CFI/CFII Liability?

[midlifeflyer]

The CFI would only be covered under the policy if s/he was an "additional insured" and either flying the airplane for s/he own business and pleasure use or was giving instruction to the owner/policyholder.

Remember that this issue came up in the limited context of how to give instruction to an aircraft owner without buying one's own CFI coverage. The answer was to have the owner get you added to his/her policy as an "additional insured."

I recall the limited context. Exactly what language in the policy indicates the "insured is not an insured" language does not apply if the instruction is being given to the owner of the airplane?

Sorry, but I don't see it as much as I'd like it to be there (remember, you're the one that chided others for not pointing to specific language).

 

[PPC1052]

Since then, there have been several cases around the country holding that there is no such thing as instructional malpractice liability, including, as I recall offhand, one in 2012 involving a Cirrus accident. The problem is that liability is generally a matter of state law, so some states will say yea while others will say nay, while still others have not even answered the question.

My strictly personal view as an instructor, not as a lawyer, is that I expect I will be held liable if I am in the airplane but that my risk is acceptably low if I am not. YMMV.

This is sort of an interesting point. I have a case now that might raise these issues. The thing to remember about aviation cases is that they can raise all sorts of choice of law issues. For example, a student pilot lives in one state, gets training by an organization in another, flies his plane from a third state en route to a fourth state, and crashes on the way in a fifth state, killing passengers from a sixth state. Which state's law applies to determine whether there is educational malpractice?

 

[midlifeflyer]

This is sort of an interesting point. I have a case now that might raise these issues. The thing to remember about aviation cases is that they can raise all sorts of choice of law issues. For example, a student pilot lives in one state, gets training by an organization in another, flies his plane from a third state en route to a fourth state, and crashes on the way in a fifth state, killing passengers from a sixth state. Which state's law applies to determine whether there is educational malpractice?

Now that is getting esoteric.

Two ideas you may not have thought of (though you probably did):

1. Was there a contract. Assuming the choice of law is a state that does recognize instructional malpractice, does it also have an economic loss rule that's pretty strong?

2. You might want to look at Newman v. Socata SAS (M.D. Fla., 2013). Apparently, Florida's case not recognizing educational malpractice was in the context of a public provider. The Middle District refused to extend it to private providers without direction from the Florida Supreme Court. The case's primary value may be in the pretty decent national review the judge did on the current state of the law. I didn't go any further than reading the decision but the briefs of counsel have some interesting tidbits

 

[Kristin]

>>I recall the limited context. Exactly what language in the policy indicates the "insured is not an insured" language does not apply if the instruction is being given to the owner of the airplane?

Sorry, but I don't see it as much as I'd like it to be there (remember, you're the one that chided others for not pointing to specific language). <<

The intent of that provision is that no insured shall use the aircraft to make money. In this limited context, the user of the aircraft is getting instruction in the aircraft, so it is not the aircraft that is the commercial operation, at most it is the instructor, who is also a named insured. If there are any ambiguities in the policy, the law will construe the policy against the insurance company. If you have any questions about your policy, the best thing to do is ask your broker for clarification before you do something that you are not sure about. The broker will not want to be on the legal hook for bad advice, so unless they are 100% sure, they will ask the underwriter. The underwriter's answer is binding on the company.

 

[PPC1052]

Now that is getting esoteric.

Two ideas you may not have thought of (though you probably did):

1. Was there a contract. Assuming the choice of law is a state that does recognize instructional malpractice, does it also have an economic loss rule that's pretty strong?

That would be fine if the claim were by the pilot against the trainers. But what about the claim by the injured passengers who weren't a party to the contract?

As far as the economic loss doctrine, that usually stops when there is a personal injury claim, as opposed to property damage. In my state, if there is damage to "other property" then the defense doesn't apply. So, in this case if they provide training to me, and I damage my plane which I bought from somewhere else under another contract, the damage to the plane would be "other property." But certainly good thoughts and issues to consider.

 

[PPC1052]

Now that is getting esoteric.

Two ideas you may not have thought of (though you probably did):

2. You might want to look at Newman v. Socata SAS (M.D. Fla., 2013). Apparently, Florida's case not recognizing educational malpractice was in the context of a public provider. The Middle District refused to extend it to private providers without direction from the Florida Supreme Court. The case's primary value may be in the pretty decent national review the judge did on the current state of the law. I didn't go any further than reading the decision but the briefs of counsel have some interesting tidbits

Thanks. I'll check it out. It probably won't affect my client's position much. But it may have relevance to other parties and potential parties.

And as far as esoteric, I did exagerate the facts in the example to illustrate the potential issues, but in my case, there are three different states whose law might apply. So these issues really do come up.

 

[JimNtexas]

I think perhaps you should talk to your insurance carrier about this. Despite your doubts, it's possible you could save some money if you're willing to be have more stringent instructor qualification requirements.

The way we handle this issue is when we (three or four officers or BOD members) in-brief a new member we tell him or her that it's better to get their Cardinal checkout with a CFI who has flown a Cardinal. We mention the names of the CFI's we've liked as individuals, but leave the choice up to the member.

We have asked Avemco about this, and they haven't offered to lower our rates if we somehow had a way to differentiate between one CFI from another.

We are a 28 member equity club with three airplanes. We do not operate a 'flight school', and only members can fly our planes. Perhaps a flying group with a different structure might benefit from approving instructors.

Our club is over thirty years old, and it is hard wired into our DNA that members are owners, and must think of themselves that way.

There is always an urge in any group of 3 or more people to start writing rules for each other. We fight that urge all the time.

We're all Texans, and Texans tend to think like that.

The people on the east and west coasts seem to the ones who can never have enough rules.

 

[midlifeflyer]

>>I recall the limited context. Exactly what language in the policy indicates the "insured is not an insured" language does not apply if the instruction is being given to the owner of the airplane?

Sorry, but I don't see it as much as I'd like it to be there (remember, you're the one that chided others for not pointing to specific language). <<

The intent of that provision is that no insured shall use the aircraft to make money. In this limited context, the user of the aircraft is getting instruction in the aircraft, so it is not the aircraft that is the commercial operation, at most it is the instructor, who is also a named insured.

Sorry to be a pain but simply repeating what you want it to say that again and again doesn't change the language of the policy that says very clearly that a named insured is not a named insured when giving flight instruction for hire (there's that money you are looking for). The fact you don't like the language doesn't change it...

If there are any ambiguities in the policy, the law will construe the policy against the insurance company.

...nor create an ambiguity. Something in the language has to be ambiguous to begin with to get into all the interpretive rules. I don't think "I think the intent is this..." or "I think it should say something different than it does..." cuts it.

So what's the ambiguity in the language of the policy? What language creates any ambiguity - any interpretation other than an "insured" under the policy is not entitled to the protection of an "insured" when giving flight instruction for hire. Period. What else does it say to lead to your "except when giving instruction to another insured..." interpretation?

But let's go with your interpretation... Is it reasonable? You seem to say that all a CFI needs to do to avoid commercial insurance when he instructs in a plane he owns is to list all his students as "named insureds." After all, in that case, all that's happening is an insured teaching other insureds.

Same question:

Exactly what language in the policy indicates the "insured is not an insured" language does not apply if the instruction is being given to the owner of the airplane?

 

[midlifeflyer]

The way we handle this issue is when we (three or four officers or BOD members) in-brief a new member we tell him or her that it's better to get their Cardinal checkout with a CFI who has flown a Cardinal. We mention the names of the CFI's we've liked as individuals, but leave the choice up to the member.

We have asked Avemco about this, and they haven't offered to lower our rates if we somehow had a way to differentiate between one CFI from another.

Jim, just a suggestion. Get an independent insurance agent. Avemco generally provides cookie-cutter solutions. Even AOPAIA works with limited underwriters.

There are independent agents who specialize in getting the best insurance for their clients - their client's being the customer, not the insurance company - and have access to multiple companies with different policies and endorsements available.

One may or may not be able to help, but given the size of your organization, it's probably worth the inquiry.

 

[gismo]

For a full analysis of the issue by a real aviation attorney, I suggest reading the legal journal article "Tiger by the Tail". The facts in that paper suggest the picture for CFI's with assets is not nearly as bleak as FRon makes it appear as long as they play it by the book, document properly, and carry an appropriate level of insurance.

What's an "appropriate" level of liability protection for a CFI with "substantial" assets? This issue (along with some time constraints) is what's held me off from pursuing a CFI cert.

 

[weilke]

Sorry to be a pain but simply repeating what you want it to say that again and again doesn't change the language of the policy that says very clearly that a named insured is not a named insured when giving flight instruction for hire (there's that money you are looking for). The fact you don't like the language doesn't change it...

I am in a partnership with two CFIs. The corporation is the insured and we are all additional insured. They can give me and each other all the flight instruction and IPCs they want as no money changes hands.

It is the acting as an aviation business that kicks out the coverage, not the fact that flight instruction is given.

 

[weilke]

What's an "appropriate" level of liability protection for a CFI with "substantial" assets? This issue (along with some time constraints) is what's held me off from pursuing a CFI cert.

The level of insurance you can get as a flight instructor through the usual suspects is quite limited. The only way to get higher limits 2-5mil is to incorporate and to buy commercial non-owned policy like you would as a flight-school or FBO. Anything is available for a price, but the price will make it economically not viable.

 

[Kristin]

But let's go with your interpretation... Is it reasonable? You seem to say that all a CFI needs to do to avoid commercial insurance when he instructs in a plane he owns is to list all his students as "named insureds." After all, in that case, all that's happening is an insured teaching other insureds.

Same question:

That isn't what I am saying. Please re-read what I wrote and try to follow along. I have never addressed the situation where the CFI owns the aircraft. That is an entirely different issue and involves an entirely different interpretation.

 

[denverpilot]

Makes me wonder then if a high net worth CFI should go to the trouble that some doctors do of creating the illusion that they have no "personal" assets ?

Most that I've met who have significant assets walk around looking like they don't anyway. Flannel shirt, jeans, beat up old truck.

They didn't get rich by spending it.

 

[LDJones]

This is sort of an interesting point. I have a case now that might raise these issues. The thing to remember about aviation cases is that they can raise all sorts of choice of law issues. For example, a student pilot lives in one state, gets training by an organization in another, flies his plane from a third state en route to a fourth state, and crashes on the way in a fifth state, killing passengers from a sixth state. Which state's law applies to determine whether there is educational malpractice?

Did you get that off my bar exam from 30-some years ago?? It sounds vaguely familiar!

 

[weilke]

Did you get that off my bar exam from 30-some years ago?? It sounds vaguely familiar!

When in doubt either the laws of Pennsylvania or Illinois apply to any aviation case.

 

[midlifeflyer]

That isn't what I am saying. Please re-read what I wrote and try to follow along. I have never addressed the situation where the CFI owns the aircraft. That is an entirely different issue and involves an entirely different interpretation.

But that's the thrust of your add-on interpretation of the Avemco language. You still haven't' pointed to anything in the policy that says something different. Here's the issue as I see it and then I'll shut up:

You are saying that it's a viable alternative to carrying his owner insurance for a CFI to simply be named as an insured on an owner/student's policy. I've pointed to specific language in an owner's policy that excludes persons named as insured from coverage when they are giving instruction for hire. Pointing to nothing other than your own opinion that the language should be different or not apply when you don't think it should, you have decided it doesn't apply so long as the trainee is the owner of the airplane and are suggesting others can rely on that.

While I think CFI liability risk is generally low, if a CFI is interested in protecting herself, insurance-wise, relying on your interpretation, hoping the insurer will cover her despite a clear policy exclusion and not simply send a no-coverage letter based on the exclusion, leaving the CFI dealing with her own defense and then maybe sue Avemco after the fact hoping a court will throw out the policy after spending still more in fees, would be a very, very bad idea.

The "named insured CFI is automatically protected" is a very common misconception that is negated by the language in the owner policies I've seen.

Again, sorry to be so adamant about this but I think the advice you are giving is simply wrong and a CFI who follows it is potentially in for a very bad time if an accident occurs while in a trainee's aircraft (it doesn't even begin to cover instructional malpractice where such claims are viable).

 

[midlifeflyer]

I am in a partnership with two CFIs. The corporation is the insured and we are all additional insured. They can give me and each other all the flight instruction and IPCs they want as no money changes hands.

It is the acting as an aviation business that kicks out the coverage, not the fact that flight instruction is given.

Absolutely. I was in the same situation in my former group. Insured corporation, officers included in the definition of insureds, gave flight instruction within the group at no charge.

No charge, no problem. Charge, separate business requiring separate policies (or endorsements if available).

 

[midlifeflyer]

What's an "appropriate" level of liability protection for a CFI with "substantial" assets? This issue (along with some time constraints) is what's held me off from pursuing a CFI cert.

That's going to be a matter of opinion and risk tolerance.

The cookie-cutter CFI policies, even those available through NAFI and SAFE have pretty low limits, typically $500,000 or $1 Million liability with $100,000 per seat limitations. That pretty much translates to $100,000 coverage for your student's injuries with the rest available only if you do substantial damage to persons and property on the ground. And to pay for a defense if a claim is made — that's probably it's greatest value.

Coverage for hull damage to the aircraft itself is separate - you choose how much coverage you want based on your risk calculation.

Cost is, perhaps surprisingly low, but may well reflect the real risk exposure. The typical policy is just a non-owned aircraft (renter) policy with a CFI coverage endorsement. The largest premium cost of the policy is the non-owned aircraft coverage, and the highest part of that is the hull coverage. The CFI piece is, as I recall about $150-$200.

Of course, risk calculation is very personal. What you find acceptable risk, I might think is sheer lunacy. And vice versa.

With that in mind, here's how I look at it personally. I've been comfortable with those low limits when teaching in someone else's airplane. I feel my highest risk exposure is when in the airplane teaching a student pilot. That one, to me, has a low chance of occurring although, if it does, the consequences could be staggering. I'm willing to accept that. For "CFI malpractice" claims, I think the risk of those are low overall and the costs and difficulties a plaintiff faces in bringing one (even in those states where the claim is viable) will likely result in acceptance of the policy limits . Again, a risk that is acceptable to me personally. I choose my hull coverage premium based on what I think is the most damage $-wise I might do to a rented (or client's) airplane.

I'll repeat the disclaimer: I give that only as an example. My personal risk calculation could very well change later today.

 

[weilke]

With that in mind, here's how I look at it personally. I've been comfortable with those low limits when teaching in someone else's airplane. I feel my highest risk exposure is when in the airplane teaching a student pilot. That one, to me, has a low chance of occurring although, if it does, the consequences could be staggering. I'm willing to accept that. For "CFI malpractice" claims, I think the risk of those are low overall and the costs and difficulties a plaintiff faces in bringing one (even in those states where the claim is viable) will likely result in acceptance of the policy limits . Again, a risk that is acceptable to me personally. I choose my hull coverage premium based on what I think is the most damage $-wise I might do to a rented (or client's) airplane.

Given that the 'CFI policies' are non-owned aircraft policies, how do they deal with 'instructional malpractice' claim where the CFI isn't anywhere near the aircraft in question. E.g. a claim where someone whom you have given a BFR/IPC proceeds to do something really dumb on his own time ?

 

[midlifeflyer]

Given that the 'CFI policies' are non-owned aircraft policies, how do they deal with 'instructional malpractice' claim where the CFI isn't anywhere near the aircraft in question. E.g. a claim where someone whom you have given a BFR/IPC proceeds to do something really dumb on his own time ?

It's a non-owner aircraft policy with a CFI coverage endorsement. It's the endorsement ("endorsement" meaning "add-on to an insurance policy" not "CFI signature in a logbook") that gives a CFI coverage for instructional activities, including any malpractice.

Here's an example: the AOPAIA policy. If you compare, you'd see it's almost identical to the regular non-owned aircraft policy, except for the endorsement on page 12

It has to be looked at carefully, though; there have been CFI policies that excluded instructional malpractice.

 

[TMetzinger]

I looked back at some notes when I was an owner.

My policy would cover a CFI giving instruction to me in my airplane as if he was a named insured, meaning he'd not be responsible for damage to the hull and he would enjoy the same liability coverage as I did.

It would NOT cover any of the named insureds (my partner and I) from giving instruction for hire in the airplane. We could purchase such coverage for a small fee.

 

[Kristin]

But that's the thrust of your add-on interpretation of the Avemco language. You still haven't' pointed to anything in the policy that says something different. Here's the issue as I see it and then I'll shut up:

You are saying that it's a viable alternative to carrying his owner insurance for a CFI to simply be named as an insured on an owner/student's policy. I've pointed to specific language in an owner's policy that excludes persons named as insured from coverage when they are giving instruction for hire. Pointing to nothing other than your own opinion that the language should be different or not apply when you don't think it should, you have decided it doesn't apply so long as the trainee is the owner of the airplane and are suggesting others can rely on that.

While I think CFI liability risk is generally low, if a CFI is interested in protecting herself, insurance-wise, relying on your interpretation, hoping the insurer will cover her despite a clear policy exclusion and not simply send a no-coverage letter based on the exclusion, leaving the CFI dealing with her own defense and then maybe sue Avemco after the fact hoping a court will throw out the policy after spending still more in fees, would be a very, very bad idea.

The "named insured CFI is automatically protected" is a very common misconception that is negated by the language in the owner policies I've seen.

Again, sorry to be so adamant about this but I think the advice you are giving is simply wrong and a CFI who follows it is potentially in for a very bad time if an accident occurs while in a trainee's aircraft (it doesn't even begin to cover instructional malpractice where such claims are viable).

You can think it wrong all you want, but that doesn't make you right. The Avemco sample policy is merely that, and we don't know under what circumstances that form is used. It does not address the circumstance of an "additional insured". Now, of course, it is possible that Avemco will not add an instructor to the policy as an "additional insured", or if they do add an instructor as an "additional insured" that they use a different form policy, but that is a different issue.

My point is that I have not yet seen a policy issued where an instructor was named as an "additional insured" where that instructor was not covered for giving instruction to the owner of that aircraft. All of the underwriters that I know, want to encourage, not discourage, their policyholders to get more training.

If you or someone can provide a policy that is actually been used with an instructor listed as an "additional insured" then I will analyze that one in more detail. The sample Avemco policy is merely that, a sample and it is not clear that it is ever used in the situation that I am addressing.

I would show mine, except that I do have non-owner CFI coverage written into mine, so it is a different policy than we are discussing.

 

[PPC1052]

For a full analysis of the issue by a real aviation attorney, I suggest reading the legal journal article "Tiger by the Tail". The facts in that paper suggest the picture for CFI's with assets is not nearly as bleak as FRon makes it appear as long as they play it by the book, document properly, and carry an appropriate level of insurance.

One of the things to be aware of with Tiger by the Tail is that it was written almost 20 years ago so it's a bit dated.

I just pulled out my brochure for this year's SMU conference. There will be a presentation on just this topic.

 

[Art VanDelay]

That's going to be a matter of opinion and risk tolerance.

The cookie-cutter CFI policies, even those available through NAFI and SAFE have pretty low limits, typically $500,000 or $1 Million liability with $100,000 per seat limitations. That pretty much translates to $100,000 coverage for your student's injuries with the rest available only if you do substantial damage to persons and property on the ground. And to pay for a defense if a claim is made — that's probably it's greatest value.

Coverage for hull damage to the aircraft itself is separate - you choose how much coverage you want based on your risk calculation.

Cost is, perhaps surprisingly low, but may well reflect the real risk exposure. The typical policy is just a non-owned aircraft (renter) policy with a CFI coverage endorsement. The largest premium cost of the policy is the non-owned aircraft coverage, and the highest part of that is the hull coverage. The CFI piece is, as I recall about $150-$200.

Of course, risk calculation is very personal. What you find acceptable risk, I might think is sheer lunacy. And vice versa.

With that in mind, here's how I look at it personally. I've been comfortable with those low limits when teaching in someone else's airplane. I feel my highest risk exposure is when in the airplane teaching a student pilot. That one, to me, has a low chance of occurring although, if it does, the consequences could be staggering. I'm willing to accept that. For "CFI malpractice" claims, I think the risk of those are low overall and the costs and difficulties a plaintiff faces in bringing one (even in those states where the claim is viable) will likely result in acceptance of the policy limits . Again, a risk that is acceptable to me personally. I choose my hull coverage premium based on what I think is the most damage $-wise I might do to a rented (or client's) airplane.

I'll repeat the disclaimer: I give that only as an example. My personal risk calculation could very well change later today.

How helpful would adding a release that you have the student sign that basically says he or his estate agrees not to sue you for any damages in excess of your insurance limits ? Would it legally hold water or is such a piece of paper asking the student to give up his rights ?

 

[PPC1052]

How helpful would adding a release that you have the student sign that basically says he or his estate agrees not to sue you for any damages in excess of your insurance limits ? Would it legally hold water or is such a piece of paper asking the student to give up his rights ?

It could be, depending on the law of the state, and the wording used. Most states would let you execute such a waiver of liability. But it would only protect you from claims by the student and his estate/family. It would not be effective as to third-party claimants, such as occupants of other planes or those on the ground.

 

[LDJones]

How helpful would adding a release that you have the student sign that basically says he or his estate agrees not to sue you for any damages in excess of your insurance limits ? Would it legally hold water or is such a piece of paper asking the student to give up his rights ?

Such a waiver is required by the American Bonaza Society's BPPP course before their instructors will fly with you. To what extent that waiver has been court-tested I do not know.

 

[midlifeflyer]

It could be, depending on the law of the state, and the wording used. Most states would let you execute such a waiver of liability. But it would only protect you from claims by the student and his estate/family. It would not be effective as to third-party claimants, such as occupants of other planes or those on the ground.

This.

The law regarding the effectiveness of liability waivers varies by state and by circumstance. In states where they are effective, there is usually a requirement that the recipient of the waiver ensures the person signing it understands the risk. I was once briefly involved in a case of a parachute lesson death. I was very impressed with their waiver, which included a very serious and professional-looking video presentation by one of the skydive organizations, viewed before signing the waiver (briefly because, afaik, a claim was never made)

 

[denverpilot]

So a side track here: With current insurance rates (whatever you guys are typically paying for the liability insurance) and current CFI rates (whatever you typically charge per hour to instruct)...

What's the break even? How many hours a year of you have to instruct to carry your insurance policy before any profit is made?

 

[poadeleted20]

So a side track here: With current insurance rates (whatever you guys are typically paying for the liability insurance) and current CFI rates (whatever you typically charge per hour to instruct)...

What's the break even? How many hours a year of you have to instruct to carry your insurance policy before any profit is made?

My CFI insurance is $1300 per year. Do the math. But remember I have a good bit of other overhead besides that insurance policy to pay off before I'm in the black. However, based on the roughly 300 hours flight instruction I log a year, that runs about $4.33/hour for my insurance.

 

[denverpilot]

My CFI insurance is $1300 per year. Do the math. But remember I have a good bit of other overhead besides that insurance policy to pay off before I'm in the black. However, based on the roughly 300 hours flight instruction I log a year, that runs about $4.33/hour for my insurance.

Yeah I wanted to keep it to the thread topic, so insurance only. Thanks for the numbers.

Makes my interest in doing the CFI go down even more, unfortunately. It's becoming a gig you have to do full time or it's just an additional money suck in an already expensive hobby. Teaching part-time for "fun" looks like a break even past time at best.

 

[midlifeflyer]

Yeah I wanted to keep it to the thread topic, so insurance only. Thanks for the numbers.

Makes my interest in doing the CFI go down even more, unfortunately. It's becoming a gig you have to do full time or it's just an additional money suck in an already expensive hobby. Teaching part-time for "fun" looks like a break even past time at best.

It is depending on how "part time." Never has been about breaking even or making money for me (I couldn't afford the pay cut). My interest in teaching is, well pretty much about the teaching.

I'm not currently carrying CFI insurance because, with the move, I don't have the aviation contacts I had in Colorado and I'm not presently teaching, so why bother? But if that changes next week (I'm working on it )...

If you're curious about rates, here is the AOPAIA application. It includes rate choices - see which one fits you. (Keep in mind these are for instruction in aircraft other than you own).