CFI/CFII Liability?

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Martymccasland

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M.McCasland
For no particular reason other than enjoying aviation, I started studying my CFI certificate. I may end up training a few people through the Private, but would really enjoy progressing to the CFII and helping a handful of people get their IR. I have no desire to build time, get an airline job, etc. It would just be for the love of IFR and teaching others.

One question: What's the liability of a CFI/CFII? Anything written into the law to limit liability?

I've never heard of a CFI being sued for negligence, but wouldn't at all be surprised if it has happened. Also, 'can't imagine having students sign some boilerplate waiver being of much use if there's a death/serious injury and a lawyer on contingency starts digging and finds the CFI/CFII has assets worth at least trying to take.

Also, pilots of all experience and rating levels get killed every month (just as car drivers of all levels of ability do the same). Yet, it seems the act of flying would lend a spouse, family, etc. to point fingers harder to a CFI/CFII than the teacher at the local driver's school.

Just curious / thanks in advance for the responses.
 
I know of instructors who have been sued and the available liability insurance coverage is woefully inadequate. Any instructor with any assets worth grabbing is wide open. It's one of the reasons I haven't bothered getting an instructor rating.

I don't know why you think it's hard to point fingers at instructors. All they have to do is find the students log book and look for the regulatory mandated entries.
 
For a full analysis of the issue by a real aviation attorney, I suggest reading the legal journal article "Tiger by the Tail". The facts in that paper suggest the picture for CFI's with assets is not nearly as bleak as FRon makes it appear as long as they play it by the book, document properly, and carry an appropriate level of insurance.
 
There's no such thing as a liability-free life in America today. Insure as best you can, do your job to the best of your ability...then pray for safe travels for your students!

Personally, I love sharing my passion for flight. I don't get overly hung up on the what-ifs.
 
flyingron said:
I don't know why you think it's hard to point fingers at instructors. All they have to do is find the students log book and look for the regulatory mandated entries.
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What gave you that idea? My concerns that CFI/CFIIs could be wide open to liability is the reason I posted the question in the first place.
 
Ron Levy said:
For a full analysis of the issue by a real aviation attorney, I suggest reading the legal journal article "Tiger by the Tail". The facts in that paper suggest the picture for CFI's with assets is not nearly as bleak as FRon makes it appear as long as they play it by the book, document properly, and carry an appropriate level of insurance.
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Thanks, Ron. That sounds like exactly what I need to be reading along side my CFI materials.
 
LDJones said:
There's no such thing as a liability-free life in America today. Insure as best you can, do your job to the best of your ability...then pray for safe travels for your students!

Personally, I love sharing my passion for flight. I don't get overly hung up on the what-ifs.
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Many thanks. Sounds like a good mantra.
 
Choose your students wisely.

This might sound trite and obvious, but my wife and I would *never* sue our CFII. I'll just leave it at that.
 
Ron Levy said:
For a full analysis of the issue by a real aviation attorney, I suggest reading the legal journal article "Tiger by the Tail". The facts in that paper suggest the picture for CFI's with assets is not nearly as bleak as FRon makes it appear as long as they play it by the book, document properly, and carry an appropriate level of insurance.
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One of the things to be aware of with Tiger by the Tail is that it was written almost 20 years ago so it's a bit dated.

Since then, there have been several cases around the country holding that there is no such thing as instructional malpractice liability, including, as I recall offhand, one in 2012 involving a Cirrus accident. The problem is that liability is generally a matter of state law, so some states will say yea while others will say nay, while still others have not even answered the question.

My strictly personal view as an instructor, not as a lawyer, is that I expect I will be held liable if I am in the airplane but that my risk is acceptably low if I am not. YMMV.
 
You might want to look at a video produced by Gold Seal and NAFI at Sun 'n Fun back in 2010. It is a roundtable discussion about this very topic and the members include the vice president of a major aviation insurance company and an aviation attorney. I wouldn't assume anything until you give this video a look. And btw, look quick. The website is likely to be taken down in a few days:
http://www.goldseallive.com/nafi/
The video is on the home page.
 
The question that the OP asked was a major reason I stopped renewing my instructor certificates years ago. When I was young, I had little to lose and liability had little meaning. As I acquired more "stuff" and had more responsibilities my priorities changed. There were other factors but that was a major one.
 
ronnieh said:
The question that the OP asked was a major reason I stopped renewing my instructor certificates years ago. When I was young, I had little to lose and liability had little meaning. As I acquired more "stuff" and had more responsibilities my priorities changed. There were other factors but that was a major one.
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That's why God made insurance.
 
write-stuff said:
You might want to look at a video produced by Gold Seal and NAFI at Sun 'n Fun back in 2010. It is a roundtable discussion about this very topic and the members include the vice president of a major aviation insurance company and an aviation attorney. I wouldn't assume anything until you give this video a look. And btw, look quick. The website is likely to be taken down in a few days:
http://www.goldseallive.com/nafi/
The video is on the home page.
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Excellent video. Many thanks for sharing.
 
Martymccasland said:
What sort of CFI/CFII professional liability rates can be expected?
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I pay about $650 a year for my combined CFI and non-owned $1M liability insurance, including instructional liability as well as liability for injury/death when I'm flying any plane not my own but not including hull insurance, which costs extra. Since I give over 300 hours of flight instruction a year, that's an expense easily amortized over my instructional income.
 
You want as many layers of protection as possible.
(1) Incorporate. All payments made to your corp or LLC, never to you personally.
(2) Whenever possible, have students add you to their insurance policy as a "named insured" (the open pilot clause does nothing for you)
(3) Get a CFI policy that is thorough and includes professional liability. Prices run roughly $500 - $1500 per year. If you have assets, don't cut corners here.
 
Martymccasland said:
What sort of CFI/CFII professional liability rates can be expected?
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My policy runs a little over $600 a year. I gave a little over 500 hours of dual last year, not including ground instruction, so overall adds about a buck an hour to my rates....pretty cheap peace of mind.

As pointed out in the video, the key value is the coverage for defense costs. I feel the odds of being held liable by a jury are pretty small....but the costs of clearing your name can be horrific. I view it as much as a legal defense retainer as I do a liability policy.
 
write-stuff said:
You want as many layers of protection as possible.
(1) Incorporate. All payments made to your corp or LLC, never to you personally.
(2) Whenever possible, have students add you to their insurance policy as a "named insured" (the open pilot clause does nothing for you)
(3) Get a CFI policy that is thorough and includes professional liability. Prices run roughly $500 - $1500 per year. If you have assets, don't cut corners here.
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Bingo. And I do all three. I've been added to a number of my client's policies and there has never been any additional cost to the owner. I usually get a call once a year from the various owners to get my current hours for their insurance.
 
midlifeflyer said:
Since then, there have been several cases around the country holding that there is no such thing as instructional malpractice liability, including, as I recall offhand, one in 2012 involving a Cirrus accident. The problem is that liability is generally a matter of state law, so some states will say yea while others will say nay, while still others have not even answered the question.
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UND foundation and Cirrus design had been sued under a product liability statute. The case went up and down the MN and federal courts until it was dismissed in a narrow 5/4 decision of the MN supreme court. They held that despite the fact that cirrus sold the course together with the plane it was instruction and not a product. In MN, instruction is protected, you cant sue your math teacher if you are bad at calculus.

Getting to that decision cost cirrus and UND probably millions in lawyers fees alone.
 
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write-stuff said:
You want as many layers of protection as possible.
(1) Incorporate. All payments made to your corp or LLC, never to you personally.
(2) Whenever possible, have students add you to their insurance policy as a "named insured" (the open pilot clause does nothing for you)
(3) Get a CFI policy that is thorough and includes professional liability. Prices run roughly $500 - $1500 per year. If you have assets, don't cut corners here.
Click to expand...

In regards to #1, I talked to an aviation attorney when we bought our recent plane. I asked about putting the plane in an LLC. He said to do so is for financial reasons primarily and liability secondarily. As he said, "If you flew the plane into a bus of schoolchildren, was the LLC flying the plane or were you?" The answer is obvious and he further said in such a case the LLC *AND* you personally would be named in the suit. Meaning the LLC distinction really achieved nothing. (We ended up putting the plane in the LLC anyway, but I expect little to none protection from the LLC in a liability prospective should something happen.)

Now I'm not an attorney, but I would be surprised if the situation changes much in the CFI world. Student pays money to an LLC but the LLC didn't teach them how to fly; I did. They crash and both me and my LLC gets sued -- I'd guess. (Waiting for the attorneys to check-in and correct me.)


As for #2, the "open pilot" clause. Is it primarily because insurance policies waive "flight instruction" as a covered activity on most policies -- meaning even if the CFI is named, nothing is really achieved? For that matter, does being added as a "named insured" achieve anything as well if, like most policies, flight instruction is not covered? (Excuse my ignorance / just asking question that's probably obvious to many of you.)
 
LDJones said:
I view it as much as a legal defense retainer as I do a liability policy.
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Exactly. I was surprised to learn from the video that the legal defense cost is not capped. i.e. if it takes $2MM in legal fees to defend a $1MM liability policy, you're covered.

That's exactly what I'm looking for. Unless one is just extremely sloppy, don't really care, etc., it seems hard for a judgement for negligence against a CFI to occur.
 
The LLC makes some sense if you have a physical office where members of the public walk through the door. If you fall victim to a slip&fall legal assault your personal assets are not tied up. To protect against claims for your actions as a professional it does nothing.

If your plane is in a entity and another pilot (ferry pilot, mechanic) causes harm to a third party it may help to keep your personal stuff out of it. If you are at the controls it dies nothing.
 
write-stuff said:
You want as many layers of protection as possible.
(1) Incorporate. All payments made to your corp or LLC, never to you personally.
Click to expand...
Won't make a bit of difference for liability purposes if you're the only instructor in that corporation. Corporate entities do not shield you from the consequences of your own actions, only the actions of others in that corporation.
 
write-stuff said:
You want as many layers of protection as possible.
(1) Incorporate. All payments made to your corp or LLC, never to you personally.
(2) Whenever possible, have students add you to their insurance policy as a "named insured" (the open pilot clause does nothing for you)
(3) Get a CFI policy that is thorough and includes professional liability. Prices run roughly $500 - $1500 per year. If you have assets, don't cut corners here.
Click to expand...
Keep in mind that, as a general principle, (1) will do absolutely (0) to protect you from instructor liability. That is for the most part true for (2) as well since most policies have an exclusion for providing paid flight instruction services. IOW, a CFI is protected if she borrows the airplane, not when she teaches in it.

Thinking (1) will do anything in this situation is probably (1) in the list of layman misunderstandings of what incorporation (or creating any form of limited liability entity) does.
 
Martymccasland said:
In regards to #1, I talked to an aviation attorney when we bought our recent plane. I asked about putting the plane in an LLC. He said to do so is for financial reasons primarily and liability secondarily. As he said, "If you flew the plane into a bus of schoolchildren, was the LLC flying the plane or were you?" The answer is obvious and he further said in such a case the LLC *AND* you personally would be named in the suit. Meaning the LLC distinction really achieved nothing. (We ended up putting the plane in the LLC anyway, but I expect little to none protection from the LLC in a liability prospective should something happen.)
Click to expand...

The one time that the LLC provides an effective liability shield is when someone else is flying the plane.

Basically, the owner (LLC) and the operator (Pilot) are both jointly and severally liable. When you're flying a plane that you own, then the distinction is not important. However...if your buddy borrows your plane, and crashes into that same schoolbus, then the owner (LLC) and the operator (buddy) are liable...you are not personally liable. If the plane was owned by you then the owner (you) and the operator (buddy) could both be held personally liable.
 
Martymccasland said:
In regards to #1, I talked to an aviation attorney when we bought our recent plane. I asked about putting the plane in an LLC. He said to do so is for financial reasons primarily and liability secondarily. As he said, "If you flew the plane into a bus of schoolchildren, was the LLC flying the plane or were you?" The answer is obvious and he further said in such a case the LLC *AND* you personally would be named in the suit. Meaning the LLC distinction really achieved nothing. (We ended up putting the plane in the LLC anyway, but I expect little to none protection from the LLC in a liability prospective should something happen.)

Now I'm not an attorney, but I would be surprised if the situation changes much in the CFI world. Student pays money to an LLC but the LLC didn't teach them how to fly; I did. They crash and both me and my LLC gets sued -- I'd guess. (Waiting for the attorneys to check-in and correct me.)
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Absolutely nothing to correct. You had a lawyer who did a great job in making sure you understood what he was talking about.
 
weilke said:
If your plane is in a entity and another pilot (ferry pilot, mechanic) causes harm to a third party it may help to keep your personal stuff out of it. If you are at the controls it dies nothing.
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That's my understanding... Wind gets to blowing while tied-down on an overnight trip somewhere. My Bonanza gets up 30 knots or so of speed and crashes into a G650. The LLC *may* provide some hope to limited liability where there otherwise would have been none. Now if I do something at the controls, the fact of the plane being in a LLC or not is just trivia.
 
JeffDG said:
The one time that the LLC provides an effective liability shield is when someone else is flying the plane.

Basically, the owner (LLC) and the operator (Pilot) are both jointly and severally liable. When you're flying a plane that you own, then the distinction is not important. However...if your buddy borrows your plane, and crashes into that same schoolbus, then the owner (LLC) and the operator (buddy) are liable...you are not personally liable.
Click to expand...
Not necessarily. You would also need to have no contributing negligence or other act which contributed to the accident. This would be particularly important if there is any maintenance or airworthiness issue involved, since you as the owner are the party taking care of maintenance. It might also involve you if there's a question of competence or qualification of the pilot flying, since you are the one who allowed him to fly it. That LLC won't protect you from either of those things you did yourself.

However, none of these are relevant to the issue of CFI liability unless the CFI is providing the plane, not just the training which is usually the only thing free-lance CFI's provide.
 
Most liability claims against instructors arise from dinging the clients airplane while instruction is provided. Claims for instructional liability are uncommon. Insurance for the hull risk on a C150 or Warrior is cheap. Insurance to protect against dinging a Malibu or TBM is difficult to come by and would usually be provided by the owners insurance on a case by case basis (iow the insurance co has a list of type specific instructors they cover, they wont cover your 271hr fresh graduate in a TBM850).
 
Martymccasland said:
In regards to #1, I talked to an aviation attorney when we bought our recent plane. I asked about putting the plane in an LLC. He said to do so is for financial reasons primarily and liability secondarily. As he said, "If you flew the plane into a bus of schoolchildren, was the LLC flying the plane or were you?" The answer is obvious and he further said in such a case the LLC *AND* you personally would be named in the suit. Meaning the LLC distinction really achieved nothing. (We ended up putting the plane in the LLC anyway, but I expect little to none protection from the LLC in a liability prospective should something happen.)

Now I'm not an attorney, but I would be surprised if the situation changes much in the CFI world. Student pays money to an LLC but the LLC didn't teach them how to fly; I did. They crash and both me and my LLC gets sued -- I'd guess. (Waiting for the attorneys to check-in and correct me.)


As for #2, the "open pilot" clause. Is it primarily because insurance policies waive "flight instruction" as a covered activity on most policies -- meaning even if the CFI is named, nothing is really achieved? For that matter, does being added as a "named insured" achieve anything as well if, like most policies, flight instruction is not covered? (Excuse my ignorance / just asking question that's probably obvious to many of you.)
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Absolutely correct on #1. The main reason for my LLC is for tax purposes when subcontracting with FBO. It helps make clear that I'm not an employee as they are paying the LLC.

As for #2, I have not seen a flight instruction exclusion in any of my client's policies. It would seem odd for them to exclude it when they are encouraging regular recurrent training by the policyholder.
 
weilke said:
Most liability claims against instructors arise from dinging the clients airplane while instruction is provided.
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Note that such hull damage claims are not covered by instructional liability coverage -- you need additional hull damage coverage for that. In my case, that's another $650 per year for $75K, although that includes all non-owned aircraft I might fly, not just client planes when instructing. So, my CFI policy is really four coverages in one policy -- instructional liability, hull damage when instructing, liability when piloting non-owned aircraft, and hull damage when piloting non-owned aircraft.
 
LDJones said:
As for #2, I have not seen a flight instruction exclusion in any of my client's policies. It would seem odd for them to exclude it when they are encouraging regular recurrent training by the policyholder.
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I think you misunderstand the exclusion. That clause excludes any named insured when that named insured is giving training for pay. The owner is still covered when receiving training, and you'd be covered when flying the plane yourself, but even though you may be a named insured, that clause would exclude coverage for you when you are getting paid for giving the owner training. And that is a common exclusion, so please read your trainee's policy carefully before relying on that "named insured" coverage in your trainee's policy to cover you while giving paid training to the owner in the owner's aircraft.
 
The OP asked if there is liability and how common it is. Jonesy replied "That is what God created insurance for". Insurance does not relieve anyone of liability. Insurance pays for your defense and if you lose will pay damages up to policy limits. If you have $1M in coverage and get a $3M judgment against you guess who pays the other $2M?

For those who instruct hundreds of hours a year then it is a business and insurance is one cost of business. The OP stated the occasional student was his interest. Sounds like he is keeping his day job to buy groceries. That was my situation and I had way to may friends who needed a quick flight review or a pilot moving to a twin and needed a baby sitter or a friend who's son wanted to learn to fly. Most of the time I got a heart felt thanks. Try buying insurance with a "heart felt thanks". The OP could also discover that he is like me and detested primary instruction.

So to answer his question again, yes there is liability, substantial liability. Can you mitigate it?, yes to some extent. Anyone who has ever been named in a wrongful death suit (been there, done that, have the tee shirt)knows that it is painful, frustrating and very expensive, even with insurance. Lost work, worry, travel to name a few. I am grateful they are full time and part instructors willing to accept the risk.

If you think you can pick clients (or their families) that won't sue you or that another person's insurance won't go after you or that your insurance will make everything all rosy, to put it politely, you are as crazy as a run over dog.
 
LDJones said:
As for #2, I have not seen a flight instruction exclusion in any of my client's policies. It would seem odd for them to exclude it when they are encouraging regular recurrent training by the policyholder.
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I'm way outside of my knowledge areas. With that said, in the video (link below) starting around the 27:00 and going on through the 32:20 min mark hits the covered / not-covered points as a part of flight instruction. The particular call-out they made in the video pertained the the "open pilot clause". The insurance agent called out that flight instruction is frequently NOT covered as a part of exclusions in the open pilot clause.... I was confused in my post and interchanged "open pilot" with "named insured". To your point, insurance companies WANT the owner to get flight instruction and not discourage it.

http://www.goldseallive.com/nafi/
 
Ron Levy said:
I think you misunderstand the exclusion. That clause excludes any named insured when that named insured is giving training for pay. The owner is still covered when receiving training, and you'd be covered when flying the plane yourself, but even though you may be a named insured, that clause would exclude coverage for you when you are getting paid for giving the owner training. And that is a common exclusion, so please read your trainee's policy carefully before relying on that "named insured" coverage in your trainee's policy to cover you while giving paid training to the owner in the owner's aircraft.
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Easy enough to go to the AVEMCO website (or any other insurer that puts samples on the web) and look at a sample policy to see an example of the common exclusion.

I once did a program on insurance for independent instructors at a flight school (they also did a lot of outside training to owners) and, fortunately, there was an independent aviation insurance agent in the group. He pointed out something I was not aware of - that there are in fact insurers who will protect a CFI giving a policyholder instruction but it's generally by a special endorsement.
 
:rofl:
Ron Levy said:
I think you misunderstand the exclusion. That clause excludes any named insured when that named insured is giving training for pay. The owner is still covered when receiving training, and you'd be covered when flying the plane yourself, but even though you may be a named insured, that clause would exclude coverage for you when you are getting paid for giving the owner training. And that is a common exclusion, so please read your trainee's policy carefully before relying on that "named insured" coverage in your trainee's policy to cover you while giving paid training to the owner in the owner's aircraft.
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Much better said than my poorly written post. That's what the the insurance agent and attorney in the CFI video link were mentioning.
 
Martymccasland said:
What sort of CFI/CFII professional liability rates can be expected?
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Pretty much nonexistent. Most of the policies out there as "CFI insurance" aren't professional liability policies at all. They're just pretty much standard aviation non-owned insurance that covers while flight instructing and at roughly comparable rates.

The few I have seen have ridiculously low limits that aren't worth the effort.
 
flyingron said:
Pretty much nonexistent. Most of the policies out there as "CFI insurance" aren't professional liability policies at all. They're just pretty much standard aviation non-owned insurance that covers while flight instructing and at roughly comparable rates.
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I've only seen four such policies offered (Avemco, Falcon/NAFI, SAFE, and AOPA), and all but Avemco include instructional liability.
 
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