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NAFI Insurance Checkouts: Non-Owned Aircraft

By Bob Mackey

What is a non-owned aircraftè When might you as a flight instructor fly a non-owned aircraft, and what are your risks when you fly oneè If you’re a flight instructor, you need to know the answers to these questions. This isn’t a topic you can ignore.

I’m not one to believe I can sell insurance by scaring people, but at the same time I have to look at the cold facts and realize there are some worrisome issues out there. I also believe in a simple formula: risk management = risk analysis + risk mitigation + risk financing. Risk analysis is the assessment of what could happen. Risk mitigation is the implementation of methods that will reduce or eliminate what could happen. Risk financing is an insurance policy. Risk management overall is the balancing of all three elements to the satisfaction of the individual or an entity. Let’s look at these elements as they may apply to you, as an instructor, as well as those questions posed in the first paragraph.

What is a non-owned aircraftè It’s any aircraft that you do not own in whole or in part. Any aircraft you fly that you have no ownership in whatsoever fits the bill.

When might you, as an instructor, fly such an aircraftè The list can get quite long, but it includes when you fly a borrowed airplane for personal use, an airplane owned by a student pilot you are teaching or providing checkride to, or an airplane owned by a flight school where you instruct as an independent contractor.

What are your risks when you fly a non-owned aircraftè They include potential liability for injury to someone (other than yourself), damage to someone’s property, and damage to the airplane.

For example, say you’re flying with a student pilot, and you take the controls to demonstrate a particular landing technique. While landing, you lose control, and the airplane departs the runway and hits an airport employee cutting the grass. You could be held responsible for the injuries to the airport employee, damage to the tractor the airport employee was driving, and damage to the airplane you are flying. If the student pilot you’re teaching is also injured, you could also be held responsible for those injuries, too.

Would the flight school’s airplane insurance respond to this accidentè Yes. The flight school’s airplane insurance would repair the damaged airplane and respond on the flight school’s behalf for its potential negligence. The flight school’s airplane insurance may respond on your behalf, too, if you’re an employee of the school and not an independent contractor. It may also respond on your behalf if the school had its airplane insurance modified to extend coverage to independent contractors, but in most circumstances, schools don’t do that.

How do you protect yourself when you’re flying a non-owned aircraftè With insurance coverage that protects you from the potential risks of flying an airplane you don’t own.

One solution would be to have the flight schools where you teach include you as an additional insured and grant a waiver of subrogation in your favor with respect to your activities as flight instructor or pilot examiner. Some insurance companies will not make this extension, while others will require an additional premium. The flight school may not wish to pay an additional premium, or the school may require you to pay the additional sum. This solution would apply only to your use of a non-owned aircraft at that flight school, but it wouldn’t apply to flight instruction conducted outside that school or any other use of a non-owned aircraft.

Another solution would be to arrange personal non-owners (renters) insurance, which would cover personal usage, as well as flight instruction, flight reviews, and flight examinations. This insurance also includes professional liability insurance to protect against alleged negligent instruction, review, or examination; NAFI developed this insurance several years ago to help you protect yourself properly as you use non-owned aircraft in flight instruction or your own non-commercial uses. The NAFI Flight Instructor Insurance Plan includes standard category airplanes as well as experimental amateur-built, experimental light-sport aircraft, and special light-sport aircraft. Furthermore, the definition of non-owned aircraft allows coverage for multiengine aircraft, seaplanes, and gliders.

Don’t assume you’re protected when you don’t have your own insurance protection or written confirmation that you are protected by the flight school’s insurance. And don’t assume you cannot become a target for recovery of expenses (“subrogation”). Protect yourself; it’s likely no one else will.

Bob Mackey is senior vice president for the Falcon Insurance Agency, which offers the NAFI Flight Instructor Insurance Plan. To find out more about the insurance plan, call 866-243-6234 or visit www.NAFINet.org/programs/falcon_insurance.html. NAFI Insurance Checkouts is a special NAFI member benefit; if you have a topic or question you would like to see addressed in NAFI Insurance Checkouts, please send it to [email protected].