As aircraft owners, we generally conduct flights where we will be carrying passengers, employees or other pilots. Many of the aircraft purchased today are financed and have lienholders with an interest in the aircraft. Some aircraft are purchased or operated on a lease agreement by another party. Given all of these variables, many aircraft owners often ask, “who is covered (insured) on my policy?”
The answer will vary based upon which insurance company you are with and how the policy is structured. This means that you should always read your policy and contact your agent if there is ever a doubt. For this purpose, the answer can usually be found under “who’s covered” or “who’s an insured,” which is generally located in the definitions section of the policy.
Let’s look at some answers to this question that are common on many Pleasure and Business use policies. Pleasure and Business use is generally defined as pleasure and incidental business travel where no charge is made or anticipated. However, some policies may allow for limited reimbursement (i.e. fuel and oil)
In many policies Insured is defined as:
1. “You,” which is defined in the definitions section of the policy, typically worded as: the person or organization who is listed as the “named insured” on the policy (policyholder). The “named insured” is usually the person or organization for which the aircraft is registered or leased. In addition, the “named insured” is the only insured party who may make changes to the policy.
Liability is further extended to other parties:
2. Any person who is using or riding in your aircraft with “your” permission, or any person who is legally responsible for the aircraft. This includes passengers and pilots who are not the “named insured.” Pilots must meet the pilot requirements and use the aircraft within the scope of its approved uses.
Who’s NOT covered?
Often excluded as an insured in many policies is any:
– Student pilot, unless listed by name as a pilot on the policy. Many people often justify instructing student pilots who are not named to the policy by claiming the certified flight instructor meets the pilot requirements and is the pilot in command. However, student instruction or instruction to anyone other than named pilots is excluded in most Pleasure and Business use policies, unless that student is named to the policy.
– Person or organization renting your aircraft. Rental is a commercial use and not part of a standard Pleasure and Business use policy.
– Person or organization other than you or your employees or agents, while at work for you who design, make, modify, repair, service, maintain, rent, sell, finance, lease or charter aircraft, aircraft engines, parts or accessories, own or operate a flying school, provide flight instruction, own or operate an airport, hangar or aircraft tie-downs, if the claim arises out of such activity by such person or organization. Pleasure and Business policies are intended to cover the “named insured” for their private use. They are not a means to provide coverage for ANY type of commercial operation whether he or she is named pilot or not. This is often referred to as the “Aviation Professional Exclusion.”
– Employee who injures a co-employee. Often called “Fellow-Employee Exclusion,” this prevents coverage when one employee sues another.
– Owner or lessor of an aircraft you lease, rent or borrow unless otherwise endorsed. Likewise, if another pilot is using your aircraft, his non-owned coverages will probably not cover you. Non-owned policies are usually in excess to that of the aircraft owner.
– Other people or organizations that fall under “who’s covered” who are “Additional Insureds” that are endorsed in the policy. These may include the lienholder, a lessor or someone else that has been deemed to have an interest in the aircraft and its use thereof. These “Additional Insureds” are typically presented to and agreed upon by the company.
Please keep in mind that not all policies will exactly reflect the preceding definitions. Some companies may have more or less information in their definition of who is an insured.
What does the policy do for all of these insureds? It provides liability coverage and a separate legal defense for each insured, however the policy limits will not increase for each insured. There will be one “occurrence” limit for all parties concerned. You are essentially sharing your liability limit with each of these insureds. So in reality, it is not desirable to have numerous “Additional Insureds” on a policy with a lower liability limit, as it dilutes your own coverage.
The moral of many insurance related discussions will be “read your policy” so you are fully aware of who and what is covered under your policy. If any of these issues create a problem for you, you should contact your broker to rectify the situation and amend the policy. So next time you have a passenger who questions if they are assuming liability for which they are not covered while riding in your aircraft, you will be able to identify this in your policy.