Providing Instruction

[Unitedcap]

Hey Guys!

So i have just earned my CFI and want to start doing freelance instruction. My friend is letting me use his plane for the cost of gas. I have non-owners insurance. However, what steps should I do to protect my self and his plane.

I'm going to start an LLC, however, the plane will not be part of that. I'm guessing I should get Instructors Insurance?

Any help would be great guys.

Thanks!!!

 

[MauleSkinner]

CFI insurance would probably be a good plan.

I'd also make sure your friend's insurance covered commercial flight instruction.

 

[midlifeflyer]

CFI insurance would probably be a good plan.

I'd also make sure your friend's insurance covered commercial flight instruction.

...and it probably doesn't. Use for flight instruction generally requires a separate policy or at least an additional endorsement.

There are going to be a number of issues in the scenario, from insurance that actually protects you (and its exclusions) to the fact that the LLC doesn't protect you from claims based on the instruction you give, to the need for 100 hour inspections since the instructor, and not the student, is providing the aircraft (yes, I am assuming the friend is passing responsibility for the airplane to the instructor and not to the student).

If you are an AOPA LSP member, might be worth the 30 minute free consult to at least understand the questions you need to consider.

 

[MikeELP]

What Mark said above!!

Also, may I recommend you join SAFE www.safepilots.org

The discounts you get on CFI insurance will more than pay for the membership, plus lots of other discounts (the 50% off on ForeFlight for example) plus many on-line resources to draw on as an instructor.

 

[TommyG]

Just curious, so if he gets CFI a insurance he will be covered to instruct. But what happens if it is a PPL student and comes time to solo? Would renters insurance cover it?

 

[moonshine]

Your friend's airplane is most likely insured for "personal and business use"
Operating for hire will involve:
a) commercial use insurance. That's what kills most ideas like that. For example, I pay around $850 a year for my Diamond. Commercial use bumps it up to about $6000. Ouch? Ouch.
b) 100-hour inspections. Almost like an annual, but every 100 hours as opposed to once a year.

Renter's insurance - to protect the renter from the claims from the main insurance company
CFI insurance - similar for the CFI.

Never had either. Doing transition training and whatnot in customers' airplanes I'm covered by my airplane insurance - which will cover ASEL up to four seats with the hull value up to mine. Which, in case of a 2007 DA40, covers most of the airplanes I provide instruction services in.

 

[evapilotaz]

Why would your friend allow students to punish his airplane? Is he getting kick backs in this deal?

 

[RyanShort1]

Your friend might expect the cost to be in the $3K+ range for insurance if you're using it commercially.

 

[James331]

Why would your friend allow students to punish his airplane? Is he getting kick backs in this deal?

Depends on the skills of the CFI.

I've seen some licensed pilots dish out more punishment on their own planes the students.

The insurance is just a gamble.

I had my students get AVEMCO renters insurance in addition to the regular non commercial AVEMCO policy the plane had, only draw back was if there was a loss due to malfunction of the plane.

Look at your risk to reward and go from there.

Also you might be able to avoid the 100hr if the students are paying the owner of plane completely separate from the CFI.

 

[jesse]

Your friend might expect the cost to be in the $3K+ range for insurance if you're using it commercially.

Paid $3047 for such coverage on a 172 with a $35k-ish hull value. Was quoted nearly $7,000 for a much newer 172 with $180,000 ish in hull value.

 

[midlifeflyer]

Just curious, so if he gets CFI a insurance he will be covered to instruct. But what happens if it is a PPL student and comes time to solo? Would renters insurance cover it?

Maybe.

Think of it in non-aviation terms.

You are in a fender-bender car accident. Your car is damaged. Probably the other guy's fault but not one of those absolutely clear situations. The other driver, needless to say, denies he did anything wrong.

#1. You have collision civerage. In 3 business days, your insurer evaluates your claim, puts a value in it and repairs are under way within days.

#2. You do not have collision coverage, so you have to negotiate with the other driver's insurance company. They really have no obligation to you and since liability isn't completely clear they deny the claim. You'll have to sue to get anything.

#1 is the equivalent of the aircraft owner dealing with his own company. #2 is when the owner's insurance is off the hook because of a non-covered event and the owner wants to be paid by the renter's company.

 

[flyingron]

An LLC is likely to do NOTHING for you (whether the plane is in it or not). As an instructor and the aircraft owner you're likely going to incur personal responsibility for the students misdeeds no matter what you have in place.

A "limited commercial" policy (i.e., the typical one that will cover flight instruction), will provide liability coverage and hull coverage when the student is soloing or even renting the aircraft after getting his license. "Rental insurance" is the name for non-owners policy. You don't get "renters insurance" on your own plane. The owner's policy may indeed subrogate against the actual renter in the case of a claim (we used to have a waiver of subrogation rider on our club policies but that got harder and harder to obtain).
That's when the student's renter's insurance comes into play.

 

[midlifeflyer]

An LLC is likely to do NOTHING for you (whether the plane is in it or not).

It may do something, but not what most people think it will do. Most think it will protect them from personal liability which, as you say, it will not. It may even provide some protection to a CFI for misdeeds of a student, but that's a question that is a bit more complicated than a simple yes or no. I definitely wouldn't rely on it as a business strategy.