| The Truth About Aircraft Insurance |
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Introduction
Many pilots have a misconception that aviation insurance policies, like automobile policies, are “standardized”,
and that all policies are alike. In addition, many non-owner pilots think they are covered under the aircraft owner’s
or flight school's insurance policy when they use a non-owned aircraft. This is far from true.
The following questions and answers are general in nature and are not intended to address the
specific requirements of an individual’s policy. These should be discussed directly with an trained
aircraft insurance agent.
Q: What is non-owned liability coverage?
A: It is a liability insurance policy to protect you as a non-owner pilot against claims arising from bodily injury or
damage you may have caused to others or to their property when using a non-owned aircraft. Your insurance
company’s commitment is to defend you if you are sued, and if you are at fault, to pay for the damages according
to the terms of the policy. This coverage is not medical or life insurance, but rather, liability coverage for claims
made against you by third parties for which the law holds you legally liable. This includes damage to the non-
owned aircraft if you purchase aircraft damage liability coverage. Bodily injury and property damage liability
coverage and aircraft damage liability coverage are generally the two types of coverage you can purchase under
a non-owned policy.
Q: What is subrogation?
A: It is the right of an insurance company to recover from a legally responsible third party, such as a non-owner
pilot, for the payment of a covered claim to its policyholder, such as a flight school. This right to “subrogate” is
found in almost every insurance policy and upon payment of a claim entitles the insurance company to all of the
policyholder's legal rights of action against responsible third parties for the loss paid. It is common practice for
insurers of flight schools to “subrogate” against renter pilots to recover their payment for damage over the
deductible.
Q: What about the rental agreement I signed? I thought I only had to pay the deductible?
A: Yes, you probably will be responsible for the deductible. However, it is not the only thing you may be
responsible for. Some operators hold their renters responsible for loss of income during the time the aircraft is
down for repairs and depreciation of the aircraft’s value due to its damage history. In addition, if the operator’s
insurance company pays for the damage above your deductible, they can subrogate against you for the cost of
the damages they paid.
Q: What limits of bodily injury and property damage liability should I carry?
A: Because different people have different needs, there is no standard recommended amount of liability coverage
you should carry. You need to consider factors such as your personal assets, earnings, liability limits you carry on
your other insurance policies such as auto or homeowners, whom you carry as passengers, and how much
insurance you can afford, among others.
Q: What limits of aircraft damage liability should I carry?
A: A guideline in the selection of your aircraft damage liability policy limit would be the value of the non-owned
aircraft you usually fly.
Q: What effect does pilot experience have on non-owned insurance premiums?
A: Generally none. Premiums are based on the limits of coverage you select.
Q: I want to borrow a friend’s aircraft. My friend said it would raise his insurance premium too much to
add me as an approved pilot. Am I covered if I purchase a non-owned policy to fly his aircraft even
though I’m not an approved pilot on his insurance policy?
A: Yes. You have liability coverage from your non-owned aircraft insurance policy. However, your friend will have
no coverage under his insurance, because you were not an approved pilot on that policy. Although your friend
was not flying his aircraft at the time of the accident, he may still be sued and will have to pay all his legal costs
and any judgment out of his own pocket. Therefore, while you are protected under your policy, for your friend’s
sake you should still either be a named pilot on his policy or meet the qualifications of his open pilot clause, if it is
provided.
Q: Will a non-owned policy protect me if I use a non-owned aircraft for other than my own pleasure
and business use?
A: Generally, no. Non-owned policies do not provide coverage if you use a non-owned aircraft for any activity for
which you get money or other benefits, such as carrying passengers or cargo for hire, rental, and aerial
photography; or for any special uses like parachute jumping, maintenance test flights, and traffic patrol.
Q: What is an A.M. Best rating? What rating should I look for in an insurance company?
A: The A.M. Best rating reflects an insurance company’s financial strength and its ability to meet its obligations to
policyholders. The rating categories range from A++ and A+ (Superior) to F (in liquidation). It is recommended
that you select an insurance company that holds an A++ or A+ (Superior) rating, and specializes in aviation
insurance.
Q: How can I recognize the differences in non-owned insurance policies?
A: Because state law does not regulate aviation insurance extensively, policy language varies considerably. In
fact, some companies are not always licensed in all states in which they do business (surplus lines companies),
nor are their policies necessarily approved in all states. Be sure to ask for a sample policy in an easy-read format
and review it to understand what is and is not covered. Since every renter pilot has different coverage needs, be
aware that the least expensive policy may not provide the best protection to meet your needs. Also be aware that
policies with the same "limits" will not in many instances provide the same coverage.
Q: My Flight school told me that I’m covered under their insurance policy when I rent their aircraft.
Why do I still need renter's insurance?
A: How do you really know if you are covered? It is not safe to just ask the flight school about its coverage.
Experience has shown that an flight school may not fully understand or realize that its insurance coverage does
not generally extend to renter pilots. The only way to determine if coverage is provided by the flight school policy
is to read and understand that policy. You also have to either rely upon the flight school or contact its insurance
company directly every time you fly to verify coverage is still in force and has not been canceled for some reason,
such as failure to pay the premium. Even if you live in one of the few states that require the flight school to carry
renter’s liability coverage, there is a chance that the flight school may not be fully aware of the law, or the
coverage may be inadequate for your needs. It is not prudent to rely on someone else’s insurance to protect your
own assets. A non-owned aircraft liability policy is an easy, inexpensive way to give you peace of mind when
dealing with the unknown hazards confronting the non-owner pilot.
Many pilots have a misconception that aviation insurance policies, like automobile policies, are “standardized”,
and that all policies are alike. In addition, many non-owner pilots think they are covered under the aircraft owner’s
or flight school's insurance policy when they use a non-owned aircraft. This is far from true.
The following questions and answers are general in nature and are not intended to address the
specific requirements of an individual’s policy. These should be discussed directly with an trained
aircraft insurance agent.
Q: What is non-owned liability coverage?
A: It is a liability insurance policy to protect you as a non-owner pilot against claims arising from bodily injury or
damage you may have caused to others or to their property when using a non-owned aircraft. Your insurance
company’s commitment is to defend you if you are sued, and if you are at fault, to pay for the damages according
to the terms of the policy. This coverage is not medical or life insurance, but rather, liability coverage for claims
made against you by third parties for which the law holds you legally liable. This includes damage to the non-
owned aircraft if you purchase aircraft damage liability coverage. Bodily injury and property damage liability
coverage and aircraft damage liability coverage are generally the two types of coverage you can purchase under
a non-owned policy.
Q: What is subrogation?
A: It is the right of an insurance company to recover from a legally responsible third party, such as a non-owner
pilot, for the payment of a covered claim to its policyholder, such as a flight school. This right to “subrogate” is
found in almost every insurance policy and upon payment of a claim entitles the insurance company to all of the
policyholder's legal rights of action against responsible third parties for the loss paid. It is common practice for
insurers of flight schools to “subrogate” against renter pilots to recover their payment for damage over the
deductible.
Q: What about the rental agreement I signed? I thought I only had to pay the deductible?
A: Yes, you probably will be responsible for the deductible. However, it is not the only thing you may be
responsible for. Some operators hold their renters responsible for loss of income during the time the aircraft is
down for repairs and depreciation of the aircraft’s value due to its damage history. In addition, if the operator’s
insurance company pays for the damage above your deductible, they can subrogate against you for the cost of
the damages they paid.
Q: What limits of bodily injury and property damage liability should I carry?
A: Because different people have different needs, there is no standard recommended amount of liability coverage
you should carry. You need to consider factors such as your personal assets, earnings, liability limits you carry on
your other insurance policies such as auto or homeowners, whom you carry as passengers, and how much
insurance you can afford, among others.
Q: What limits of aircraft damage liability should I carry?
A: A guideline in the selection of your aircraft damage liability policy limit would be the value of the non-owned
aircraft you usually fly.
Q: What effect does pilot experience have on non-owned insurance premiums?
A: Generally none. Premiums are based on the limits of coverage you select.
Q: I want to borrow a friend’s aircraft. My friend said it would raise his insurance premium too much to
add me as an approved pilot. Am I covered if I purchase a non-owned policy to fly his aircraft even
though I’m not an approved pilot on his insurance policy?
A: Yes. You have liability coverage from your non-owned aircraft insurance policy. However, your friend will have
no coverage under his insurance, because you were not an approved pilot on that policy. Although your friend
was not flying his aircraft at the time of the accident, he may still be sued and will have to pay all his legal costs
and any judgment out of his own pocket. Therefore, while you are protected under your policy, for your friend’s
sake you should still either be a named pilot on his policy or meet the qualifications of his open pilot clause, if it is
provided.
Q: Will a non-owned policy protect me if I use a non-owned aircraft for other than my own pleasure
and business use?
A: Generally, no. Non-owned policies do not provide coverage if you use a non-owned aircraft for any activity for
which you get money or other benefits, such as carrying passengers or cargo for hire, rental, and aerial
photography; or for any special uses like parachute jumping, maintenance test flights, and traffic patrol.
Q: What is an A.M. Best rating? What rating should I look for in an insurance company?
A: The A.M. Best rating reflects an insurance company’s financial strength and its ability to meet its obligations to
policyholders. The rating categories range from A++ and A+ (Superior) to F (in liquidation). It is recommended
that you select an insurance company that holds an A++ or A+ (Superior) rating, and specializes in aviation
insurance.
Q: How can I recognize the differences in non-owned insurance policies?
A: Because state law does not regulate aviation insurance extensively, policy language varies considerably. In
fact, some companies are not always licensed in all states in which they do business (surplus lines companies),
nor are their policies necessarily approved in all states. Be sure to ask for a sample policy in an easy-read format
and review it to understand what is and is not covered. Since every renter pilot has different coverage needs, be
aware that the least expensive policy may not provide the best protection to meet your needs. Also be aware that
policies with the same "limits" will not in many instances provide the same coverage.
Q: My Flight school told me that I’m covered under their insurance policy when I rent their aircraft.
Why do I still need renter's insurance?
A: How do you really know if you are covered? It is not safe to just ask the flight school about its coverage.
Experience has shown that an flight school may not fully understand or realize that its insurance coverage does
not generally extend to renter pilots. The only way to determine if coverage is provided by the flight school policy
is to read and understand that policy. You also have to either rely upon the flight school or contact its insurance
company directly every time you fly to verify coverage is still in force and has not been canceled for some reason,
such as failure to pay the premium. Even if you live in one of the few states that require the flight school to carry
renter’s liability coverage, there is a chance that the flight school may not be fully aware of the law, or the
coverage may be inadequate for your needs. It is not prudent to rely on someone else’s insurance to protect your
own assets. A non-owned aircraft liability policy is an easy, inexpensive way to give you peace of mind when
dealing with the unknown hazards confronting the non-owner pilot.
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