Renter's Insurance

[DesertNomad]

I have AOPA renter's insurance with 500K Liability, 40K damage. I am considering renting a newish C182 that is worth about $275,000.

If I tie it down at Podunk Airport and while I am in the FBO, an anvil falls out of the sky and smashes the plane, or perhaps I taxi the airplane into the anvil and the anvil wins... My passengers and I are fine, but the plane is totaled.

What happens next? My 40K insurance covers the owner's deductible, but won't his insurance company come after me for their loss (subrogation)? And since I only have $40K, I'd be personally on the hook for $235,000, right?

AOPA does not even offer renters coverage above $200K.

How do people handle renting anything other than a tired old C172?

 

[hook_dupin]

How do people handle renting anything other than a tired old C172?

Shop around flight schools and ask about insurance. I've got an aircraft on lease-back: with my policy, the renter is only on the hook for the deductible. Their renter's insurance can cover that deductible, but it seems pointless.

Other insurance structures may be very very different.

 

[patmike]

Being a renter myself subrogation is a concept I have trouble with. With the example DesertNomad gave with $40,000 coverage and the aircraft valued at $275,000 he'd be on the hook for $235,000 because the insurance company doesn't want to do what it was payed premiums for and just pay. The way I see it insurance is nothing more than a legalized pyramid scheme. Take in billions and trickle back thousands to make it look like they're doing what they're supposed to.

 

[acrophile]

Being a renter myself subrogation is a concept I have trouble with. With the example DesertNomad gave with $40,000 coverage and the aircraft valued at $275,000 he'd be on the hook for $235,000 because the insurance company doesn't want to do what it was payed premiums for and just pay.

What the insurance company is paid for is clearly stated in their contract. You seem to want them to do more than they agreed to.

The way I see it insurance is nothing more than a legalized pyramid scheme. Take in billions and trickle back thousands to make it look like they're doing what they're supposed to.

If your numbers were correct, insurance companies' return on total revenue would be 100,000,000%. In fact, it averages about 3% (see http://www.investopedia.com/features/industryhandbook/insurance.asp). In other words, they take in only a small percentage more than they pay out.

If your numbers weren't a fantasy, you could easily get rich by starting an insurance company that charges a small fraction of the premiums charged by any existing company, but pays the same benefits.

Also, even if your numbers had some basis in reality, it still would be nothing like a "pyramid scheme".

 

[jonnyjetprop]

Is it your fault that the anvil fell on the plane? In this case, the answer is that you were not responsible for the loss. Your renters insurance would not pay anything nor would you be expected to pay.

Same plane, but you ran out of gas and crashed. It is now your fault that you ran out of gas. The plane's owners insurance pays the claim. You will be asked to pay the deductible. Your renters insurance pays that. Now it is up to the owner's insurance company to see if they will go after you for the rest of the claim. Your renters insurance company will defend you in any court action. The insurance company will have to prove that you caused the loss. Then, your insurance would pay up to the limits of the policy and the owner's insurance would seek to get the rest from you.

This is where things get sticky. Are you wealthy? Do you have a great job that wages can be attached? What is your exposure? When I was a poor student pilot at age 18, I was judgement proof. I didn't have anything. Today, I have stuff. I have a good job. There is something they can go after. That's why I have renters insurance. I am in the same boat. I fly mostly $50K C-172's but I do fly a restart C-182 from time to time. I have chosen to carry $50k damage and max liability.

I do find it funny that people think insurance is a scam. I have been hit by someone who did not carry car insurance in violation of state law. I was SOL. That's why I carried uninsured motorist coverage at extra cost to me.

As a renter, I'm asking someone who knows very little about me to give me the keys to a $175k airplane. Do you expect the owner to eat the loss if I cause the loss of a plane. Everyone talks about personal responsibility and part of that is making things right when I cause damage or harm.

I have AOPA renter's insurance with 500K Liability, 40K damage. I am considering renting a newish C182 that is worth about $275,000.

If I tie it down at Podunk Airport and while I am in the FBO, an anvil falls out of the sky and smashes the plane, or perhaps I taxi the airplane into the anvil and the anvil wins... My passengers and I are fine, but the plane is totaled.

What happens next? My 40K insurance covers the owner's deductible, but won't his insurance company come after me for their loss (subrogation)? And since I only have $40K, I'd be personally on the hook for $235,000, right?

AOPA does not even offer renters coverage above $200K.

How do people handle renting anything other than a tired old C172?

 

[Edgefly]

Did AOPA tell you that (if you taxied into the Anvil) ? Was this example a case where you had no liability insurance ? There have been at least a million threads on various forums about aircraft insurance and of course armchair experts with all the answers for each. If you have previously decided to self insure liability coverage, $235,000 is only pocket change in view of the risk taken. I'm certainly interested in your hypothetical situation but would think more realistic information whould come from quotes from several INSURERS (that means the companies offering the insurance, not brokers such as AOPA, Joe's InsuranceCo. Etc.). Do some research against real aircraft and levels of insurance and share it here with us.

 

[patmike]

I'm sorry I think of things in simpler terms. The owner of the airplane has insurance on it in case something happens. If something does happen, they pay.

 

[patmike]

https://www.youtube.com/watch?v=pis7Ls9OMTA

 

[Dead Stick]

Best way to do it is get on the policy of the guy renting: there may already be an "open-pilot" clause in the policy...

Don't forget that the open pilot clause only validates the coverage for the named insured, not for the pilot flying the airplane. The only real way to have coverage is to be added as a named insured on policy. Some providers will also issue a waiver of subrogation. Whatever you do, discuss this with their insurance broker and get it in writing. There are a lot of guys flying around who assume that whey have coverage, when in fact, they do not. It can be a very tough financial lesson to learn.

 

[dans2992]

So, back to the OP's question - what do folks do if they're renting expensive aircraft?

Based on what I've seen, I'd say literally 99.5% have less coverage than the hull value if the aircraft is >$200k.

 

[dans2992]

Most FBOs seem to look at you sideways if you asked to be a "named insured" on their policy though.

 

[Dead Stick]

Thanks for that clarification. You are exactly right: for protection under the owner's policy one must be a "named insured." That is the only way to get the full benefit of the owner's coverage for hull and liability. I would insist on having a copy of the endorsement page of the policy be integrated into your written rental agreement ( also very important). Thanks for the nice catch, DS. Blessings.

A while back, I rented an Aeronca 7AC and prior to solo you have to provide evidence of a non-owner policy sufficient to cover the value of the airplane. It's actually a pretty good way to do it. Their policy covers you when you're flying with their CFI and your personal policy covers you when you're solo. (By the way, the rental rate is $60/hour.)

As a CFI, I simply insist on being added as a named insured on any personal airplane that I give training in. (On some policies I'll also ask for a waiver of subrogation.) Normally, it's simply a matter of contacting the broker and having them fax or email you the documents. Since most policies are quoted to the least qualified named insured, there's seldom any cost.

The take away from all of this is if you assume that you're covered on an airplane that you are renting or borrowing just because you meet the open pilot clause, you are probably mistaken. If you're a renter and just assume that you're covered by the owner's policy you'd be wise to verify that and get it in writing.

 

[poadeleted20]

Being a renter myself subrogation is a concept I have trouble with. With the example DesertNomad gave with $40,000 coverage and the aircraft valued at $275,000 he'd be on the hook for $235,000 because the insurance company doesn't want to do what it was payed premiums for and just pay. The way I see it insurance is nothing more than a legalized pyramid scheme. Take in billions and trickle back thousands to make it look like they're doing what they're supposed to.

Generally speaking, subrogation requires some finding of negligence or fault on the part of the person against whom subrogation is made. I don't see that happening if an anvil falls from the sky and smashes a rented plane tied down on the ramp. As stated by others, get and read (with a lawyer's help if necessary) a copy of the flight school/FBO's insurance policy as your liability may well be significantly limited below the total hull value. That said, this isn't something about which I worry a lot, and I carry only $75K hull on my non-owned aircraft policy while flying aircraft worth five and even ten times that much.

 

[dans2992]

Ron - just curious, what makes you not worry very much about this? These days it seems like lawyers can make things "your fault" that really aren't. (Ie, you hit a deer on landing - your fault because you didn't see it.), etc.