One of the most often 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 aircraft renter is the deductibles. These are usually broken down into “non-motion” and “motion”. This is the amount the renter must pay before the insurance company pays. If you have large deductibles you will have lower annual premiums and conversely if you have low deductibles you will have higher insurance premiums.
As you can probably guess 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 is a concept in law that allows the insurance company, “to substitute (one person) for another with reference to a claim or right”. In other words, whoever is responsible for the damage and subsequent claim the insurance company must pay, 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 or accident and as the pilot you are deemed at fault, the insurance company can and will sue you to recover the amount of money they had to “pay out” for the cost to repair or replace the aircraft and any money that was paid out for a liability claim by an injured party. This can add up to some pretty big bucks. 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 they have insured.
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 or accident and determine what percent of fault is the members, if any and asses them for that percentage of the deductible. As you can see you have a very small exposure with our flying club.
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.
Also, don’t forget they will almost assuredly have much higher deductibles and you are subject to being sued by the insurance company (subrogated against), thus requiring the cost of renters insurance in addition to the aircraft rental rate.
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. – an exceptional value.
Lastly, in addition to the unsurpassed insurance protection and other great benefits of membership you’re also a part of an organization that places a high priority on the social aspects of flying. We not only want you to have the best deal around, but have the most fun too.
So, “Don’t Just Fly – Fly with a Flying Club”.
