Difference between flying another’s plane under the “open pilot “ clause versus being a “named insured” on the policy.

[dabney]

I am helping a low time pilot fly newly acquired aircraft about 1200nm to his home. He has very few hours in this model. Basically, I’m along for the trip as his “safety pilot” to keep him out of trouble. He will be PIC .

I‘m wondering if in this capacity it would be advisable to be a named insured versus flying under the open pilot provision. I am a CFI so if something goes wrong maybe the insurance company will try to get into my pocket.

The pilot has not heard yet from his insurance company if X number of hours with an instructor will be required. If that turns out to be required then I would be acting as a CFI. Would that change the equation?

Any advice appreciated ..

 

[newt]

Any advice appreciated ..

Best to cover this off with his insurance company. You're unlikely to get much actionable intel from here.

- mark

 

[RV6_flyer]

Would like to know more.

I am under the impression that a name insured will NOT get sued by the insurance company to recover anything if a loss is incurred.

My opinion is the person covered under the "open" pilot MAY need to go to court against the insurance company if a loss is incurred.

Hope someone that knows more than I do about aircraft insurance can set me straight.

 

[howardtlcc]

A pilot flying under the open pilot provision could be sued by the ins. company to recover what they paid out to the owner. A named insured will not. Always ask to be a named insured to cover yourself or have another policy (like a CFI policy) that covers you.

 

[JImKerr]

A pilot flying under the open pilot provision could be sued by the ins. company to recover what they paid out to the owner. A named insured will not. Always ask to be a named insured to cover yourself or have another policy (like a CFI policy) that covers you.

This is 100% correct. A named insured will be protected under the policy. The insurance company will need a release from the aircraft owner and anyone named insured if they need to settle a claim below the policy limits. All named insured will get notified of any accident and settlement an insurance company is working. This includes your airport if they require to be listed on a policy for hangar space.

Adding someone to the policy that will be flying the plane has the negative consequence of basing the pricing of the policy on the skills of all pilots. The least experience pilot will add risk and the policy will cost more. It has been my experience that the insurance costs more even if both pilots have the exact same flying history because the insurance company calculates into risk aircraft potential utilization. An airplane will likely be flying more if there are 2 pilots. One person may fly 50 hours a year. 2 people could be flying 100 hours a year. Adding a flight instructor can also increase the price more. They could do IPC's and other training operations without putting the plane into commercial operation. Anything that may increase risk will be calculated into the policy price.

I went though this recently with insurance on one of my planes I was selling. The policy was in my name and I needed a broker to be able to fly it to their airport, for maintenance, etc. The broker had a several thousand hours of flight time, but he did not quite meet the Open Pilot make and model time for my plane even though he actually personally owned the exact same make and model that was insured though the same company. When I added him to my policy, the cost increased $450/year. Fast forward to nearing the end of the policy term and I was being hounded by the insurance company to provide all named pilot flight hours. They would not renew the policy with the brokers name on it without his hours. He had been busy and didn't have his logbook current. I had to renew the policy in my name only to keep it insured and he moved into Open Pilot. If you do add people to the policy, you will need their full flying history every time the policy renews. If they have had any incidents, their medical is expired, they are late on a BFR, etc. your policy pricing will go up or they may not renew the policy with them on it.

 

[Mconner7]

Having done contract pilot services in jets, you not only need to be named insured but ask for a waver of subrogation for any non-owned aircraft you may be considered PIC on. Insurance companies see this request a lot at the corporate jet level and won’t be surprised.

 

[DanH]

Having done contract pilot services in jets, you not only need to be named insured but ask for a waver of subrogation for any non-owned aircraft you may be considered PIC on. Insurance companies see this request a lot at the corporate jet level and won’t be surprised.

Mark, that would be a waiver of subrogation between the aircraft owner and yourself, or a waiver from the insurance company with which you are a named insured...or both?

 

[JImKerr]

Having done contract pilot services in jets, you not only need to be named insured but ask for a waver of subrogation for any non-owned aircraft you may be considered PIC on. Insurance companies see this request a lot at the corporate jet level and won’t be surprised.

Jets are generally owned by corporations. They are usually insured under commercial policies with millions of single limit liability coverage. They are a LOT more expensive than GA and have more stringent coverage requirements. Pilots have to be type certified on a jet. The insurance company needs to verify they are. The corporation CEO may not know what to ask for when handing the keys to their multimillion dollar jet to someone. Naming a pilot on a commercial policy protects the company and the passengers from a pilot suing them. A phase inspection can be missed on a jet and the pilot unknowingly takes passengers up in an unworthy airplane. They can be personally on the hook for that and could loose their pilots license and blow up their career. The pilot cannot sue the company or maintenance department because they did not tell him/her. They are all covered under the same policy. They would have to release their rights of coverage opening them up to massive personal liability. Entire different game with jets.

Adding a clause to protect a named insured from flying other aircraft is fairly common. It is like auto insurance covering someone renting a car. Most insurance company's will do this if asked. I think a lot of them do it by default. It protects the insurance company. They will have wording that says you have to be current and meet open pilot requirements or something like that in the policy to be covered. They will not accept hull damage liability for a non-insured aircraft. Read the wording in the policy carefully if you expect to be covered in any aircraft you fly. They will spell out exactly what they will cover and exceptions. Accordingly, the other plane may not even have insurance. The insurance could have lapsed due to a payment being lost in the mail. A 3rd policy policy will certainly have exceptions for this spelled out. I personally think it is best to have a dedicated policy in your own name to cover flying non-owned and rented aircraft. Those policies are specifically written to cover these types of situations.

 

[Mconner7]

Mark, that would be a waiver of subrogation between the aircraft owner and yourself, or a waiver from the insurance company with which you are a named insured...or both?

Subrogation is when the insurance company pays the policy holder then sues the pilot to recoup the loss. If you are named insured with a subrogation waver then you are covered by the policy just like the owner is. A $300-400K RV-10 is a lot of money but liability if there is an injury my be multiples of that.

 

[Flyfish]

A pilot flying under the open pilot provision could be sued by the ins. company to recover what they paid out to the owner. A named insured will not. Always ask to be a named insured to cover yourself or have another policy (like a CFI policy) that covers you.

I apologize, but I really don’t understand this. If I fall under the open pilot qualifications, and the owner allows me to fly the aircraft, isn’t the insurance company then covering me? So why could they sue me if they themselves approved the qualifications? That doesn’t really make sense to me.
Edit:
If that’s the case that the insurance company is going to sue the open pilot, why would anyone use that clause? What’s the point at all of even having that?

 

[Mconner7]

I apologize, but I really don’t understand this. If I fall under the open pilot qualifications, and the owner allows me to fly the aircraft, isn’t the insurance company then covering me? So why could they sue me if they themselves approved the qualifications? That doesn’t really make sense to me.
Edit:
If that’s the case that the insurance company is going to sue the open pilot, why would anyone use that clause? What’s the point at all of even having that?

I am not an insurance agent but this is my understandin.

You are not insured just because you meet the OPW. The policy holder is. If there is a claim, they may pay the policy holder and subrogate against you to reclaim the loss (Likely requiring proof of gross negligence ). Moreover, you may be sued by any third party if there is damage or injury and YOU are not the policy holder so not covered. By insisting on being named insured, you are now treated the same as the policy holder.

 

[BobTurner]

Edit:
If that’s the case that the insurance company is going to sue the open pilot, why would anyone use that clause? What’s the point at all of even having that?

Answers:
1. A huge number of pilots do not understand that ‘open pilot clauses’ protect the owner, not them.
2. In practice such lawsuits are fairly rare. Going to court is very expensive. Insurance companies watch their bottom line. If you cause $100K in damage but it costs the insurance company $150K in legal costs, they just pay the owner and walk away. Some pilots are willing to take the gamble.

 

[Mconner7]

Answers:
1. A huge number of pilots do not understand that ‘open pilot clauses’ protect the owner, not them.
2. In practice such lawsuits are fairly rare. Going to court is very expensive. Insurance companies watch their bottom line. If you cause $100K in damage but it costs the insurance company $150K in legal costs, they just pay the owner and walk away. Some pilots are willing to take the gamble.

Agreed,
I have a policy on my RV-10 that covers me when I am flying someone else’s plane. When I meet the OPW for a friends plane, I don’t pester their insurance company to name me on the policy as I am already covered by my policy and the friend is covered by his. In this scenario, the OPW saves the insurance company from having to name me. Underwriters hate having to “touch the file” over and over for the relatively small commission they make on our policies (versus a corporate jet). If I had no coverage for myself, the OPW would only help out the friend….

 

[scsmith]

I just had a discussion with my insurance broker about this. There are a few complicating facets.

First of all, you can not add someone as a "named insured" to your policy unless that person has an ownership interest. You can not be a "named insured" under someone else's policy for their airplane. What seems like a minor semantic point, there are "additional insured" entities that can be added that extends liability coverage. But an "additional insured" does not include operating the airplane -- it is intended to cover other entities, like an airport or hangar owner for liability.

If you are covered under an open-pilot clause, that clause extends 3rd party liability coverage to you. But it does not shield you from subrogation for hull damage, up to the limit of the hull coverage. So you can't be sued for a million dollars for damage or injury to 3rd parties, but you can be sued for the damage to the covered aircraft, up to the limit of the hull coverage on that airplane.

It is possible to get a waiver of subrogation added, for specific circumstances. Our tow plane policy has a waiver of subrogation for our (volunteer) tow pilots.

Many policies extend non-owned aircraft coverage as part of your policy on your own airplane. In my case, my policy covering my RV-8 extends non-owned aircraft coverage - with some limitations. Notable limitations are that the non-owned airplane can not have more seats than my RV-8, and also must be a Standard category airplane. So, my non-owned coverage does not cover me flying another experimental aircraft. (darn!) And would not cover me flying my friend's Cessna 180 Skywagon. (darn!)

You can purchase non-owned aircraft coverage, but it may have limits on what you can do with the airplane. For example, you can't use that coverage if you are towing gliders in someone else's airplane.

 

[RV7A Flyer]

I think people are confusing "named insured" with the idea of specifically named additional pilots on a policy.

 

[MacCool]

I just had a discussion with my insurance broker about this. There are a few complicating facets.

First of all, you can not add someone as a "named insured" to your policy unless that person has an ownership interest. You can not be a "named insured" under someone else's policy for their airplane. What seems like a minor semantic point, there are "additional insured" entities that can be added that extends liability coverage. But an "additional insured" does not include operating the airplane -- it is intended to cover other entities, like an airport or hangar owner for liability.

We're probably insured by different companies. This is contrary to what is stated in my policy under "exclusions", and what my broker confirmed. My transition CFI and good friend was and still is a "named insured" on my plane.

I think @RV7A Flyer in above post has it correct.

 

[scsmith]

I think people are confusing "named insured" with the idea of specifically named additional pilots on a policy

My Broker specifically said that it does not matter whether a pilot is specifically named as an additional pilot on the policy, or covered under a blanket qualification. In either case, a non-owner pilot is not protected against subrogation for the value of the hull coverage if they are at fault. Only the owners are the "named insured" and are protected, unless there is a subrogation waiver in place for the additional pilots - whether individually named or not.

 

[ronrapp]

You can purchase non-owned aircraft coverage, but it may have limits on what you can do with the airplane. For example, you can't use that coverage if you are towing gliders in someone else's airplane.

Some aircraft insurance policies have non-owned coverage as a standard or available feature, so if you have your airplane insured with them, they also extend coverage to you when you're flying an airplane you do not own.

--Ron

 

[rolivi]

I;m curious what @LRingeisen can add to this question. For those unaware, she is an insurance broker that writes many policies for us. #Galleghar

My understanding is that the "Named Pilots" (In my case a CFII with no ownership of my plane) is covered the same as I am... but if they were filying under the open pilot provision MY coverage is not the same.

 

[BobTurner]

I;m curious what @LRingeisen can add to this question. For those unaware, she is an insurance broker that writes many policies for us. #Galleghar

My understanding is that the "Named Pilots" (In my case a CFII with no ownership of my plane) is covered the same as I am... but if they were filying under the open pilot provision MY coverage is not the same.

That’s my understanding too. But really matters is what it says in the contract.

 

[Dave S]

You might want to call his insurance company. I am a member of in a float plane club with several members. Our policy will cover an appropriated rated CFI if they are flying with a named club member. The CFI could could still possibly be open subrogation, but the agent I spoke with said he's only heard of it once and the CFI was deserving of it (I don't recall the specifics) The interesting part is we have a member who does not have his float Sea Plane Rating. That member is covered as long as he's flying with a CFI and the CFI is covered since he would be flying with a named club member. We have named CFIs in the past but that still only covered them as pilots, per the agent really only cost the club more money in premiums with the additional pilots being named.

 

[scsmith]

Some aircraft insurance policies have non-owned coverage as a standard or available feature, so if you have your airplane insured with them, they also extend coverage to you when you're flying an airplane you do not own.

--Ron

Yes. But as I said, there are limitations on that coverage. In my case, the coverage only extends to aircraft with the same number of seats (or fewer). And DOES NOT EXTEND to other EXPERIMENTAL aircraft.

 

[MacCool]

The discussion proceeds making the assumption that all insurance companies have the exact same underwriting policies. That has not been my experience, and the theories postulated here are not in line with what my broker and my policy indicate. I'd suggest that folks contact their broker before assuming that this discussion is universally applicable.