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Thread: CFI insurance. Be Careful!

  1. #1

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    CFI insurance. Be Careful!

    I am an additional insured with waiver of subrogation on a friend’s $120K aircraft. I have been so for decades.

    I do read policies, and this year I found an obscure little caveat on note 17 that seemed to affect CFIs. It was ambiguous, so I asked. Broker wasn’t sure, so he asked the underwriter:

    My first, and immediate thought: I always thought that being additional insured gave better protection than a simple waiver of subrogation. Apparently not so - I will try to get more info on that.

    My second thought -I bring a million liability when I instruct, but no hull coverage. Hull, with my SAFE policy, would top out at $125K and cost me over a grand per year - worth it if I did a lot of instructing in beat up old Cubs, but not in 180s or Cirrusi.

    Here is the underwriter’s response:


    So when Bob Turner provides dual to either of the other two pilots, he is no longer insured by the policy, regardless of whether he charges or not. If he wants coverage for his giving dual, he can buy a CFI non-owner policy (probably best if instructing others) or we can name him as an additional insured on the policy for $68. If he wants a waiver of subrogation, that would be $305.


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  2. #2
    mvivion's Avatar
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    Bob,

    thanks for posting this. Insurance policies are a minefield. All the insurers tell us to carefully read the provisions of the policy, but those provisions are so obfuscated by jargon as to be nearly impossible for the average person to interpret.

    If you’re flying or instructing in someone else’s plane, be VERY careful to understand your liabilities.

    MTV
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  3. #3

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    It's clearly implied in the foregoing posts, but keep in mind that most of the phrases in an insurance policy (such as "additional insured" and "waiver of subrogation", to list the current ones) are terms of art and may or may not mean what folks think they mean...the terms will have specific meanings and without a detailed understanding, will often come into play in an unexpected way.

    Read the policy but get an explanation from the underwriter and (ideally) from an attorney experienced in insurance matters. Particularly if hull insurance is in play, a couple hundred $$ spent on a consult to help understand the $XXX,XXX coverage would be beneficial.

  4. #4
    Kodiakmack's Avatar
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    This brings up a question I’ve been wondering about. If I have someone in the front seat of my pa-12, pilot or not, that understands how to manipulate mixture, carb heat, etc., would my policy with me as the named insured no longer be valid even though I am the PIC? *I am a CFI but don’t insure the bird for giving dual.
    HAVE FUN. DON'T DIE.

  5. #5
    Richgj3's Avatar
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    Additionally Insured is only there to stop YOU from suing the additionally insured person. So, my hangar landlord requires me to name him as Additionally Insured so if his hangar falls on my airplane, my insurance company won’t go after him because they’d be suing themselves.

    Just being named on a policy doesn’t really protect you. It protects the policy owner if you wreck his airplane. Then the insurance company pays him, and comes after you. To have the same protection he has, you need to be an OWNER of the policy. Not practical from a flight instructor standpoint. The only way to be sure you are protected from all situations is to have your own insurance to cover you while instructing. Too expensive for many of us. Which is why I don’t instruct anymore.

    Rich

  6. #6

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    Not entirely true, but close. Being named does nothing for you unless the policy defines "named" so you are covered.

    I learned something today - "additional insured" at least for AIG means you are covered for liability and property damage, but not hull.
    "Waiver of Subrogation" means neither the insurer nor the owner can come after you for hull damage and loss of use.

    For me, Waiver of Subrogation is all I need - my CFI policy cannot cover me for the value of most hulls (even used 172s exceed the max for SAFE insurance). It has always been free - until this year.

    Mike is right - these terms are defined differently for each underwriter. Get it in writing, and in simple English, like I do.

    I am now frozen out of instructing. I can get dual coverage on my own Cub, but would have to charge each student $140 extra to cover the liability only premium - and I would have no "tail" so flight reviews would not be practical.

    Here is a note on subrogation I found on the internet. No idea if it is accurate.

    Why should you agree to provide a waiver of subrogation?

    In a perfect world you shouldn’t, however some companies will simply not provide the service unless you do. Most flight training companies (SimCom, FlightSafety, Simuflite, etc.) require this without exception.
    Last edited by bob turner; 08-26-2021 at 09:58 PM.

  7. #7

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    Bob, that’s interesting… when you asked about note 17 they pulled your waiver of subrogation? How did note 17 read?
    I don’t do instruction in an airplane other than my own unless they have hull insurance and they can write this into the policy. Add “name of LLC” and “my name” as Additional Insured with a Waiver of Subrogation for physical damage claims.

  8. #8

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    Yes, interesting!

    I am probably repeating myself - I thought "additional insured" meant full coverage. It does not.
    I knew that "waiver of subrogation" only protected me for hull - and I have required that for over a decade. It has been free until very recently.

    I have a waiver of subrogation and additional insured on a 201 Mooney. The minute I get in the right seat, I am no longer insured in that aircraft! That's because of note 17. It is obscurely written, and pretty much conflicts with what is stated as coverage.

    I started this because most CFIs still believe being "named" on a policy is good enough. That is emphatically not true, unless the policy expressly defines "named" as meaning you are covered when instructing. And - and - because even as careful as I am, this "note 17" business caught me, and the broker, by surprise!

    I will dig up note 17 and copy it here.
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  9. #9

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    Here is note 17. b) c):

    [But excluded is any] person or organization other than you or your employees or agents while at work for you who design . . . provide flight instruction . . . if the claim arises out of such activity by such person or organization;


    Note 18 unambiguously states that I have a waiver of subrogation. There are no caveats in note 18; straightforward English.

    So you see there is an ambiguity. If one were to go to court, it would probably be determined that the waiver was in effect, notwithstanding paragraph 17. However, why go to court when one can get the underwriter to state exactly what is meant. And the underwriter stated that flight instructors are not covered, no matter whether a waiver is otherwise given.

    Waivers of subrogation for flight instruction used to be free, and available if a CFI asked. About two years ago that stopped being true, at least for me. It may be my age, but so far nobody has actually said that, so I am assuming the same is true for 30 year old CFIs. I suppose if it is age related it is reasonable - would love to hear from younger CFIs on the topic. But as of right now, it is my impression that underwriters are not encouraging experienced flight instructors to ride herd on their policy holders - at least not experienced CFIs with assets.

  10. #10

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    Quote Originally Posted by bob turner View Post
    I suppose if it is age related it is reasonable - would love to hear from younger CFIs on the topic. But as of right now, it is my impression that underwriters are not encouraging experienced flight instructors to ride herd on their policy holders - at least not experienced CFIs with assets.
    I doubt if I qualify as "younger" but I'm interested in the topic as I do sometimes instruct. Is this the scenario you are concerned about -

    You will give instruction to an airplane owner in his airplane
    You get yourself named as insured on the owner's policy
    You think you are covered under the owners policy while giving him instruction in his airplane
    You find you are not covered and that you may be subject to subrogation

    Is this an extension of the idea that FAA finds the most qualified person to be the one at fault even if they were not pilot flying or acting as pilot in command? Does that actually ever happen?

  11. #11

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    No. Insurance issues are quite different.
    In an "event" the plaintiff (the injured party) will sue everybody. You need lawyers - especially if the event was not your fault.
    In an event involving hull damage, the insurer will pay the owner, and then go after you. You can either have CFI insurance for hull (expensive) or get a waiver of subrogation from the owner's insurer. Make sure it specifies "while instructing."

  12. #12
    skywagon8a's Avatar
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    Quote Originally Posted by bob turner View Post
    Here is note 17. b) c):

    [But excluded is any] person or organizationother than you or your employees or agents while at work for you who design . . . provide flight instruction . . . if the claim arises out of such activity by such person or organization;
    If you are providing instruction for hire to the owner of this airplane, are you not his employee? Bob, are you saying the owner is covered in this case but the employee is not?
    N1PA

  13. #13

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    That is why I asked. Since it conflicts with section 18, I plan to ask what kind of wording they would provide with the $300 waiver for me as CFI.
    Ambiguous, and misleading.

  14. #14

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    Bob,

    I'm 37 and some of the people I have flown with have been charged to put the waiver on the policy. Usually I'm only flying with them for 10 or 15 hours and the insurance companies will pro-rate the waiver. One was pretty expensive, I think like an extra $600 for the year on an experimental Cub but we were able to finish the training in a month and they pro-rated it for the month.

    Sawyer

  15. #15

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    I may have to apologize for jumping the gun.

    When I asked initially I very clearly stated that I was named as "additional insured with waiver of subrogation" and asked them to clarify paragraph 17. I even mentioned the "employee/agent" thing, noted above.

    I posted their answer. So today I asked about the wording should I pay the extra $306 for a CFI waiver, and AIG said all I had to do was be specifically named. I am specifically named, and, again, my short inquiry stated that - as does the policy.

    So maybe I pulled the alarm too soon, based on information from folks who do not read the friggin' question before answering. We shall see.

  16. #16

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    Yes. My initial post was in error. I am "named" on the policy, along with the two pilots who are the beneficial owners. Note 18 gives me a Waiver of Subrogation, but nowhere does it state that I am "additional insured." Here is note 18:

    WAIVER OF SUBROGATION FOR NAMED PILOTS Unless mutually agreed upon by the Company and You, we agree to waive our rights of recourse against the pilot(s) listed by name in the "Pilots Endorsement", provided however that this waiver shall not prejudice the Company's right of recourse for damages arising from the design, manufacture, modification, repair, sale or servicing of aircraft.

    Only in note 17 is that contradicted.

    Here is another "gotcha" that I was not aware of - bringing your own hull coverage may or may not cover replacement aircraft or diminution of value - indeed your primary insurance may not cover those. Without a Waiver of Subrogation, the owner can sue you for those things after your hull coverage has written him a check.

    And of interest - all three of us are listed the same way on the policy. The aircraft is owned by a trust, and nowhere in the policy does it define who else is covered as "additional insured." At least nowhere that I have found. I will look again this evening.

  17. #17
    cafi19's Avatar
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    Just a side note here....if you read the policy....a named operator, an additional insured and a named insured all have different protections. You do have to read carefully. I know this doesn't necessarily pertain to Bobs original post but important to understand and be aware of.

    cafi

  18. #18

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    I suspect I'm restating the obvious, but being a "named pilot" for purposes of the underwriter agreeing not to sue that "named pilot" is vastly different than being a named insured on a policy.

    There have been millions of pounds of pulp used to write books and billions of electrons dedicated to the cause of addressing insurance, coverage, defense, and liabilities. When the you-know-what hits the oscillating air movement device, all bets are off and there is always a line of inquiry "How do we (the underwriter / insurer) avoid liability?" that looks very closely at who is "Named Insured" "Additional Insured" "Additional Named Insured" "Named pilot"...and who has waivers of subrogation....with the inquiries going on ad infinitum as the potential loss gets larger.

    Given the complications and specific provisions unique to each policy that apply, probably best to run the policy(ies) by an attorney to get an unbiased view of coverage, liability, and exposure.


    ON EDIT: Think this crossed in the ether with the immediately previous post.
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  19. #19

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    Nice to see Cafi -

    My point is that there was an ambiguity in the policy. One paragraph flat out said we all had waivers of subrogation. Period. No caveats. The paragraph before it said flight instructors do not - so I asked for clarification, and I got it.

    Painful. I can fly the aircraft with waiver so long as I am acting PP - so I did today.

    I am rated in the Airbus 320 - and always advocated turning the magic off when it is not working for you. With the brand new touch screen Garmin stuff, it took 20 minutes to figure out how to get it back to raw data. Brand new setup for me, but my right seater had 20 hours with the new stuff. I was the one who found the "CDI" button, and meanwhile somebody hit another button and turned the tower off. !

    The point of that? My buddy is no slouch with high tech electronics. He was VP Engineering for a huge electronics company, and is routinely among the top ten glider pilots worldwide. Glider flying is extremely high tech. So be careful with this wonderful glass touch-screen stuff - it has lots of "gotchas." Even for us engineers.

  20. #20
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    Quote Originally Posted by bob turner View Post
    Nice to see Cafi -

    My point is that there was an ambiguity in the policy. One paragraph flat out said we all had waivers of subrogation. Period. No caveats. The paragraph before it said flight instructors do not - so I asked for clarification, and I got it.

    Painful. I can fly the aircraft with waiver so long as I am acting PP - so I did today.

    I am rated in the Airbus 320 - and always advocated turning the magic off when it is not working for you. With the brand new touch screen Garmin stuff, it took 20 minutes to figure out how to get it back to raw data. Brand new setup for me, but my right seater had 20 hours with the new stuff. I was the one who found the "CDI" button, and meanwhile somebody hit another button and turned the tower off. !

    The point of that? My buddy is no slouch with high tech electronics. He was VP Engineering for a huge electronics company, and is routinely among the top ten glider pilots worldwide. Glider flying is extremely high tech. So be careful with this wonderful glass touch-screen stuff - it has lots of "gotchas." Even for us engineers.
    No LOC or ADF back course to a circling approach? IFR has got so simple, a good thing. Us old farts learned how to lots of steam gauge approach with our minds processing situational awareness. Now I have synthetic vision glass panel IFR (non certified) and ADSB traffic/weather/airspace/approach plates on my iPad running ForeFlight Pro in my Cub. We’ve come a long way baby.


    Sent from my iPad using Tapatalk
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  21. #21
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    Quote Originally Posted by bob turner View Post
    ............With the brand new touch screen Garmin stuff, it took 20 minutes to figure out how to get it back to raw data. Brand new setup for me, but my right seater had 20 hours with the new stuff. I was the one who found the "CDI" button, and meanwhile somebody hit another button and turned the tower off. !
    The point of that? My buddy is no slouch with high tech electronics. He was VP Engineering for a huge electronics company, and is routinely among the top ten glider pilots worldwide. Glider flying is extremely high tech. So be careful with this wonderful glass touch-screen stuff - it has lots of "gotchas." Even for us engineers.
    I was in an airplane shop yesterday when it took 2 or 3 guys about 15 minutes to figure out how to get the "tach time" from a Garmin touchscreen gizmo.
    Not at all intuitive.
    It didn't help that Garmin's user guides and/or manuals are only available online, and seem to all run to over 100 pages--sometimes well over.
    Cessna Skywagon-- accept no substitute!

  22. #22

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    I don’t find the Garmin glass cockpit very intuitive. That said, I wouldn’t get in any new glass cockpit airplane and just go flying. I spend a fair amount of time online watching training videos then, if possible, hook up ground power and practice before going airborne. “I used to fly a (fill in the blank)” doesn’t work with a totally different cockpit. I used to get by with that mindset with round gauges, not so much with glass.
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  23. #23

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    I think a light aircraft should have a “revert” button that puts everything back to raw data with knobs for frequency select and a flip-flop button. I think at least that should be “standardized.”

  24. #24

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    Bob, I agree but that will never happen. When Dassault came out with the “Easy” cockpit, (Enhanced Avionics SYstem) they were demonstrating it to us and were proud to show us how you could move all of the info around to different locations on different screens. Engine instruments could be moved around as well. I’m flying the airplane and can’t find what I’m looking for. So they certify the airplane, and long story short, FlightSafety eventually came out with a “standard configuration” they would use to teach new students. One operator had t-shirts made up for their pilots going through school that read “EASY ISN’T”. The last Gulfstreams I flew were much better (IMHO) as their Planeview system allowed for versatility, but some things like engine instruments couldn’t be moved from their primary position unless there was a failure. You could display them elsewhere, but they were always presented in a standard position. You’ll never get manufacturers to standardize because they want to show there’s is better than the competitor. But honestly, the new generation of pilots complain less about this than the seasoned guys. Times are changing; for the better?? Another discussion.

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