Insurance & Providing my Airplane as a CFI...Flight School? Flying Club?

Discussion in 'Pilot Training' started by ilpilot, Dec 24, 2020.

  1. ilpilot

    ilpilot Filing Flight Plan

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    Hello all,

    Firstly, this is a conversation that needs to be had with my insurance. Before I do that, any personal guidance and experiences are appreciated.

    Situation: I have been debating purchasing a tailwheel airplane (champ, tcraft, luscombe, etc). I am a CFI. My goal is to provide instruction in the airplane and allow my students to rent it from me, solo it, and fly it if they choose after earning their certificates. Other non-students would be able to rent it from me also after a checkout.

    A good friend is an AP/IA so annuals and 100hrs will cost me parts, not labor. This would not my main source of income.

    One of the largest fixed expenses in insurance, hence the reason of this post. Looking for any insight from those CFIs or other pilots who have come across a similar situation; a CFI providing the airplane and charging for the plane and instruction.

    Seems that flight school insurance or non-equity flying club insurance is what is needed...any advice on questions to ask, things to consider, or personal experiences is appreciated. Thank you!
     
  2. MauleSkinner

    MauleSkinner Final Approach

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    The only thing I can contribute is that planning on good friends doing things for free in the long term reduces the number of good friends you have.
     
  3. Daleandee

    Daleandee Pattern Altitude

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    Repairing a Champ, T-craft, or Luscombe after a ground loop or hard landing may get expensive as parts for those older certified airplanes can get costly.

    The instructor I received my tail wheel endorsement from lost a plane because of a student (student was fine, plane was not). He lamented about all the time it took for the whole investigation, minimal insurance payout, and finding a suitable replacement aircraft after the accident. The additional cost in down time and revenue lost do to the lack of a training airplane was tough to deal with.

    Insurance for TW planes can be high especially if they are used for training.

    Not to sound negative as I really hope you do this because I believe we really need more instructors teaching good ol' stick & rudder skills!
     
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  4. ilpilot

    ilpilot Filing Flight Plan

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    Appreciate comments from you both. That is the goal, teaching stick and rudder. Trying to find out if it is economical. Regarding the AP/IA I apprentice under him as I'm working towards my AP license. A long ways to go, but I do the labor and he oversees, thus keeping maintenance down to cost of parts.
     
  5. RyanShort1

    RyanShort1 En-Route

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    I've done this off an on for years. It's a LOT harder than it sounds.

    First off, I've had www.TexasTailwheel for years and right now I STILL can't actually get commercial insurance on my recently (July) purchased Luscombe because all of the providers have stopped writing new policies until they have an "airtight" COVID clause according to my insurance agent. As a result most of my instruction lately is just in client aircraft.

    Second, insurance can be VERY expensive per flight hour. Unless you get at least 200+ hours a year on the plane, expect your insurance overhead to be a big, big chunk of your hourly rate. If you pay $3000 for insurance and only fly the plane 100 hours, that's $30/hour just to recoup that cost.

    Third, if you have a problem, and it's your main source of income, that's a BIG deal. I have access to a Cessna 140 that a friend owns, but he's had financial difficulties because of COVID and the plane's been down with a bad cylinder for 4 months because of that, so between the COVID insurance deal and my buddy not getting the 140 back in the air, I've been turning down tailwheel endorsements, which is a major bummer. If you have a problem that takes you down for just a month, that's a major issue if you don't have another job.

    And yes, asking people to do stuff for free - that's not right, especially if you are getting paid in the machine and their signature is potentially at risk if you goof up.
     
    Last edited: Dec 24, 2020
  6. ilpilot

    ilpilot Filing Flight Plan

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    Thank you all.

    Agreed that expecting/asking for free things in not cool...this situation is a little different. The A&P is semi-retired and does maintenance part time to stay busy. I have been 'apprenticing' under him part time and unpaid. He's a one-man shop, and when he needs and extra set of hands for things he calls me. He has said he is happy to help with maintenance on the taildragger. So its not 100% 'free' as we exchange favors for each other. He'll have a plane to fly also.

    This is not my primary source of income (I'm military). It would be nice to break even but any profit this makes will go into a reserve fund for maintenance/beer money.

    Ryan, if you don't mind me asking, when looking for insurance are you structured as a flying club or flight school? Or did you find there wasn't much of a difference? Again, really appreciate your comments.
     
  7. RyanShort1

    RyanShort1 En-Route

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    I was / am doing it as a flight school. Solo insurance - could easily run north of $4k. Expect $2-3K minimum for dual only for a "cheap" tailwheel, and I've got over 1000 hours TW. If you have less than 200 TW total, I'd think it might be more, but could be wrong. Chances are that solo rental will bite you sooner rather than later.
     
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  8. Dana

    Dana Pattern Altitude

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    One thing to ask your insurance company is what about hand propping? The local FBO has a no-electric Cub, they give instruction in it but can't rent it because the insurance won't allow renters to hand prop it. Not sure how they handle students on a solo cross country.

    One of the FBO's CFIs recently started an independent LSA flying club around a Champ; they were looking for anything in that class but had to get one with electric start because they couldn't get insurance otherwise.
     
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  9. Geosync

    Geosync Pre-takeoff checklist

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    So, as claims guy, let me say that first make sure you have a knowledgeable broker. Not AOPA(or whatever they call it now). They are your advocate who will go to the insurance companies. There is a difference- you interact with your broker who works for you and shops your insurance around to the various “carriers”, or insurance companies. Good ones know the best companies for what you want, in fact this is essentially why they exist. You can google aviation insurance brokers in your area.
     
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  10. Brad Z

    Brad Z Final Approach

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    All I want to add is good luck. Insurance can be a real bummer for operations like this. It sounds like your agreement with your A&P is a handshake deal. Depending on how frequently he's doing 100 hr inspections and maintenance, he'll be expecting more labor from you. Better to get something in writing...this is a business after all.

    Honestly, if your goal is just to teach and fly with folks, you're better off establishing a shared equity club that you can offer to instruct for.
     
  11. mandm

    mandm Pre-takeoff checklist

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    Gosh so it is pretty much the same price to rent as own without the mx costs and headache. I just thought pay for insurance, parking and didn’t think about the per hour cost based on 100hrs per year.

    Insurance $20-30/hr
    Fuel $40/hr (11gal per hr)
    Parking $5/hr tie-down $40/hr hangar
    Hangar utilities?
    Annual $20/hr $2000/yr
    Mx?
    Garmin subscriptions $10/hr
    Others?
    Keeping the plane clean and ready to go

    Total: Min $95/hr tie down $130/hr hangar
     
  12. RyanShort1

    RyanShort1 En-Route

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    Remember, if you operate for hire; providing the plane and the CFI (a rental is different) you also have mini-annual costs for the 100 hour, too. The simpler the plane, the easier that can be, but it still has to be done.
     
  13. RyanShort1

    RyanShort1 En-Route

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    You hit the nail on the head, and there can be other overhead costs for legal / business related expenses. It’s not cheap, and the margins are actually quite thin.

    People who complain about rental costs are often quite annoyingly ignorant that it’s often more of a service to other pilots to even offer a rental rather than a moneymaker!

    If you ever think a flight school owner is grumpy...
     
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  14. mandm

    mandm Pre-takeoff checklist

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    Well yes and no, because a flight school may use the plane 400+ hours per year so the cost per hour drops significantly. But I can be reasonable and calculate my ownership cost on a more practical 100 hour per year usage, which might be only during the honeymoon phase which probably will decrease over time. Then there’s depreciation and the headache of selling later on. So I’m confident flight schools can make money which is fine but from a practical standpoint it also makes sense to rent aircraft as well.

    My reasons for wanting my own are more being able to go on longer distance trips, in a faster plane, and without a daily minimum hrs building up. My club has reasonable minimums (1hr/weekdays) but for flight schools with 2-2.5hr per day minimums makes it difficult to go anywhere for a long time.
     
  15. aftCG

    aftCG Pre-takeoff checklist

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    Sending you a PM
     
  16. j1b3h0

    j1b3h0 Line Up and Wait

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    Ryan—Does it make a difference if one’s airplane is ONLY rented dual? Say I have a Luscombe and I wanted to start giving tailwheel endorsements in it,—but never rent the airplane out solo, is the insurance still cost prohibitive? Also, is most of that cost hull, or liability?
     
  17. RyanShort1

    RyanShort1 En-Route

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    YMMV but I’ve personally never gotten a quote under $2-3K for dual only, and would expect $3-4K to let someone’s solo it IF a provider will cover that. Get an incident on your record and it will be even higher.

    I suspect most is liability, but the likelihood of the plane being totaled if you ground loop or even prop strike can be pretty high, and you have to figure a deductible as well.

    Minus some data, here is a what it cost to insure my Cessna 120 in 2016 for dual only and with an established website and customer base I didn’t actually break 100 hours that year in that aircraft. There have been years I might have been able to do 200 hours, but that’s roughly 25 tailwheel endorsements per year or 2 endorsements every month and I’m skeptical that most people will see that level of traffic, because I definitely would be pretty happy with that much traffic.

    If you only teach part time and each tailwheel endorsement is roughly 6-10 hours (saying 8) then you are probably making 3-5 flights per endorsement. If you go full time that’s easier with other people’s schedules, but also you will be working evenings and every weekend that’s flyable most likely.

    I think I’ve turned down roughly 6 people since I bought my Luscombe in July because of not having the commercial insurance, not because of other reasons, and I’m just not sure how much traffic you can get.

    [​IMG]
     
    Last edited: Dec 25, 2020
  18. RyanShort1

    RyanShort1 En-Route

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    But that also means 3 100 hour inspections and likely higher wear rate on stuff. I would expect at least one of those 100 hour inspections to have a higher cost for parts and repair of something...
     
  19. RyanShort1

    RyanShort1 En-Route

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    Here’s my bottom line. I’ve done it, and I’m trying to do it again as soon as the providers write post-COVID policies again, but I’m taking the risk of walking away from $2-3K of insurance money because I enjoy teaching tailwheel and working with those customers. I also have a relatively stable primary job, and an established marketing presence and fly in other clients’ tailwheel planes. If you want to do it, go for it, but don’t expect it to be a huge moneymaker.
     
  20. TonyG

    TonyG Pre-Flight

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    Ryan Short's summary matches my experience near perfectly. Have been providing instruction and rental in a Cessna 170 for over 10 years. It is NOT my main source of income. If so, I'd be a good bit skinnier than I am, and I'd be living under a bridge.

    Regarding insurance: It may be best to think about three levels of operations and their respective insurance costs:
    • Dual only. The quotes I've gotten in the past for this are in line with what Ryan listed. In my area, there are very, very few tailwheel aircraft available for rent - so if I did this I'd be training folks for endorsements that most would find very hard to use. I get a lot of business from pilots that got their endorsement years back, never flew, and now are thinking of buying a TW aircraft, or just want to start up again. Many of them need to start from scratch. Further, as a CFI with an airplane at risk, I've got to fully explore their potential shortcomings, even if they're Chuck Freakin' Yeager (I've got some bent metal associated with not doing this well). This takes time and money. Due to these circumstances in this area I rent my airplane for solo ops to endorsed pilots and insure for that. I just can't bring my self to issue an endorsement with no way for recipients to maintain their proficiency.
    • Dual plus solo operations for endorsed, checked out pilots with at least a Private Certificate, and some other minimal criteria. This is what I do. In my case, add $1000 per year to Ryan's quotes. See the above explanation for why I do this.
    • Dual plus solo operations plus primary instruction (including student pilot solo). Add ANOTHER $1000-2000 to the 2nd case. I don't do this in my airplane anymore due to the cost. Plus, it's scary. If you read through the regs, there's a bit of an interpretation hiccup. The tailwheel endorsement requires you to find the student proficient in TW operations, and elsewhere can be be interpreted as defining that as proficient in 3 point, wheel, and crosswind landings. That's a tall order prior to student pilot solo flight (soloing a cub on grass with 3 points only don't fit in this regime). So that adds a substantial number of hours to the path to solo relative to a tricycle gear airplane. Sure, there are other interpretations, but that's the one I use. Further, when other CFIs started instructing in my airplane, we generated a firm, objective standard for "proficiency" for each type of landing, so we'd be consistent across students. It's a pretty high standard. When I do primary instruction in student's airplanes, I lay all these out ahead of time and make sure they know what's coming.

    In addition to that insurance, your airport may require a general liability insurance for your business (for slip-and-fall type claims, so they don't get sued.) If so, plan on another 800 bucks a year or so.

    I'd second everything else Ryan said (and I don't know the guy from Adam).

    Good luck, but think this through before you leap.

    --Tony
     
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  21. j1b3h0

    j1b3h0 Line Up and Wait

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    I would think most of the premium cost would be hull. I don’t know anyone who got rich flight instructing. It’s a shame that the insurance companies want to suck all the profit out of it. I wonder about self-insuring.
     
  22. ilpilot

    ilpilot Filing Flight Plan

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    Thank you all for your input and I appreciate you being so forthcoming with your experiences.

    I will be getting restationed in 2-3 years and with my next job assignment I will not be able to keep the airplane. Therefore, the financials of this depend on the ability to sell the airplane at that time (hence why hull insurance is so important). That’s the only way this works.

    Tony, I agree with you in making the plane available to solo rent for qualified individuals (which would likely be sport pilots as the minimum certificate in my situation). No tail wheel planes to rent for over 100 miles.

    Looking forward to talking to a broker on Monday. If anyone knows of a broker in the Chicago/northwest Indiana or Colorado Springs and referrals would be appreciated. Happy holidays.
     
  23. optionizerSS

    optionizerSS Pre-takeoff checklist

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    I am not a pilot (yet) and do not own an aircraft and have never rented/borrowed one but have been a boat owner for several years and am active on boating forums. The issue has come up in the boating world and the consensus is no way. Now the difference is in the licensing/experience. Anyone can rent a boat with no experience and in most states with no license. But it has been tried and in the end the owner lost money due to damages and repairs. The experience may be different with planes since the experience and licensing requirements are much different
     
  24. RyanShort1

    RyanShort1 En-Route

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    Keep us informed on your journey! Sport rentals are hard to come by so you’ll definitely be providing a service.
     
  25. ilpilot

    ilpilot Filing Flight Plan

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    Received a quote this morning for $2500-$3000 annually with no student solos. Generally this is acceptable, next step is finding a reasonable hangar rate in the Colorado area. With my full time job I won't be able to instruct very much, so the fixed costs are definitely the determining factor in deciding if this whole thing is feasible. Really appreciate everyone's input again. Thank you