Insuring Your Flying Club, the Airplane and the Members
MIKE ADAMS, SENIOR VICE PRESIDENT OF UNDERWRITING
As much as I’d like to give you a simple definitive description of what is involved in insuring your flying club and insuring you as a member, there is no one-size-fits-all answer because there is no one-size-fits-all definition of a flying club. Plus, insuring the club and its individual members can be two very different issues. That’s why the best advice I can give you is to pick up the phone and talk with an aviation insurance underwriter if you’re thinking of joining or starting a flying club.
There are almost as many ways to structure a flying club as there are clubs, ranging from an informal understanding (nothing spelled out in a written agreement) between the individual members, to a highly organized and professionally run organization. Before joining a club, it’s important you understand all the rules of the club, including how its insurance works.
Here are some suggested insurance questions you should receive answers to, before joining a club:
Is the flying club owned by a flight school or FBO vs. an independent club owned by its members?
If a flight school or FBO owns the club, the rules may be very different from a member-owned club and so will the insurance policy. In the case of a club owned by an FBO or flight school, the policy may protect just the club from liability or damage to the aircraft or property, not the individual members. If so, you’re going to want to carry your own non-owned policy to protect yourself in the event you injure somebody, damage their property, and/or damage the aircraft itself (personal liability). And what about a CFI giving instruction to members? If the club is owned by an FBO or flight school, the CFI is probably covered by the FBO/club policy. But if it is member-owned, there’s a high likelihood the CFI could be covered as a member of the club when he or she is flying for personal pleasure. However, their instruction liability to other club members may be excluded, in which case they would need to be covered by a CFI non-owned aircraft policy.
Do the members have an ownership interest in club airplane(s)/assets?
Many insurance companies, Avemco included, look more favorably on clubs whose members have a financial interest in the club’s aircraft because the inherent pride of ownership and fear of losing their investment frequently means that club members are more cautious and make better decisions. You have probably witnessed a difference between how a person drives their own car vs. a rental car. Sometimes, it is no different with a plane.
What and whom does the club’s insurance policy cover?
If you’re joining an existing club, make sure you understand their insurance policy up front. It’s not uncommon for a club that owns a low-value plane to only carry liability insurance, with the understanding that the members will contribute toward repair or replacement costs. There’s nothing wrong with that unless you personally don’t want to incur the risk. In that case, you probably want to consider a non-owned aircraft policy for yourself that includes aircraft damage liability coverage.
Does the club policy include cross-liability coverage?
Cross-liability coverage is important and would come into play when two or more club members are flying in a club plane. In the event of an accident, cross liability would protect (defend and offer settlement as needed) the member who was the pilot at the time of accident from the claim of the injured member who was the passenger. Without cross liability in the policy, the insurance company could deny defense and settlement on the basis an insured party (member passenger) cannot sue another insured party (member pilot) of the same policy. Avemco’s flying club insurance will still defend the pilot flying against a suit filed by another club member (passenger) in a covered claim.
How much financial risk are you comfortable with?
Make sure you ask the club leadership what the policy liability limits are and who it covers (who is an “insured”). Does the insurance policy defend and protect just the club and the aircraft, or does it also defend and protect the individual club members? A common liability limit for flying clubs is $1,000,000 total per accident with $100,000 bodily injury. As the club member flying the plane, if you’re at fault for an accident or incident, you may be sued along with the club. Even if the club’s policy includes you as an insured, if you don’t feel the club’s policy provides enough coverage for you, you may want to purchase a non-owned aircraft policy that would increase the coverage limits for you while flying a club aircraft.
All of the above bring me back to my first bit of advice. Pick up the phone and call an aviation insurance underwriter who can help you determine all the variables in your flying club and the best way to protect yourself from the unexpected.
After all, the reason to join a flying club is to enjoy flying more while spending less money, and knowing you are protected by the right insurance.
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Mike Adams, Senior Vice President of Underwriting, is an instrument-rated pilot, and a former President of the Oregon Pilots Association. Mike holds a property/casualty insurance license in all 50 states. His more than 35 years of combined experience with general aviation and the aviation insurance industry helps pilots to understand why many of Avemco’s coverages and underwriting decisions are designed to help keep them safe.
Avemco® does not provide technical or legal advice, and is not affiliated with companies whose products and services are highlighted, advertised, or discussed in content contained herein. Content is for general information and discussion only, and is not a full analysis of the matters presented. The information provided may not be applicable in all situations, and readers should always seek specific advice from the FAA and/or appropriate technical and legal experts (including the most current applicable guidelines) before taking any action with respect to any matters discussed herein. In addition, columns and articles solely reflect the views of their respective authors, and should also not be regarded as technical or legal advice.