Club Officer Liability

[Mahneuvers]

I know there are quite a few of you who are members of clubs and I'm sure some holding officer positions. Does liability scare you? Despite Hold Harmless agreements etc, officers shouldn't be liable in the event of an accident but that doesn't stop someone from trying.

On a related matter, apparently a lot of companies are getting out umbrella liability policy writing as I could not renew this year and State Farm isn't writing new policies. Any recommendations?

 

[frfly172]

Don’t be an officer if you have that worry from the members

 

[TCABM]

As for club officer liability, then one time I was concerned about it, a conversation over lunch solved the problem.

There are E&O policies for directors/officers, though. We used to carry them but found it not necessary.

Structure of the club will play a part of the decision.

 

[DreadPirateWill]

Liability for what? Like mentioned, structure of the club will dictate a fair amount.
Club I'm involved in is equity which likely alleviates many concerns - every member is an owner/operator.
Leaseback situation would be a bit different, might be some liability in an officer deciding what/how/who can operate the aircraft as a non owner.

 

[Mahneuvers]

...Structure of the club will play a part of the decision.

Please expound. It's an LLC. There are way too many members for one plane but many fly infrequently. So 20+ members, 5 officers, 1 plane.

Don’t be an officer if you have that worry from the members

There are many members and it's their families that is the concern. Would like to give back to the club but don't want to expose myself financially for what is a volunteer job.

Liability for what?...

Anything really. An accident in which a family loses the primary bread winner.

 

[TCABM]

Please expound. It's an LLC. There are way too many members for one plane but many fly infrequently. So 20+ members, 5 officers, 1 plane..

We’re packing for a 3-day trip to Austin starting tomorrow. I’ll PM you some thoughts when I’ve got a down minute there.

 

[Lindberg]

That's what D&O insurance is for.

 

[Mahneuvers]

That's what D&O insurance is for.

From what I understand, that doesn't stop someone from naming officers in a lawsuit in which case legal representation has to be hired to get you removed. Also, as I understand it, a judge might choose not to remove you if it's a case of gross negligence i.e. deferring maintenance which then led to a crash. The other club member telling me this worked for a Fortune 100 company and was in a role where he was sued repeatedly despite being an agent of the company. It might be he's overly cautious b/c of his history.

 

[Lindberg]

From what I understand, that doesn't stop someone from naming officers in a lawsuit in which case legal representation has to be hired to get you removed. Also, as I understand it, a judge might choose not to remove you if it's a case of gross negligence i.e. deferring maintenance which then led to a crash. The other club member telling me this worked for a Fortune 100 company and was in a role where he was sued repeatedly despite being an agent of the company. It might be he's overly cautious b/c of his history.

No insurance prevents you from being sued; it defends you when you are sued. Being someone else's agent doesn't mean you can't be sued for your own actions, rather it means they can also be sued for your actions.

 

[Hang 4]

From what I understand, that doesn't stop someone from naming officers in a lawsuit in which case legal representation has to be hired to get you removed. Also, as I understand it, a judge might choose not to remove you if it's a case of gross negligence i.e. deferring maintenance which then led to a crash. The other club member telling me this worked for a Fortune 100 company and was in a role where he was sued repeatedly despite being an agent of the company. It might be he's overly cautious b/c of his history.

D&O insurance is supposed to accomplish two things 1. Provide a defense in the event of a lawsuit. 2. Pay the judgement in the event of a successful suit. Having said that, there are generally specific policy exclusions that can leave you exposed. One specific exclusion is Insured vs insured suits. (e.g. one director suing another). Read the policy, understand the maintenance and safety policies, practices and if that's a real worry, don't volunteer.

 

[flyingcheesehead]

I know there are quite a few of you who are members of clubs and I'm sure some holding officer positions. Does liability scare you? Despite Hold Harmless agreements etc, officers shouldn't be liable in the event of an accident but that doesn't stop someone from trying.

I served on the BoD of an equity club with 30 members and 3 airplanes for 14 years. This is exactly what D&O (Directors and Officers) coverage is made for.

Don’t be an officer if you have that worry from the members

It's not the members you have to worry about, it's their next of kin.

 

[TCABM]

PM sent. Be sure to read declarations on any D&O policy that’s in effect or being considered. It may not provide the protection you think it would on cursory examination.

 

[Clip4]

I know there are quite a few of you who are members of clubs and I'm sure some holding officer positions. Does liability scare you? Despite Hold Harmless agreements etc, officers shouldn't be liable in the event of an accident but that doesn't stop someone from trying.

On a related matter, apparently a lot of companies are getting out umbrella liability policy writing as I could not renew this year and State Farm isn't writing new policies. Any recommendations?

Your personal umbrella policy with State Farm never covered any aviation exposure.

Most club officers are not going to be found liable in the event of an accident. That doesn’t mean they will not be sued. If your club has a maintenance officer performing preventative maintenance, that’s not a great position to be in because it requires endorsing aircraft logbooks.

 

[TCABM]

…. If your club has a maintenance officer performing preventative maintenance, that’s not a great position to be in because it requires endorsing aircraft logbooks.

What if your club maintenance officer is an active A&P/IA and has been for decades?

 

[Clip4]

What if your club maintenance officer is an active A&P/IA and has been for decades?

He knows the liability issues and DO insurance isn’t going to help him.