Jim Pinegar, Vice President & Director of Operations of AOPA Insurance Services, addresses your aviation insurance questions.Disclaimer: The following material is provided for informational purposes only and does not constitute legal advice. For questions concerning your specific circumstances, consult a local attorney.
JOHN: What benefits of a "smooth" policy should I understand to evaluate if I should have one?
JIM: John – thank you for writing in…”smooth” policies at AOPA mean one thing – the removal of the passenger submit. The term “smooth” comes from the meaning that the policy’s aggregate payout is smoothed over the entire covered loss for property and bodily injury to others.
To evaluate the smooth limit is to first ensure you qualify for one. Most carriers have minimum standards for both for the pilot and aircraft. The pilot may need a minimum of 500 hours and an instrument rating, while the aircraft generally needs a manufacture year of 1970 or later.
Once a broker indicates that a carrier will offer smooth limits, look at the premium differential. Many times a smooth policy is only a few hundred dollars more than a sublimit policy. However since a smooth policy removes the sublimit for passengers, one would need to consider who and if they take anyone flying in their aircraft. If I’m in a single seat aircraft or only ever fly by myself, a smooth limit may not make much sense. However, if I take family members, business colleagues, neighborhood children...or anyone in my aircraft, a smooth limit could make a significant difference in their available coverage under your aircraft policy. Remember that if someone’s losses exceed the amount available under a policy, they most likely will be looking for other assets to make them whole. And medical bills, pain & suffering, and all the other covered items, could quickly max out a sublimit!
WANER: What insurance do I need if I want to be PIC in a friend's aircraft? What insurance should they have?
JIM: Waner – the first place I would want to review is the “open pilot warranty” clause on your friend’s aircraft policy. This will describe what your friend’s insurance carrier will require for their basic coverage (aircraft physical damage and liability) to apply to non-named insured and non-named pilots. Now, I would be remiss if I didn’t mention the old saying of not allowing someone else’s policy keep you protected. Remember your friend’s policy is for them and was designed to make them whole in the event of a loss…not to necessarily protect you. There are instances where someone has flown under a friends open pilot warranty only to find that their policy wasn’t valid for a number or reasons – i.e. nonpayment of premium. Now you’re on your own….so I would recommend you highly consider a non-owned policy. This way you can be certain you have coverage in place, and the coverage you selected should an accident occur. That is the very reason I carry my own non-owned coverage, even when I fly another person’s aircraft and clearly meet their open pilot warranty.
MARSHALL: Can one of three owners obtain liability insurance without the others?
JIM: Marshall – this is a very interesting question, one that can be answered in two ways, so please allow me to describe which may apply.
First scenario, 3 owners and only 1 wants to secure coverage– is this possible? Short answer – no. If A, B, and C own an aircraft, then A, B, and C have to be named insureds. Think of it this way - if the accident causes injury, all the owners may be named as defendants…so an insurance carrier will not split their liability coverage. So then you may ask, what is possible?
Second scenario, and one we see quite often. Back to owners A, B and C - we now list A, B, and C as named insured, BUT exclude owners B & C from piloting the aircraft. In effect all the owners have coverage, but since B & C will not be flying the aircraft, they aren’t taken into consideration with regard to insurance premium….in essence; you are now only paying for yourself.
LAWRENCE: Concrete 4000x75 runway is closed at my airport. If I land on the grass adjacent to this runway,
is my insurance valid?
JIM: Lawrence – Insurance is generally valid for off airport landings if the policy does not contain an off airport exclusion (which is rare these days), and landing is performed without the expectation of damage (unless, of course you are having an emergency). However, there’s a caveat that needs to be considered. First, is the grass adjacent to your runway approved for takeoffs and landings by your airport? If it is approved, effectively you’re just landing on a grass runway. If it’s not approved, you may be found in violation of a FAR, which could then invalidate your insurance policy.