Umbrella policies, waivers of liability to passenger question

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xander75

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xander75
I have a insurance question for you all seeking opinion and options of what is wise to do.

For years I had a umbrella policy and for years I owned this awesome piper arrow. Just now my insurance company called me they don't want to extend the umbrella anymore on the upcoming renewal due to the plane exposure. In all fairness, I had always been under the assumption that GA/aviation was excluded from the umbrella and only covers in and around the house / car related claims.
For the plane I have a separate insurance with haul, passenger and property damage coverage. Obviously up to a certain limit per claim per incident.

This now also got me thinking about carrying passengers outside of immediate family, and possible exposure to claims over these aviation insurance limits and since they are not
protected by the umbrella how to go about it.

Questions:
1 - Are there insurance companies that would still offer an umbrella albeit with some wording of exclusion of aviation related incidents
2 - I have considered setting up a trust and split the plane, assets from myself. Would that take care of possible liability for claims over the aviation insurance limits?
3 - At the same time, I almost want to give passengers a waiver to sign explaining they are covered during flight up to a certain amount of the coverage limits and that they waive the right to sue or claim for more. Sort of similar when you go to certain attractions where one signs a waiver that you understand the risk etc.
However some say that is off putting and concerning potentially and some said this is not even legally bound?
4 - if "3" is a reasonable idea, is there a "template" for this available by any chance?
5 - I wonder how this works for CFI's then too? Could a student possibly sue the gazoo on a CFI beyond the coverage limits?

I am almost getting uncomfortable taking people for a ride besides my family considering the associated (financial) risk. And that is a loss also as I take so much pride introducing people
to aviation.

any options and opinions welcome!
cheers!
xander
 
The easy answers:

2 - Putting the airplane into separate ownership, whether trust, corporation, LLC, or your Cousin Joe, has absolutely zero effect on your liability if you have an accident. It might protect the airplane as an asset, but not you.

3 - Contrary to popular belief, most states enforce liability waivers to some degree. But states vary a lot in their waiver-friendliness. And even in waiver-friendly states it’s not a panacea. (Ironically, that same popular belief might be exactly what makes some people willing to sign them.)

4 - If you go the waiver route, don’t use some online template. Get professional advice. (actually, that applies to #2 as well.)

5 - Coverage limits prevent the insurance company from excess claims, not the person responsible for the damage. Sorry, if my claim is worth $5 Million and you have $2.00 coverage, nothing stops me from suing you.

There may be other things which mitigate liability exposure. Most involve the cost and difficulty in proving liability vs the ability to actually collect. That’s what most aviation (and other) liability policies are about - having enough “easy money” to throw at a problem to entice the injured part to take the proverbial “bird in the hand.”

Your comfort level is your own. Protection of your assets is a discussion with an estate/financial planning attorney.
 
thank you for the helpful insights midlife and dfw! Could you share, dfw, which insurance carrier for the umbrella you have? I'd be ok with the exclusion, but yeah, I probably stick with family too ...
cheers!
xander
 
xander75 said:
I have a insurance question for you all seeking opinion and options of what is wise to do.

For years I had a umbrella policy and for years I owned this awesome piper arrow. Just now my insurance company called me they don't want to extend the umbrella anymore on the upcoming renewal due to the plane exposure. In all fairness, I had always been under the assumption that GA/aviation was excluded from the umbrella and only covers in and around the house / car related claims.
For the plane I have a separate insurance with haul, passenger and property damage coverage. Obviously up to a certain limit per claim per incident.

This now also got me thinking about carrying passengers outside of immediate family, and possible exposure to claims over these aviation insurance limits and since they are not
protected by the umbrella how to go about it.

Questions:
1 - Are there insurance companies that would still offer an umbrella albeit with some wording of exclusion of aviation related incidents
2 - I have considered setting up a trust and split the plane, assets from myself. Would that take care of possible liability for claims over the aviation insurance limits?
3 - At the same time, I almost want to give passengers a waiver to sign explaining they are covered during flight up to a certain amount of the coverage limits and that they waive the right to sue or claim for more. Sort of similar when you go to certain attractions where one signs a waiver that you understand the risk etc.
However some say that is off putting and concerning potentially and some said this is not even legally bound?
4 - if "3" is a reasonable idea, is there a "template" for this available by any chance?
5 - I wonder how this works for CFI's then too? Could a student possibly sue the gazoo on a CFI beyond the coverage limits?

I am almost getting uncomfortable taking people for a ride besides my family considering the associated (financial) risk. And that is a loss also as I take so much pride introducing people
to aviation.

any options and opinions welcome!
cheers!
xander
Click to expand...
1. I don’t know how your umbrella insurer knew you have an aviation exposure unless you told them. I also don’t understand why they care.
2. A non-revocable trust will protect the assets because the assets are no longer yours. You don’t have access to the money.
4-5. A liability waiver does not ever protect against gross negligence. I have never seen one that’s says I am not asking you to waive you right to sue, I limiting you for suing for suing for too much.
5. Any one can sue for an amount beyond insurance limits, but after an accident you are not the only one who gets sued. Everyone one who can be sued is and everyone with insurance some pays to get out of court,
 
Clip4 said:
1. I don’t know how your umbrella insurer knew you have an aviation exposure unless you told them. I also don’t understand why they care.
2. A non-revocable trust will protect the assets because the assets are no longer yours. You don’t have access to the money.
4-5. A liability waiver does not ever protect against gross negligence. I have never seen one that’s says I am not asking you to waive you right to sue, I limiting you for suing for suing for too much.
5. Any one can sue for an amount beyond insurance limits, but after an accident you are not the only one who gets sued. Everyone one who can be sued is and everyone with insurance some pays to get out of court,
Click to expand...
A non-revocable trust can help, but a good lawyer can frequently attack the creation of the trust and transfer of the assets into the trust as a fraudulent transfer, depending on the circumstances. In other words, those can be unwound in some situations.
 
You don't need to protect the airplane as an asset, in the scenario you're worried about, it's likely gone anyway. What you want to protect is your other assets. If you do that well, suing you for more than insurance policy limits becomes much less attractive. A good estate-planning attorney can advise you on that.

The club I'm at now requires waivers from all non club member riders, paying or not. I haven't seen anyone bat an eye at signing it. But if you're serious about that, you need one drafted for you by a lawyer in your state.
 
Liability waivers are only as good as the lawyer writing it and defending it. Someone can sign a liability waiver for himself, but he cannot sign away the rights of his family to sue if he passes away.
 
State Farm does an umbrella policy. Source: I have one.
 
Another common limitation of umbrella policies is to cover only accidental or unintentional acts, not all lawful acts. For example, if you use force to defend your family from someone attacking you, that is a lawful act but not an accidental act. Even if the local DA gives you a medal for protecting your family, the bad guy or his family may sue you in civil court and your policy may not protect you. Similar examples could apply to aviation. Watch out for that!
 
For this reason I only take my older friends (we're all close to retirement and so limited loss of earnings potential and kids are grown and moved out) and family for rides in my Skyhawk and only my wife gets to ride with me in my RV-12...
 
Mahneuvers said:
That covers aviation?
Click to expand...
No. But they aren't declining coverage because I fly like the OP's is. OP's umbrella is being axed completely because of the aviation aspect. Mine is still valid, just won't cover me if I crash into a busful of nuns and children.
 
appreciate all the helpful insights!
some key takeaways I got here is that
a) an umbrella would generally not cover aviation, like in my original scenario, but should not be a reason for non coverage
b) waivers could help, but are not all covering either
c) a trust or llc would not help protect assets, especially if gross negligence is of relevance (and what would that be right, eg I could imagine an expired annual but yeah...)
d) legal assistance to the locality (state) of the PP is of significance due to state differences
e) a main liability for taking passengers in the event of a situation is loss of income of the passenger (heirs).
f) ensure all documentation is current, adequate and complies with regulations to show there is no negligence and that for instance an engine failure and therefore a forced landing has no baring on the plane or pilot.
.) probably a few more :)

ps1. @Clip4 mystery to me also how they found it out, maybe they are scraping FAA databases and look for reasons to increase premium or decline coverages. (in my state MA, there has been a lot of that going on it being a coastal state and bumping up insurances by the gazoo because of being close to a flood line = 20mls W of KBOS...)

ps2. @Lindberg could you share here or a DM of a sample on that waiver, just to have a look at it so I have a base when I speak with legal folks of what it could look like, state adjusted?

ps3. @Mahneuvers thank you for the tip, let me contact them and get a quote!

I probably forgot to call out a few others being equally helpful, am very appreciative of the guidance and experience shared!
cheers!
xander
 
I went with Progressive. I must carry specific coverages on my auto and home policies as well as for any other land/water craft. I already had the max limits so that wasn't an issue. And each year at renewal I must send them a copy of those policies. If I fail to maintain these limits, the umbrella policy is null and void. An umbrella policy only starts when the primary policies are exhausted. That's why the coverage is relatively inexpensive.

In my policy, "Aviation" is a standard exclusion along with motorcycle racing, hovercraft, etc.
 
xander75 said:
e) a main liability for taking passengers in the event of a situation is loss of income of the passenger (heirs).
Click to expand...
After being involved in non-aviation event. It may actually be medical expenses.
in the event I was involved with their Medical insurance company ate about 95% of the medical expenses and liability insurance only covered about 5% of it. if the injured had not had medical insurance the liability insurance wouldn't have covered hardly any of the medical bills.

My Non-professional take away is you want about enough insurance to cover your sue-able assets which may not include your primary home or retirement account (probably state dependent). The idea is you want them to take the insurance settlement rather than sue you. Suing voids the insurance paying them, and the insurance money is used to defend you, instead of paying them. To much insurance, pretty much insures they will take it to court (challenge the insurance company, rather than take what the insurance company offers) as there is the chance they may get a big payout.

Brian
 
BillTIZ said:
but he cannot sign away the rights of his family to sue if he passes away
Click to expand...
Depends on the state and how it’s written.

brcase said:
The idea is you want them to take the insurance settlement rather than sue you. Suing voids the insurance paying them, and the insurance money is used to defend you, instead of paying them. To much insurance, pretty much insures they will take it to court (challenge the insurance company, rather than take what the insurance company offers) as there is the chance they may get a big payout.
Click to expand...
(Leaving out the “voids” part) I think that’s a pretty realistic assessment.
 
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