flight lesson with his flight instructor onboard. Nobody is hurt, but the estimate to repair the airplane is a little over $20,000 and the airplane will be out of service for at least two months. The flight school’s insurer agrees to pay for the repair; however, they contact Steve to recover the amount they will pay for repairs because they feel Steve was at fault. Then, the flight school contacts Steve regarding the two months of lost income because the airplane is out of service. All of this is a not-so-happy welcome back to flying for Steve.

Mary is finishing a Van’s RV-12 airplane project. She expects to be ready for inspection in about three months. Mary was told that she would need to get some experience in an RV-12 before she would be insurable. Through a network of other RV owners Mary tracks down a CFI that holds a LODA to give transition flight training in the RV-12 the CFI owns and she arranges for at least five hours of training. During the second hour of dual with the CFI Mary messes up a crosswind landing and runs off the runway and the RV-12 nose gear collapses. The damage is estimated to be around $30,000. The insurer for the RV-12 owner/CFI agrees to pay for repairs; however, they also contact Mary regarding the cost of the insurance claim. Needless to say, Mary is bummed!

Charlie has owned several airplanes over the years and his friend Pete currently owns a Cessna 172 he bought from Charlie. Since Charlie doesn’t currently own an airplane, Pete offers to allow Charlie to use his airplane as long as Charlie pays for the fuel and a few other direct operating costs. Charlie accepts Pete’s offer and Pete has his insurance broker add Charlie as a named approved pilot on Pete’s aircraft insurance. A few weeks later Charlie takes a trip with Pete’s airplane and on the return flight home Charlie mismanages the fuel and runs out ending in an off-airport landing. Pete’s airplane ends up being a total loss; fortunately, nobody is hurt. The insurance company, even though Charlie is a named approved pilot, decides to seek recovery from Charlie for the insured value of Pete’s airplane ($75,000), because they feel Charlie was negligent.

Sorry about the scare tactic, but this stuff is real and you need to be aware of the risks and how to protect yourself.

So how do you protect yourself when you are using an aircraft you don’t own? Our recommendation is that you obtain a non-owned aircraft insurance policy. These policies are not terribly expensive, especially when you consider the protection you get versus the risk.

There are essentially two parts to a non-owned aircraft insurance policy. The first part is liability insurance in case you injure someone (including death), or damage someone’s property, other than the aircraft you are using. Typically, the limit of insurance is $1,000,000 per occurrence subject to $100,000 per passenger. (Note: make sure you avoid any insurance policy that uses a “per person” limit because it will substantially reduce your protection!)

The second part of the insurance policy is liability insurance for damage to the aircraft. You can buy whatever limit of insurance you wish; however, it is recommended that you obtain an amount equal to at least 50 percent of the value of the non-owned airplane. You may, of course, purchase a higher limit of insurance but that’s up to you.

Non-owned aircraft insurance can be purchased for standard category, light-sport, and experimental aircraft including single-engine and multi-engine aircraft, gliders or sailplanes, seaplanes, helicopters, and gyrocopters. The price of this insurance will depend on the type of aircraft.

In the above examples, if Steve, Mary, and Charlie had each been insured for both liability insurance and physical damage liability insurance, for a nominal price, the insurance would include coverage for loss of use.

Assuming you are protected by someone else’s insurance is a bad idea. Making sure you have the right insurance at the best price is what EAA Insurance Solutions and the EAA Non-Owned Aircraft Insurance Plan is all about. This EAA member benefit is exclusively administered by Falcon Insurance Agency Inc. and that’s where you should go if you need insurance to protect yourself when you fly an aircraft you do not own.

As an EAA member you have exclusive access to a great resource with EAA Insurance Solutions. Call 866-647-4322 and talk directly to an aviation insurance professional, or to check out your options for non-owned aircraft insurance, visit the EAA Insurance Solutions webpage. With EAA Insurance Solutions you will find the right insurance at the best price!

Bob Mackey is senior vice president with Falcon Insurance Agency, the official administrators of EAA Insurance Solutions. If you have any comments about this article or if would like to see a specific aviation insurance topic addressed in a future article, send him an e-mail.