Insurance
One of the overlooked, but most important aspects of aircraft rental are the pilot’s protections or more importantly exposure in regards to the aircraft’s insurance policy.
Aircraft insurance provides coverage for two areas: damage to the aircraft (hull) and other property, and liability coverage for the insured party (the person or person’s who are the named insured on the policy).
Another area of importance to the renter is the deductible. These are usually broken down into “non-motion” and “motion”. This is the amount the renter must pay before the insurance company pays.
This is an area where many commercial flight schools and aircraft rental operations will save money. The larger deductibles shift more of the exposure from the flight school and insurance company to the renter – you. It’s common for deductibles to be in the $5,000 or higher range at many flight schools and rental operations.
The biggest area of concern however, when it comes to aircraft insurance for the renter is “subrogation”. This allows the insurance company, “to substitute (one person) for another with reference to a claim or right”. In other words, whomever is responsible for the damage and subsequent claim, can be sued by the insurance company to recover their loss, except for the insured party – the commercial flight school, rental operator, or flying club.
To summarize, if you are involved in an aircraft incident and as the pilot you are deemed at fault, the insurance company can and will sue you to recover the funds they paid out for the cost to repair the aircraft and any funds that were paid out for a liability claim. This is why when you rent from a commercial flight school or rental operation you would need to purchase renter’s insurance to cover you should you be subrogated against. Remember, it is the aircraft owner that is the insured party, not you the renter.
However, if you are a member of a flying club you are one of the many aircraft owners and are the insured party, or what is called the named insured. This is the case at the University of Michigan Flyers. All of our members are owners and therefore the insured party, because they are all members of record.
Therefore, if there is an insurance claim for damage and/or liability claim (i.e. personal injury law suit) our insurance company will not only pay for the claim and the defense in court, but they also cannot “subrogate” or sue you, because your are one of the aircraft owners.
Thus you do not need to obtain renters insurance because you are barred from any subrogation by the insurance company – you are their policy holder. This is a huge advantage in the area of financial exposure, particularly with our flying club.
Your exposure is only limited to the deductible and with us that is as small as you can buy from any aircraft insurance underwriter. Our deductible is $250 for a non-motion claim and $1,000 for a motion claim. If there is a claim, our Board of Directors will review the incident and determine what percent of fault is the member's -- if any -- and assess them for that percentage of the deductible.
An additional advantage being a member of our club is due to our almost forty years of experience, professional management and excellent claim history we’re able to obtain a policy that provides $2,000,000 of liability coverage, subject to $250,000 per seat. Almost all other commercial flight schools and rental operators are only able to obtain a maximum of $1,000,000 of liability coverage, subject to only $100,000 per seat – less than half.
For most aircraft renters the added cost of the renters insurance far exceeds the cost of monthly membership dues. Our monthly dues not only help provide this far superior insurance coverage, but also clean, new aircraft, housed in hangars next to our office and maintained by our dedicated “in-house” maintenance staff to name a few.
