Are you an 'insured'?

One of the most frequently asked questions AOPA Insurance Services staff answer is, “Am I insured?”

While policy wording will vary, if you are named as the policyholder you are an “insured” and, subject to the terms of the policy, the insurance company will defend and/or pay claims on your behalf. As you dig a little deeper into your policy, you will find the term “You” in the definitions section. Typically the word “You” in the policy would be the person or organization who is listed as the named-insured on the policy (i.e. the policyholder). The “named insured” is usually the person or organization in which the aircraft is registered, or in some cases leased, and the named insured is the only person who can make changes to the policy. You may also have “additional insureds” under your policy, and that list could include, for example, the company for which you work (if you have occasion to fly the aircraft on company business), or the airport authority from which you lease a hangar. While these additional-insured parties are provided liability coverage and a separate legal defense, there is still just one occurrence limit under the policy, so you will effectively be sharing your liability protection limits with each of these additional-insureds, and thus potentially diluting your coverage.

Under a standard “Pleasure and Business” policy, liability protection is extended to “persons or organizations while using, riding in or legally responsible for the use of the aircraft with your permission.” This then includes as “insured” pilots and their passengers who are not the “named insured.” Of course, the pilots must meet the policy pilot requirements and use the aircraft within the scope of its approved uses. There are exceptions to this section. Unnamed student pilots, flight schools, and maintenance shops (among others) would not be an “insured,” although in many cases coverage can be extended to include them. Also, under most aircraft insurance policies, a pilot who rents your aircraft from you would not be an insured, and such rental has historically voided coverage. However, many insurance companies have recently shown a great deal of flexibility in this regard, and will now approve some renter activity on most noncommercial use policies. The renter pilot must be named on the policy, and there is usually a charge for this expanded use, but the fees are reasonable and this “named renter” use is proving an excellent way for aircraft owners both to offset ownership costs and to get their aircraft exercised more regularly. The renter pilot can also purchase non-owner’s insurance for additional liability or non-owned aircraft damage protection, including payment of deductibles. A word of caution: Many owners mistakenly believe that if a CFI meets the policy open-pilot-warranty, then his operation of the aircraft as pilot in command protects them while that CFI is teaching a student. It does not do so. Student pilots must be named on the policy.

So, take a few minutes to read your policy and make sure you really are an insured, and feel free to contact AOPA Insurance Services should you have any questions. Please call us at 800/622-AOPA (2672) or click here for more information.