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Contractors and Employees
By Bob Mackey

I would wager that when you were taking flight training, you didn’t know whether your flight instructor was an independent contractor or an employee of the flight school providing your training. You were probably totally focused on learning, and the instructor’s employment status didn’t really make much difference to you.

Things haven’t changed a whole lot in the flight instruction world when it comes to independent contractors and employees—that is, your students don’t really care. However, there are insurance ramifications that are very important to flight instructors.

Flight schools decide whether their flight instructors will be independent contractors or employees based on many factors. Taxes, workers compensation insurance, payroll withholding, and many other reasons come into play as schools decide how to treat their flight instructors. One other issue, however, is very important and should be carefully examined by both the school and its instructors.

A flight instructor who is the employee of a flight school is considered an insured under the flight school’s insurance and therefore protected for actions within the course and scope of his employment. Independent contractors, on the other hand, are often not insured under the flight school’s insurance. This means that the independent contractors may find themselves with no insurance protection in the event of a loss.

Flight schools can remedy this situation by adding flight instructors acting as independent contractors to the school’s insurance as additional insureds. The insurance carrier will almost certainly charge an additional premium for this extension of coverage. The flight school may also request that the carrier waive its rights of recovery with respect to a loss arising out of the flight instructor’s conduct. This is referred to as a waiver of subrogation, and may involve another additional charge. Flight instructor employees are covered by the school insurance policy, and the insurance company will not pursue them for losses arising out of their conduct as employees.

There is another way for all CFIs to make sure they are covered for the potential risk arising from their flight instruction. NAFI, EAA, Global Aerospace, and Falcon Insurance Agency have worked together to develop the NAFI Professional Liability and Aircraft Liability Insurance Plan. This insurance plan provides liability coverage and physical damage coverage for aircraft, including professional liability insurance arising out of flight instruction, checkrides, and flight exams or reviews. With this coverage, flight instructors—whether they are independent contractors or employees—can be assured that they have insurance protection for the risk exposures arising out of their activities as a flight instructor.

To find out more about the NAFI Professional Liability and Non-Owners Liability Insurance Plan, flight instructors may contact the NAFI Insurance Program at 866-243-NAFI (6234) or online at www.nafinet.org.

Bob Mackey is senior vice president of Falcon Insurance Agency Inc. If you have topics that you would like to see addressed regarding the NAFI Insurance Program or any other topics relating to aircraft insurance, send your suggestions to: [email protected]. For more information on the NAFI Insurance Plan, please contact one of the Falcon Insurance Agency specialists at 866-243-NAFI (6234).