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Aero-Tips 08.06.06
In yesterday's Aero-Tips I
mentioned a turn that bears elaboration -- the Open Pilot Warranty
on an aircraft insurance policy.
Insured Parties
Where aviation insurance is concerned, there are three kinds of
pilots-with a huge distinction between pilots of each type.
Type 1: Owners
Owners are those who have a financial interest in the airplane,
i.e., someone whose name is on the aircraft's FAA registration (or
an owner of a corporation to which the airplane is registered).
This/these person(s) have an insurable interest in the aircraft,
meaning he/she/they would be out money if the airplane is damaged
or destroyed. Insurance rates are set in part by the experience
level of insured pilots; all owners who will fly must be listed as
"approved pilots" on the policy (and the cost of insurance adjusted
accordingly) for the policy to be in effect…even when the
pilot is receiving instruction from a higher-time pilot.
Type 2: Other approved pilots
Persons who are not owners of the airplane may be "approved" by
the insurance company with the policy still in effect. Other
approved pilots can be added if they:
- are specifically "named" to the policy, if they don't meet
minimum requirements; or
- meet an Open Pilot Warranty.
The Open Pilot Warranty is a minimum level of pilot experience
spelled out in the insurance contract. A common "OPW" for a
four-seat, fixed gear airplane might be something like "Private
pilot with valid FAA medical and Flight Review, with 200 hours
total time and five hours in make-and-model". A four-seat
retractable might have an OPW like "Private pilot with Instrument
rating, valid medical and Flight Review, with 250 hours total time
including 100 hours retractable gear time and 25 hours in
make-and-model". The more complex the airplane (including the
"complexity" of tailwheel configuration), the higher the OPW
limits. Any pilot meeting the OPW can fly the airplane with no
additional insurance premium charged the owner, and the policy is
still in effect.
If a nonowner pilot does not meet the OPW he or she may still be
an approved pilot by being specifically named to the policy. The
named pilot, by virtue of his/her lesser experience, will usually
drive a higher insurance premium for the owner. Note: Some airplane
types or ownership structures result in a policy with no OPW-all
pilots must be named.
IMPORTANT CONCEPT: A "named" pilot, or a pilot
flying under the OPW, is not him/herself usually covered by
insurance. If there's an accident and the airplane is damaged, the
insurance will pay the owner because the provisions of the policy
were met. The insurance company reserves the right, however, to sue
the named/OPW pilot to recover money it paid out-a process called
subrogation. Others may sue the pilot and the owner's policy may
not cover defense costs or a judgment. This is why there's a market
for non-owned aircraft policies-to provide insurance protection to
pilots who fly airplanes they do not own.
Type 3: Unapproved pilots
Any person who flies who is not listed as an owner or "named"
pilot (and the rate adjusted), or does not meet the OPW,
invalidates the insurance policy.
Is it legal for such a person to fly the airplane? If
appropriately certificated, rated and current, yes. Is the
insurance company obligated to pay if such a person is flying and
something goes wring? Absolutely not. An insurance policy is a
legal contract between airplane owners and the insurance company.
Both parties are required to adhere to the stipulations of the
contract for coverage to be in effect.
Aero-tip of the day: As owners and as non-owner
pilots, know when your flight is covered under the aviation
insurance policy -- and when it, and you personally, are not.