Renters insurance...

[BartY]

First off, I made my first flight in over 5 years this past Saturday and it felt GREAT! I took a G1000 equipped 172 for a spin out of FTY, a BIG difference from the airplanes I was used to renting the last time I was behind the controls. I'm getting my medical renewed this week and will be scheduling a few more sessions with the instructor I flew with to get me legal again.

Anyway, I have a pass from the wife to start flying again. When I originally got my ticket, I was unmarried and didn't have much in the way of assets for anyone to go after, so I never carried any additional renter's insurance. I just made sure I had enough to pay my half of the deductible at the flying club I was a member of if I bent something. Fast forward 5.5 years and now I'm married, own a house, two cars free and clear, plus some retirement funds. In other words, a perfect target for a lawsuit.

I'll confess that I know absolutely zero about renter's insurance. As far as I can tell, I'm only on the hook for the deductible if I damage the airplane per the rental papers I was given, as members of the flying club . If that is true, is there any point in buying anything but liability insurance? I'm a member of the AOPA, so that's an option there, but does anyone have any other suggestions as to how much insurance I should purchase and from whom?

Thanks!!

 

[Ken Ibold]

Whether you're covered by your club's insurance policy is going to depend on how the club's policy is written. Some will cover you, some will not. Can you post the language?

Avemco is probably your best bet for renters insurance on something like that. The amount of coverage you might want depends on the answer to the question above.

 

[TMetzinger]

OK, Rental Insurance 101:

Scenario:
You take the FBO's airplane, and you damage it. Fortunately, you didn't hurt anyone on the ground or passengers, or property on the ground. Poor you!

First thing you do is pay the FBO deductible (probably specified in the rental contract).
Insurance then pays for repair/replacement/value, minus the deductible. Between the insurance and your payment, the FBO is now "whole". Hooray for the FBO.

The insurance company is out the amount of the loss. Boo Hoo! Bad for the shareholders. They look for a way to recoup that loss, and they find.... YOU, the dastardly evil man who damaged the airplane. They sue your but to recover their loss. This is called ... SUBROGATION. Your rental agreement with the FBO (and their coverage) may preclude subrogation, but don't bet on it - ASK.

So, if you aren't covered against subrogation, the FBO has asked you to pay the deductible part of the damage you caused, and the FBO's insurer is asking you to pay the rest (plus fees and costs associated). Sucks to be you, doesn't it? This is where non-owned aircraft (renter's) insurance comes in. It covers you, specifically, for the specified amount. One part of the coverage is liability to third parties and passengers (i.e. you killed a prize bull in your off airport landing or your passenger broke his leg running as far away from your crazy butt and bent airplane as he could get). Generally you can get coverage up to $100K per passenger and $1M per incident (farmer might get a better bull). This is the cheaper part of the insurance. The next part of the coverage (hull) is damage to the non-owned airplane itself, and you can get coverage from $1000 (in case you get sued for dinging a replaceable wingtip) up to hundreds of thousands (in case you trash the plane entirely). You MUST get liability, but hull is optional.

As with any other insurance, your insurer has a duty to defend you. You should also choose your coverage based on your assets. If you've got nada, perhaps you don't need coverage. If you've got some, you'll feel painfully exposed even if you do get $1M coverage.

So, consider your assets, and your options. I have 500K liability and 20K hull. That should cover a minor accident and it gives me legal coverage if I'm not truly at fault. I may up the hull now that I'm flying newer airplanes.

 

[Ken Ibold]

OK, Rental Insurance 101:

Scenario:
You take the FBO's airplane, and you damage it. Fortunately, you didn't hurt anyone on the ground or passengers, or property on the ground. Poor you!

OK, but he said it was a club. If it's an equity club, the insurance circumstances might be vastly different than renting from an FBO. It is not unusual to find equity clubs in which all members are named insureds on the policy; his club may or may not be like that.

 

[TMetzinger]

OK, but he said it was a club. If it's an equity club, the insurance circumstances might be vastly different than renting from an FBO. It is not unusual to find equity clubs in which all members are named insureds on the policy; his club may or may not be like that.

True - need to CHECK the agreements carefully. A club may operate exactly like an FBO (larger ones in particular), or it may be that each "member" is an owner and named insured, in which case subrogation isn't a problem, and non-owned coverage isn't even an option.

If someone from the club is even suggesting non-owned coverage, it's a good bet that the individual pilots aren't covered.

Regardless, that's how non-owned insurance works, and where it might be useful.

 

[Ken Ibold]

True - need to CHECK the agreements carefully. A club may operate exactly like an FBO (larger ones in particular), or it may be that each "member" is an owner and named insured, in which case subrogation isn't a problem, and non-owned coverage isn't even an option.

If someone from the club is even suggesting non-owned coverage, it's a good bet that the individual pilots aren't covered.

Regardless, that's how non-owned insurance works, and where it might be useful.

Agreed x 3

 

[poadeleted20]

I'll confess that I know absolutely zero about renter's insurance. As far as I can tell, I'm only on the hook for the deductible if I damage the airplane per the rental papers I was given, as members of the flying club .

That would only be true if the renters are given "named insured" status in the FBO/club insurance policy (not common) or if the FBO/club insurance policy has a "waiver of subrogation" clause in it. While you may only be on the hook to the club for the deductible, unless the policy contains those elements (and you'd have to read it yourself to be sure), the insurer can "subrogate" against you for anything they have to pay out to the FBO/club or any injured third parties. And that is why you need renter's insurance -- to cover not only the deductible, but also to cover you for anything for which the insurer sues you.

In addition, even if there's a "waiver of subrogation" clause, unless you're also a named insured, the FBO/club policy won't cover you if third parties sue you personally for any injury or damage. Your renter's policy (actually a "non-owned aircraft" policy") protects you there, too.

I'm a member of the AOPA, so that's an option there, but does anyone have any other suggestions as to how much insurance I should purchase

On the liability side, you'll probably find anything more than $1M prohibitively expensive or even unavailable. For hull insurance, if the FBO/club has a waiver of subrogation clause, you could go with only enough for the deductible. Otherwise, you should think about the worst damage you're likely to cause a club plane. Personally, I carry $75K of nonowned hull insurance. I often fly planes worth more, but that should be enough to make them cut their losses on any accident I survive (if I don't, my wife can pay it out of the life insurance and she still won't go hungry) and go away without engaging in an expensive trial to collect more.

 

[BartY]

Thanks for the input guys.

It looks like I will need to purchase some non-owned hull coverage, probably in the neighborhood of $50-75k because most of their aircraft are less than 10 years old.

Now I'm off to get my medical renewed...

 

[Maxmosbey]

OK, Rental Insurance 101:

Scenario:
You take the FBO's airplane, and you damage it. Fortunately, you didn't hurt anyone on the ground or passengers, or property on the ground. Poor you!

First thing you do is pay the FBO deductible (probably specified in the rental contract).
Insurance then pays for repair/replacement/value, minus the deductible. Between the insurance and your payment, the FBO is now "whole". Hooray for the FBO.

The insurance company is out the amount of the loss. Boo Hoo! Bad for the shareholders. They look for a way to recoup that loss, and they find.... YOU, the dastardly evil man who damaged the airplane. They sue your but to recover their loss. This is called ... SUBROGATION. Your rental agreement with the FBO (and their coverage) may preclude subrogation, but don't bet on it - ASK.

So, if you aren't covered against subrogation, the FBO has asked you to pay the deductible part of the damage you caused, and the FBO's insurer is asking you to pay the rest (plus fees and costs associated). Sucks to be you, doesn't it? This is where non-owned aircraft (renter's) insurance comes in. It covers you, specifically, for the specified amount. One part of the coverage is liability to third parties and passengers (i.e. you killed a prize bull in your off airport landing or your passenger broke his leg running as far away from your crazy butt and bent airplane as he could get). Generally you can get coverage up to $100K per passenger and $1M per incident (farmer might get a better bull). This is the cheaper part of the insurance. The next part of the coverage (hull) is damage to the non-owned airplane itself, and you can get coverage from $1000 (in case you get sued for dinging a replaceable wingtip) up to hundreds of thousands (in case you trash the plane entirely). You MUST get liability, but hull is optional.

As with any other insurance, your insurer has a duty to defend you. You should also choose your coverage based on your assets. If you've got nada, perhaps you don't need coverage. If you've got some, you'll feel painfully exposed even if you do get $1M coverage.

So, consider your assets, and your options. I have 500K liability and 20K hull. That should cover a minor accident and it gives me legal coverage if I'm not truly at fault. I may up the hull now that I'm flying newer airplanes.

That's why I would scribble everything out before I sign the rental agreement, and write in there that the FBO has to pay me double the deductible if I wreck the airplane. That way it is win/win for me.

 

[airdale]

Some sweeping generalizations here. Here's an actual case: Our club is insured by an off-the-shelf Avemco policy. All members are named insureds. Per the bylaws, the $5000 deductible is the member's responsibility in the event of an accident, so we encourage members to consider renter's insurance.

As someone pointed out, a big benefit of having your own insurance is that the company is obligated to defend you. If there is an accident, the club will get sued but you will also get sued individually. Hence, having your lawyer costs paid may be more significant than the coverage for a deductible. You will get a different lawyer than the club has, even if the same insurance company wrote both policies, because your interests are not the same as the club's. Re FBOs ... YMMV.

http://www.avemco.com/Page/Resources-PolicyDocuments.aspx

 

[poadeleted20]

Some sweeping generalizations here. Here's an actual case: Our club is insured by an off-the-shelf Avemco policy. All members are named insureds. Per the bylaws, the $5000 deductible is the member's responsibility in the event of an accident, so we encourage members to consider renter's insurance.

Sounds good. If the members are named insureds, the accident pilot is only on the hook for the deductible and any damages above the club insurance policy's limits, and a non-owned ("renter's") policy should take care of that.

 

[airdale]

Yes. Your mentioning limits reminds me: A few years ago I had a conversation at OSH with Jim Lauerman who, IIRC, runs Avemco's underwriting department. Very sharp, no BS, guy. I was asking about limits beyond the $1M that they would write. He said that he couldn't remember a case where a plaintiff recovered any amount beyond the policy limits. He said that the psychology seemed to be that it is o.k. to take all the insurance company's money but not o.k. to attack the pilot personally. That and four bucks gets you a coffee, of course, but it was interesting to hear.

 

[flyingcheesehead]

Some sweeping generalizations here. Here's an actual case: Our club is insured by an off-the-shelf Avemco policy. All members are named insureds. Per the bylaws, the $5000 deductible is the member's responsibility in the event of an accident, so we encourage members to consider renter's insurance.

Ours is the same - Named insured on the policy is "(club name) and individual members thereof." However, our deductible is only $500 - What did you do to deserve a $5,000 deductible?

 

[poadeleted20]

Ours is the same - Named insured on the policy is "(club name) and individual members thereof." However, our deductible is only $500 - What did you do to deserve a $5,000 deductible?

They paid a lot lower premium. Essentially, they shifted the burden of the low-level dumb stuff to the dummy instead of the whole club collectively.

 

[airdale]

They paid a lot lower premium.

IIRC we saved something like $2,500/year (across seven airplanes) and did exactly what Ron said. We have had only one incident in five years. Cost the member about $2,500 and he wasn't particularly upset about it.

 

[flyingcheesehead]

IIRC we saved something like $2,500/year (across seven airplanes) and did exactly what Ron said. We have had only one incident in five years. Cost the member about $2,500 and he wasn't particularly upset about it.

I'd be more worried about that person paying at all.

 

[airdale]

I'd be more worried about that person paying at all.

Non issue. $5,000 is below our club buy-in price, so we already have enough of his money that we are not at risk.

 

[poadeleted20]

airdale's club has smart management.

 

[flyingcheesehead]

Non issue. $5,000 is below our club buy-in price, so we already have enough of his money that we are not at risk.

Ah. Ours is an equity club so shares pass between the shareholders, not through the club. Going rate is $1000 on down to 0, depending on how bad the seller wants to get out!