All posts tagged 'aircraft insurance'

Ignore the Terms of Your Aircraft Insurance Policy at Your Own Risk

When you purchase an aircraft insurance policy you expect that the policy will provide coverage when you need it. However, that isn’t always the case. All aircraft insurance policies contain requirements, conditions and provisions with which you, the insured, must comply in order for the policy to provide coverage. These requirements often mandate the condition of the aircraft (e.g. airworthiness), qualifications and currency of the pilot and accuracy of the information provided by the insured to the insurance company. If an accident or loss occurs, and a policy provision has been breached, the insurer may have the right to deny coverage.

Most, if not all, aircraft insurance policies have provisions relating to the pilot(s) who will be operating the aircraft. These provisions typically require that the pilot have a current and valid medical certificate and that the pilot be in compliance with all recency of flight regulations. The policy may also limit coverage to certain identified pilots. Insurers have denied coverage based upon breaches of these provisions when the aircraft was flown by an unapproved pilot.

This was the situation in the aftermath of an accident involving a P-51D Mustang. The case, U.S. Specialty Insurance Company v. Estate of Earley, arose after the Mustang crashed, killing both Pilot A, the aircraft owner and named insured on the policy, and another pilot, Pilot B, who was flying with Pilot A.

The Mustang, originally built as a single-seat aircraft, was modified to (1) add a second, rear seat and (2) add limited controls to the rear seat: a control stick, rudder pedals, and a throttle control. These modifications were intended to allow an experienced pilot to instruct a new pilot from the rear seat. However, the modifications to the Mustang were limited and did not provide access to the following controls from the rear seat: the landing gear; the trim; the fuel selector; the propeller pitch; the brake; the hydraulics; the starter and magneto controls; the fuel boost pump; and the electrical controls.

On July 4, 2014, Pilots A and B took off in the Mustang for an instructional flight with Pilot A in the forward seat and Pilot B in the rear seat. Shortly after takeoff the Mustang crashed. At the time of accident, Pilot B was identified on the aircraft’s insurance policy as a pilot who was approved to operate the aircraft, while Pilot A was not.

After the accident, the insurance company who insured the aircraft took the position that it was not obligated to cover the accident because (1) Pilot A was receiving instruction in the aircraft and (2) he was the pilot actually flying the aircraft, which violated the terms of the insurance policy. The district court agreed and then Pilot A’s estate appealed the decision to the Tenth Circuit Court of Appeals.

Unfortunately for the Estate, the Court agreed with the district court’s decision. The Court observed that the policy language was clear in stating that the policy did not provide coverage if the Mustang was “operated in flight” by someone other than one of the approved pilots. So, the question was whether Pilot B, one of the approved pilots, could have operated the Mustang from the rear seat.

The Court concluded that Pilot A was, in fact the pilot operating the Mustang in flight because “he was the only pilot with access to all of the controls and instruments needed to ‘control the functioning’ of the Mustang.” Not only was the rear seat passenger unable to access 21 of the 24 most critical of the flight controls and instrumentation required to fly a Mustang, but the FAA’s approval of the two-seat Mustang conversion was valid only if the Mustang was placarded to be flown from the forward seat only. Thus, the Court affirmed the district court’s finding that the insurance policy did not cover any potential claims that may have arisen from the accident.

Conclusion

Although this case is an unfortunate result for Pilot A’s estate, it is a good example of why you need to make sure you comply with all of the provisions and requirements contained in your policy. Failure to comply could very well result in a denial of coverage if you are ever involved in an accident or loss. In the aftermath of an accident or loss, the last thing you want to do is fight with your insurer for coverage. To avoid this type of situation and to ensure that you will have coverage when you need it, you need to be aware of and comply with the requirements and conditions of your aviation insurance policy.


I've Had an Aircraft Accident: What Do I Do?

Most pilots will go through their entire flying lives without ever having an accident or incident involving an aircraft. That is a wonderful testament to the quality of pilots flying in America today as well as the quality of the aircraft which they operate. Most pilots work very hard at maintaining the skills necessary to avoid aircraft accidents. That includes proper initial and recurrent training, adequate and effective aircraft maintenance programs and, depending on the type of aircraft and type of operations, participation in a Safety Management Systems or a full ISBAO program as commitment to safety of flight.

However, we are all vulnerable to the whims of fate or development of a fault tree that leads to something which we try our best to avoid: an accident. The cause might be a sudden downdraft or cross-wind burst just prior to landing, an unexpected runway incursion, a slight depression in the taxiway or a catastrophic systems failure. There are possibilities lurking out there that, try our best, we may not be able to foresee or overcome.

Hopefully, you will never have to experience an event of this type; certainly not one of a catastrophic nature. The old saw of "bent metal is always better than broken bones" never rang more true. Accidents involving injury (or worse) can become extremely complex and are best dealt with by medical, legal, FAA/NTSB and or insurance professionals. It is not the intent of this article to deal with those events.

What this article is intended to address is the incident in which your aircraft is damaged, for some unforeseen or unexpected reason, and you need to interact with your insurance carrier to file a claim, get your aircraft repaired and start flying again.

Aircraft Insurance, like other types of property /casualty insurance, is based on the principle of indemnity: In exchange for the premium paid, the insurance carrier will make you whole in the event of a loss (subject to deductibles, exclusions, terms and conditions). This does not mean that your insurance carrier will pay to replace your steam gauges with the latest glass panel or "zero-time" your engine. The spirit of the insurance contract is to put you in the same condition you were in prior to the accident. The wording of you aircraft insurance policy may seem complex but, given a little effort on the part of the policy holder (a couple of hours to read the policy) and a broker or underwriter willing to answer questions, it is relatively easy to understand. Like your auto insurance policy, your aircraft insurance functions in a pretty straight forward manner.

So, what are the basic and appropriate steps you need to take in the event of an accident involving your aircraft?

If you have an accident, you need to:

1) Report the accident

As soon as possible, report the event to your broker or insurance carrier and, if the event is significant to warrant it, the FAA or NTSB. Some insurance carriers will provide you with direct reporting channels (via phone or e-mail) but, if you have an insurance broker you should contact them first if at all possible as they are your advocate in all insurance matters.

In preparation for this initial report make sure you have the important facts. Use "Who, What, Where, When and How" as a guide. You will need to provide date, time location, description of events leading to the accident, who was PIC, SIC and any passengers onboard, description of the damage to your aircraft as well as damage to any other aircraft and to any persons or property not in your aircraft (including on the ground or other in-motion or in-flight aircraft). You may have to provide additional information subsequent to the initial report but your broker and/or insurance carrier will advise you of what you should provide and to whom.

2) Capture the event and damage

If possible, take photos of the scene of the event. Carrying a disposable camera in your emergency bag on the aircraft is a good idea (remember to check periodically and replace if needed). Memorializing the physical location, the amount and scope of damage, weather conditions and other important factors on film or digital media can be a valuable resource.

Prepare a written statement. While it may be difficult to slow your mind down after an accident, it can be beneficial to prepare a personal account of what happened and how it occurred from your perspective. The most difficult part of this written statement is to remember to use only the facts as you know them. Do not speculate, guess, assume, pre-suppose or interpret. Just record the event as it unfolded to you and try to include as many facts as possible (time, weather conditions, airspeed, attitude, altitude, heading, aircraft performance, traffic, etc.). You may choose to, or be required to, share this statement with others so just stick to the facts.

3) Protect your aircraft from further damage

Depending on the location and severity of the event, you may need to wait for the FAA/NTSB, state or local or other authorities or your insurance carrier to authorize movement of you aircraft to a secure area. However, if the damage is minor, it maybe your responsibility to see that the aircraft is moved to a location where weather or other conditions will not cause or contribute to additional damage. If this is the case, make sure that the location (preferably a controlled environment) is secure but accessible to both you and your insurance claims person. In most cases, a local FBO or repair shop can provide a good, secure location until such time as you and your insurer are ready to have the repairs made.

4) Cooperate with your Insurance Carrier

Unlike the reputation of some other aspects of the insurance world, aircraft insurers, for the most part, want to work with you to ensure that your aircraft is repaired and returned to you in an efficient and timely manner. If the aircraft is deemed to be a total loss, the insurer wants to pay you, close the claim and deal with the salvage.
Like you, your insurance carrier understands that the claim will not improve with age so they want to treat you fairly, in accordance with the terms and conditions of your insurance policy, and get the repairs made or payment made as expeditiously as possible. Providing the claims adjuster with the information he or she needs to get the repairs completed and the claim settled will only get you back in the air sooner.

5) Use a repair shop that you trust

While the accident may not have occurred at your home base, you still have the ability to decide where, within reason, you want to have the repairs made.
Depending on the amount of damage, you may be able to work with your insurance carrier to ferry the aircraft to your preferred repair facility, be it the manufacturer or your home FBO. If the repairs are minor enough to have fixed locally and you choose to do so, ask around about the quality of work performed by the facility that you are considering. If there is more than one shop on the field, find the one with the best reputation and check their prices with the insurance carrier. Even if the carrier balks at the repair cost, you might find it worthwhile to contribute toward the repair if you know it will be top notch. After all, you want your ship back in the best shape you can get it.

6) Consider this a learning experience.

Once you have had an accident, affected the repairs and are ready to fly again, ask yourself, "What can I learn from this experience?"

The answer may be that you can learn many things including that you need more frequent recurrent training, better quality training or training of a different sort. It could also be that you need to pay more attention to the upkeep and maintenance of your aircraft including the quality of the work performed by your preferred shop. A good mechanic takes pride in his work
and should not be unhappy to show you what has been done and explain why. It may be his or her name that goes in the maintenance log book and they may have responsibility for the service or repair work performed but you are flying in the aircraft and, potentially, staking your life on their work so check it out.

No one wants you to have an aircraft accident or incident. If you do, however, remember that you buy insurance coverage for just such an event. Your insurance policy does have limitations and may not cover certain things after a loss (like certain types of damage excluded by the policy, diminution of value and damage within the deductible amount) and your insurer may require you to do certain things after a loss but you should view your insurance carrier as a partner in this process.

If you stay informed as to what coverage your aircraft insurance policy provides, use your insurance broker as your advocate and intermediary (part of the service for which you pay them) and stay actively involved in the process, you can help make an unfortunate situation as least painful as possible.


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