Another Insurance Question

[Unregistered]

Is an insurance company likely to go after the estate of a pilot killed in a crash who was flying her friend's plane?

Pilot met hours requirements but was not named.

 

[gismo]

Is an insurance company likely to go after the estate of a pilot killed in a crash who was flying her friend's plane?

Pilot met hours requirements but was not named.

They certainly can subrogate against the pilot's estate but I've been told by a very experienced broker friend that underwriters very rarely go after the pilot in a case like this unless there was deliberate act of recklessness (e.g. buzzing).

 

[TMetzinger]

Yes. The open pilot warranty in english means:

Dear Mr. Insured,

If you let a pilot who meets the open pilot warranty fly your airplane, and he prangs it, we'll make YOU whole. If he doesn't meet the requirements, you are S-C-R-E-W-E-D.

Love,
Your Insurer
=======================

Nothing in there says that the Pilot who isn't named is protected. Now, depending on their exposure and other factors they may choose not to recoup their loss, but don't count on it.

The only way to be protected by ANY insurance policy is to be NAMED as an INSURED on that policy. A waiver of subrogation is just an agreement by the insurer not to sue you to recoup their loss, it does NOT extend protection.

Example: You rent a plane (a recent airplane like a C172S or DA40) from FlyRight FBO, who has a 1000.00 deductible and a wavier of subrogation. You, through ordinary negligence, land the airplane in a farmers field, hitting a prize bull. You have no insurance coverage of your own.

The airplane needs $40,000 worth of goods and services to get it back to it's previous condition and ready for rental again.
The farmer want's $250K for his bull.

The farmer sues you (as the pilot), FlyRight, the manufacturer, and everybody else he can think of.

FlyRight's insurance fixes the airplane, and settles with the farmer to cover FlyRight's exposure as far as the bull goes. FlyRight collects $1000 from you and they are happy. The insurance does not sue you due to the waiver of subrogation.

The farmer is STILL suing you, and you have to defend that suit on your own nickle.

 

[poadeleted20]

They certainly can subrogate against the pilot's estate but I've been told by a very experienced broker friend that underwriters very rarely go after the pilot in a case like this unless there was deliberate act of recklessness (e.g. buzzing).

I wouldn't say "certainly" without more facts. The subrogee can only collect from the third party if the third party can be shown to have been at fault, e.g., a "deliberate act of recklessness." OTOH, if the accident was not the pilot's fault (e.g., the crankshaft failed for reasons undetectable in advance by the pilot), then the subrogee would be unable to collect from the pilot (but might be able to collect from whoever manufactured or worked on the crankshaft).

 

[Matthew]

The subrogee can only collect from the third party if the third party can be shown to have been at fault, e.g., a "deliberate act of recklessness."

That's the way it's been explained to me, but who makes that decision and when?

I just figured:
The subrogee first determines whether they 'have a case'. If YES, then I guess the letters go out asking for payment? Then third party has to either play along and pay the subrogee or hire an attorney to deal with it. Third party may or may not have renter's insurance that will pay for the attorney. Rinse, repeat, until some resolution or does a court or arbitrator get involved?

 

[poadeleted20]

That's the way it's been explained to me, but who makes that decision and when?

At the end of the day, the courts.

I just figured:
The subrogee first determines whether they 'have a case'. If YES, then I guess the letters go out asking for payment? Then third party has to either play along and pay the subrogee or hire an attorney to deal with it. Third party may or may not have renter's insurance that will pay for the attorney. Rinse, repeat, until some resolution or does a court or arbitrator get involved?

If the third party has insurance, it will pay for a legal defense -- that's implicit in the insurance contract. If not, then either the third party pays, or it goes to court, or (least likely ending) the insurer finds out it's trying to squeeze blood from a turnip and gives up.

 

[Dave Siciliano]

I'd like to take issue with the named insured comment. Nothing personal Tim, but I deal with this a lot <g>. Almost everyone asks for that: the airport, CFIs, recurrent training folks, etc. I really dislike it and will make it difficult for anyone to be a named insured on my policy. Named pilot is fine, and that's what I normally do.

A named insured actually has rights under my policy and they can be equal to mine; they can dilute my coverage and lead to some real complications. For instance, if a CFI and I prange my plane and cause damage to other party, that CFI may have equal claim to my policy limits. So, I could lose half my coverage when it's my policy and I'm paying the premiums. Also, although extreme, we could file suit against one another and my insurer might have to defend both of us; I want my insurer defending ME!

It's 'my' insurance. If you want to be a named pilot with waiver of subgragation, let's talk and that may be fine. If you meet the open warranty requirements, why do you need to be named? If you're flying with me frequently, that's one thing. An occasional flight is why there's an open pilot warranty provision.

I recently refused to sigh forms a well known recurrent training center required for me to attend: named insured, waiver of subrogation and hold harmless agreement that was very one sided. They also named the venue in a different state. I voted with my pocket book. Another inequity for the owner is if he/she carries higher coverage limits. The owner pays more for that and the named insured would fly with one owner with minimum coverage, but get equal benefits to an owner paying for much higher coverage.

Best,

Dave

 

[Henning]

That's the way it's been explained to me, but who makes that decision and when?

I just figured:
The subrogee first determines whether they 'have a case'. If YES, then I guess the letters go out asking for payment? Then third party has to either play along and pay the subrogee or hire an attorney to deal with it. Third party may or may not have renter's insurance that will pay for the attorney. Rinse, repeat, until some resolution or does a court or arbitrator get involved?

Typically the File Manager under advisement of the Adjuster will make the determination whether to send it to Subro or not. In a case as defined above, it would not likely be pursued unless there were exceptional circumstances.

After it goes to Subro, the managers there will decide if it is worth pursuing on their end, i.e. they need to see a likelihood of return to go after it, "blood from a turnip" deals rarely see subro unless you really p-ed someone off... fraud p-es insurance people off....

At the end of the line as a person defending themselves against a subro action, you have the ability to negotiate all along the line, then there is always a jury at the far end deciding whatever awards if it goes that far.

Typically the arbitration requirements are when you are going against your own insurance company.

 

[Henning]

I wouldn't say "certainly" without more facts. The subrogee can only collect from the third party if the third party can be shown to have been at fault, e.g., a "deliberate act of recklessness." OTOH, if the accident was not the pilot's fault (e.g., the crankshaft failed for reasons undetectable in advance by the pilot), then the subrogee would be unable to collect from the pilot (but might be able to collect from whoever manufactured or worked on the crankshaft).

And most of the time that is not a simple thing to prove in court which is why subrogation is rarely pursued.

 

[Henning]

I'd like to take issue with the named insured comment. Nothing personal Tim, but I deal with this a lot <g>. Almost everyone asks for that: the airport, CFIs, recurrent training folks, etc. I really dislike it and will make it difficult for anyone to be a named insured on my policy. Named pilot is fine, and that's what I normally do.

A named insured actually has rights under my policy and they can be equal to mine; they can dilute my coverage and lead to some real complications. For instance, if a CFI and I prange my plane and cause damage to other party, that CFI may have equal claim to my policy limits. So, I could lose half my coverage when it's my policy and I'm paying the premiums. Also, although extreme, we could file suit against one another and my insurer might have to defend both of us; I want my insurer defending ME!

It's 'my' insurance. If you want to be a named pilot with waiver of subgragation, let's talk and that may be fine. If you meet the open warranty requirements, why do you need to be named? If you're flying with me frequently, that's one thing. An occasional flight is why there's an open pilot warranty provision.

I recently refused to sigh forms a well known recurrent training center required for me to attend: named insured, waiver of subrogation and hold harmless agreement that was very one sided. They also named the venue in a different state. I voted with my pocket book. Another inequity for the owner is if he/she carries higher coverage limits. The owner pays more for that and the named insured would fly with one owner with minimum coverage, but get equal benefits to an owner paying for much higher coverage.

Best,

Dave

All very good points. Named pilot with a no subro clause is fine by me.

 

[Henning]

Yes. The open pilot warranty in english means:

Dear Mr. Insured,

If you let a pilot who meets the open pilot warranty fly your airplane, and he prangs it, we'll make YOU whole. If he doesn't meet the requirements, you are S-C-R-E-W-E-D.

Love,
Your Insurer
=======================

Nothing in there says that the Pilot who isn't named is protected. Now, depending on their exposure and other factors they may choose not to recoup their loss, but don't count on it.

The only way to be protected by ANY insurance policy is to be NAMED as an INSURED on that policy. A waiver of subrogation is just an agreement by the insurer not to sue you to recoup their loss, it does NOT extend protection.

Example: You rent a plane (a recent airplane like a C172S or DA40) from FlyRight FBO, who has a 1000.00 deductible and a wavier of subrogation. You, through ordinary negligence, land the airplane in a farmers field, hitting a prize bull. You have no insurance coverage of your own.

The airplane needs $40,000 worth of goods and services to get it back to it's previous condition and ready for rental again.
The farmer want's $250K for his bull.

The farmer sues you (as the pilot), FlyRight, the manufacturer, and everybody else he can think of.

FlyRight's insurance fixes the airplane, and settles with the farmer to cover FlyRight's exposure as far as the bull goes. FlyRight collects $1000 from you and they are happy. The insurance does not sue you due to the waiver of subrogation.

The farmer is STILL suing you, and you have to defend that suit on your own nickle.

That's why you carry a non owner policy.

 

[TMetzinger]

I'd like to take issue with the named insured comment. Nothing personal Tim, but I deal with this a lot <g>. Almost everyone asks for that: the airport, CFIs, recurrent training folks, etc. I really dislike it and will make it difficult for anyone to be a named insured on my policy. Named pilot is fine, and that's what I normally do.

A named insured actually has rights under my policy and they can be equal to mine; they can dilute my coverage and lead to some real complications. For instance, if a CFI and I prange my plane and cause damage to other party, that CFI may have equal claim to my policy limits. So, I could lose half my coverage when it's my policy and I'm paying the premiums. Also, although extreme, we could file suit against one another and my insurer might have to defend both of us; I want my insurer defending ME!

It's 'my' insurance. If you want to be a named pilot with waiver of subgragation, let's talk and that may be fine. If you meet the open warranty requirements, why do you need to be named? If you're flying with me frequently, that's one thing. An occasional flight is why there's an open pilot warranty provision.

I recently refused to sigh forms a well known recurrent training center required for me to attend: named insured, waiver of subrogation and hold harmless agreement that was very one sided. They also named the venue in a different state. I voted with my pocket book. Another inequity for the owner is if he/she carries higher coverage limits. The owner pays more for that and the named insured would fly with one owner with minimum coverage, but get equal benefits to an owner paying for much higher coverage.

Best,

Dave

No argument from me - If I have a client who doesn't want to make me a named insured (and I understand and agree with your reasons not to do that), then there are still other options:

• He can make me a named pilot with a waiver of subrogation, and I'll get my own liability coverage (and pass the cost along)
• I can get my own hull and liability (and pass the cost along)
• He can hire somebody else.

The fact that pilots are cheap ba$tards in general is why they sometimes prefer to just add me as a named insured - it usually works out cheapest.

If I did ferry work full time, then I'd have my own policies all the time and would just charge a set fee to cover those costs. But since I don't, then I do what's necessary to ensure I cover my costs and make an itsybitsyteenyweeny profit.

Even then the cheapest ba$tards go find somebody stupid who doesn't think about insurance and such and may not even have a commercial certificate.

 

[Dave Siciliano]

No argument from me - If I have a client who doesn't want to make me a named insured (and I understand and agree with your reasons not to do that), then there are still other options:

• He can make me a named pilot with a waiver of subrogation, and I'll get my own liability coverage (and pass the cost along)
• I can get my own hull and liability (and pass the cost along)
• He can hire somebody else.

I thought if you were a named pilot, you were covered for liability but may or may not be covered for hull damage dependent on the policy.
My intent is for you to be covered, but not dilute my coverage under the policy.

This can get complicated.

Best,

Dave

 

[gismo]

I thought if you were a named pilot, you were covered for liability but may or may not be covered for hull damage dependent on the policy.
My intent is for you to be covered, but not dilute my coverage under the policy.

This can get complicated.

Best,

Dave

AFaIK, being a "named pilot" has exactly the same impact as meeting the open pilot warranty. Either one only means the owner will be protected when you fly the airplane. If you manage to leave the gear up until after you land the insurer will pay the owner to repair or replace the airplane, if you take out a school bus the insurer will fight/pay the liability claim (up to the policy limit). But in either case the insurer likely has the right to come back to you to cover their expenses in the case. What's unclear to me is whether they would get involve in the defense if an uninvolved person was injured and that person sued you as the pilot.

 

[TMetzinger]

AFaIK, being a "named pilot" has exactly the same impact as meeting the open pilot warranty. Either one only means the owner will be protected when you fly the airplane. If you manage to leave the gear up until after you land the insurer will pay the owner to repair or replace the airplane, if you take out a school bus the insurer will fight/pay the liability claim (up to the policy limit). But in either case the insurer likely has the right to come back to you to cover their expenses in the case. What's unclear to me is whether they would get involve in the defense if an uninvolved person was injured and that person sued you as the pilot.

Yep - that's the difference between a "named pilot" a "named insured". Often a "named pilot" is added to a policy for a fee when they don't meet the open pilot warranty.

 

[Dave Siciliano]

That's what I thought; so, why would Tim need liability coverage if he's a named pilot with WOS? That's what I'm not seeing. Because the insurer may not defend him against a suit?

Best,

Dave

 

[TMetzinger]

That's what I thought; so, why would Tim need liability coverage if he's a named pilot with WOS? That's what I'm not seeing. Because the insurer may not defend him against a suit?

Best,

Dave

That's why. If I kill Farmer Bob's prize heifer... the insurance company will not defend ME if I'm sued - they'll defend the INSURED if he's sued.

Again, if you aren't NAMED as INSURED, you have no coverage. All a WOS does is ensure the insurance company won't sue you to recover their losses. Anybody else with a loss related to the incident can still sue you.

 

[Dave Siciliano]

Thanks. Every once in awhile I just have to go through this again to keep it all straight!

Best,

Dave