Insurance for club officers

[GreatLakesFlying]

This question is mainly for those who have some experience running flying clubs. I looked around PoA first to see whether there was a more appropriate forum or a recent thread on the topic, but I couldn’t find one, so here goes.

For those of you who have served as volunteer officers or directors of a flying club — president, treasurer, board member, etc. — did your club carry Directors and Officers (D&O) insurance? Was there ever concern that, after a serious accident, someone might pursue individual board members for negligence, breach of fiduciary duty, or similar claims? If so, how did your club manage that risk?

I’m asking specifically about D&O coverage, not liability insurance intended to pay damages arising from an aircraft accident. My concern is the cost of defending board members against allegations that may ultimately prove meritless. A volunteer board member could conceivably spend tens of thousands of dollars in legal fees simply establishing they did nothing wrong.

Here’s a hypothetical example. Suppose a club routinely operates engines 10–20% beyond the manufacturer’s recommended TBO, while following a rigorous oil-analysis and condition-monitoring program. Now suppose the club has a fatal accident that is completely unrelated to the engine.

The deceased member’s estate nevertheless points to the club’s TBO practice as evidence of a broader pattern of negligence and names the club and individual board members in a lawsuit. The allegation may have no merit, and the board members may ultimately be cleared, but they still have to hire attorneys and defend themselves for months. Without appropriate insurance, those defense costs could potentially come out of their own pockets.

For those who have dealt with this issue, I’d be very interested in hearing what your clubs do. Do you carry D&O coverage? Rely on indemnification provisions? Have aviation liability policies provided any meaningful protection for board members in this situation? Any experience or suggestions would be greatly appreciated. TIA.

 

[flyingron]

Can't say for clubs, but I've been an officer/board member of our airport for six years or so now. We have D&O as well as general liability policies. Yes, it's a specialized offering. They come from different underwriting companies.

 

[TCABM]

Sitting club officer for four years now. Our bylaws require D&O coverage. When I agreed to become an officer, it was contingent on the club actually purchasing a D&O policy to comply with the bylaws.

It’s cheap, a couple hundred dollars per year and I’m not going to risk my assets for a volunteer position.

I can’t speak to your hypothetical specifically, but indemnification/hold harmless agreements aren’t worth much in my experience. The board is the entity responsible for not just the airworthiness, but also managing the club’s operation, to include even knowing whether or not the dead pilot should have been allowed to fly anyways.

Happy to share our binder if you want to review it.

 

[GreatLakesFlying]

Sitting club officer for four years now. Our bylaws require D&O coverage. When I agreed to become an officer, it was contingent on the club actually purchasing a D&O policy to comply with the bylaws.

It’s cheap, a couple hundred dollars per year and I’m not going to risk my assets for a volunteer position.

I can’t speak to your hypothetical specifically, but indemnification/hold harmless agreements aren’t worth much in my experience. The board is the entity responsible for not just the airworthiness, but also managing the club’s operation, to include even knowing whether or not the dead pilot should have been allowed to fly anyways.

Happy to share our binder if you want to review it.

Thanks. Sending direct message to follow up.

 

[Pugs]

I've been an officer in two clubs (and currently in one) and I never thought to ask but perhaps should. I like to think your members are pretty reasonable but who knows about their heirs.

Who do people use?

 

[Warlock]

My advice is do not serve without being named on the club insurance base policy or a separate D and O…Four federal lawsuits over a club member crash in my personal experience is my background…I was named and served in all four.

 

[Clip4]

This question is mainly for those who have some experience running flying clubs. I looked around PoA first to see whether there was a more appropriate forum or a recent thread on the topic, but I couldn’t find one, so here goes.

For those of you who have served as volunteer officers or directors of a flying club — president, treasurer, board member, etc. — did your club carry Directors and Officers (D&O) insurance? Was there ever concern that, after a serious accident, someone might pursue individual board members for negligence, breach of fiduciary duty, or similar claims? If so, how did your club manage that risk?

I’m asking specifically about D&O coverage, not liability insurance intended to pay damages arising from an aircraft accident. My concern is the cost of defending board members against allegations that may ultimately prove meritless. A volunteer board member could conceivably spend tens of thousands of dollars in legal fees simply establishing they did nothing wrong.

Here’s a hypothetical example. Suppose a club routinely operates engines 10–20% beyond the manufacturer’s recommended TBO, while following a rigorous oil-analysis and condition-monitoring program. Now suppose the club has a fatal accident that is completely unrelated to the engine.

The deceased member’s estate nevertheless points to the club’s TBO practice as evidence of a broader pattern of negligence and names the club and individual board members in a lawsuit. The allegation may have no merit, and the board members may ultimately be cleared, but they still have to hire attorneys and defend themselves for months. Without appropriate insurance, those defense costs could potentially come out of their own pockets.

For those who have dealt with this issue, I’d be very interested in hearing what your clubs do. Do you carry D&O coverage? Rely on indemnification provisions? Have aviation liability policies provided any meaningful protection for board members in this situation? Any experience or suggestions would be greatly appreciated. TIA.

How is the flying club structured and who is the named insureds on the aviation policy? Hopefully your club is structured as a corporation and the named insureds is the flying club, inc, its members and officers. But, if you have the average club insurance policy with a $100k person sub limit, you get legal defense and not much real protection.

Depending on your state, liability waivers signed by members and all passengers are in order. Most D&O policies, especially inexpensive ones, will explicitly exclude the liability you are trying to umbrella.

 

[Clip4]

Sitting club officer for four years now. Our bylaws require D&O coverage. When I agreed to become an officer, it was contingent on the club actually purchasing a D&O policy to comply with the bylaws.

It’s cheap, a couple hundred dollars per year and I’m not going to risk my assets for a volunteer position.

I can’t speak to your hypothetical specifically, but indemnification/hold harmless agreements aren’t worth much in my experience. The board is the entity responsible for not just the airworthiness, but also managing the club’s operation, to include even knowing whether or not the dead pilot should have been allowed to fly anyways.

Happy to share our binder if you want to review it.

I suggest you read the few hundred dollar policy your club has because I suspect it doesn’t protect you at all from the exposure discussed in this thread. The policy has to specifically state it covers third-party bodily injury, passenger liability, and property damage caused by the aircraft.

 

[GreatLakesFlying]

I suggest you read the few hundred dollar policy your club has because I suspect it doesn’t protect you at all from the exposure discussed in this thread. The policy has to specifically state it covers third-party bodily injury, passenger liability, and property damage caused by the aircraft.

@Clip4 , thanks for the comments. Quick question: our club is fully insured for damages cause by one of our airplanes. Having reviewed a couple of draft D&O policies that were offered to us, I see exclusions for bodily injury etc. So theoretically, the estate of a club member lost in an accident, could go after the board for negligence, and the D&O insurer might point to the exclusion and leave us to hang dry. Is that your concern?

 

[TCABM]

I suggest you read the few hundred dollar policy your club has because I suspect it doesn’t protect you at all from the exposure discussed in this thread. The policy has to specifically state it covers third-party bodily injury, passenger liability, and property damage caused by the aircraft.

I’ve read our policy and we have a professional risk manager and an insurance broker as club officers along with counsel input. We’re happy the policy we have meets the needs of our club.

We are an equity based nonprofit corporation. If you’d like more input on our operations, I’m happy to sell you a share. As a shareholder, you can then serve as a club officer and decide for yourself whether our strategy is adequate or not.

 

[Clip4]

@Clip4 , thanks for the comments. Quick question: our club is fully insured for damages cause by one of our airplanes. Having reviewed a couple of draft D&O policies that were offered to us, I see exclusions for bodily injury etc. So theoretically, the estate of a club member lost in an accident, could go after the board for negligence, and the D&O insurer might point to the exclusion and leave us to hang dry. Is that your concern?

yes. Most DO policies do not cover vehicle related liability. Add that most club aviation insurance policies have a $100k per person or passenger sub limit. That’s not much insurance. That’s why most club members with assists should purchase non-owned insurance.

As an officer in a non-profit corporation, your actual liability is very limited.

 

[Clip4]

I’ve read our policy and we have a professional risk manager and an insurance broker as club officers along with counsel input. We’re happy the policy we have meets the needs of our club.

We are an equity based nonprofit corporation. If you’d like more input on our operations, I’m happy to sell you a share. As a shareholder, you can then serve as a club officer and decide for yourself whether our strategy is adequate or not.

I think your liability as an officer of a non profit corporation is very limited, but if the corporate veil can be pierced in a personal injury lawsuit, a few hundred dollar D&O policy is probably worthless, regardless of the advice you have received.

My doubt isn’t you can’t obtain such a policy, my doubt is the low premium you state.