CFI insurance.

[Bruce Fenstermacher]

Folks I've agreed to teach one student to fly and get his Sport Pilot license in his Luscombe and so I'm looking at additional CFI insurance.

My personal aircraft liability insurance is 10K per person $100K per passenger and 1M per accident for my Cub (it's at least that for my 170 but I don't have that policy out).

Several organizations have CFI liability coverage. So far I've looked at AVEMCO, AOPA, NAFI and a quote from AUA my normal insurance broker. It would seem that CFI liability insurance starts much lower in the level of liability coverage with AVEMCO at $25K each person, $250K Property Damage and $250K Each Accident for $145 annually and the limits and rates go up from there with NAFI offering the most at $200k each person, 1M each occurrence for $1050 annually.

It would seem to me I'd want to insure myself for at least the same level as I do otherwise but maybe there is something I'm missing and CFIs normally don't insure to that same level. Is this the case?

I'm hoping there is a sound reason to insure to the lower levels otherwise I'll just about break even just paying for the liability insurance. And I've also got to get some non-owner hull insurance as well. Is it a wonder you can't find a CFI.

[canav8]

Bruce, most airports will require you carry a min of a million, 100K,100K. Not sure I would do any CFI work for just one student. Plus you have left out details. Owners aircraft? read the fine print on the binder. Most will not cover you. Avemco will but it will not be cheap. Dont even consider anything less unless all of your assets are in a trust and you run an LLC for insulation. Its all about the layers. Favors of a friend can turn south fast when there is money involved.Best of luck to you. I would practice those wheel landings though!

[GAHorn]

LLC offers little/no individual protection....except to other partners in the LLC...don't bother with
LLC if you have no business partners, according to my attorney in TX.

Have your student add you to his policy as"additional named insured".

[Bruce Fenstermacher]

Thanks Doug. The airport has nothing to say about it really. Yes they can make it difficult I suppose but they won't. They can not stop a legal use of the facility. They can't stop the visiting instructors from the other local airports training at our airport. I'm not hanging out a shingle. I'm not even competing with the local instructor because he can't/doesn't offer tail wheel training.

George, being named as additional insured may cost as much or more than the CFI insurance available and actually be less coverage. First it is still not my insurance and it would not travel with me. For instance it wouldn't cover will I was doing a Flight Review for another person.

Being a named pilot, which is somehow different than being an additional insured, may not cover me either but it would make the insurance valid for the student. For example we hurt someone on the ground or damage property and they sue the student and me. The student is covered I am probably not. The insurance company can also come after me for any hull loss though not one agent has told me they've ever heard of an insurance company going after a named insured to recover hull loss, but they could.

But yes, I will at least be named pilot and we will investigate being a named insured.

There is no question I either buy hull insurance or I self insure. CFI non-owner hull insurance is available and actually fairly cheap at about $200 for the $20K I'll need to cover this airframe.

So it is the level of liability insurance that is the question. The lowest levels start at $145 and the highest level $1050. The fact they offer the lowest level makes me wonder if there is a reason someone could justify buying it. My philosophy with insurance is to buy what a reasonable person or the masses seem to buying. I don't want to appear under insured nor do I want to attract a lawsuit buy over insuring.

Yes this CFI insurance is crazy. It is a wonder there are any CFI's in business at any cost. I have resisted many requests for training in the past. When I tell the student the cost of insurance in my personal owned aircraft, that usually ends the discussion. I tell them if they're willing to buy their own aircraft we can talk about it. Most won't do that for a tail wheel transition.

But this friend has bought his own airplane after we discussed the limitations of my time and even limited experience in the airframe. I feel compelled to help him and agreed to do it. Many people have gone out on a limb for me over the years in aviation. And I am where I am because of it. My fixed wing instructor taught me to fly and I know now he wasn't properly insured nor was his aircraft and the list goes on.

Yes having one student makes no financial sense. But it is my way of giving back. Buy the time I buy reasonable insurance I'll probably lose money. I certainly won't be making any for my time. But I think it is time and money worth spending not only to help my student but it also helps me grow. Hopefully my student will help someone else attain or advance in this field or hobby we call aviation.

[canav8]

LLC offers little/no individual protection....except to other partners in the LLC...don't bother with
LLC if you have no business partners, according to my attorney in TX.

Have your student add you to his policy as"additional named insured".

George, every state is different regarding the layer of insulation. My company is truely a Limited Liability. It uses Limited in the title to differentiate. Hope that helps. D

[GAHorn]

LLC offers little/no individual protection....except to other partners in the LLC...don't bother with
LLC if you have no business partners, according to my attorney in TX.

Have your student add you to his policy as"additional named insured".

George, every state is different regarding the layer of insulation. My company is truely a Limited Liability. It uses Limited in the title to differentiate. Hope that helps. D

Yes, I'm sure different states are different...which is why I mention where my atty's opinion may have validity.

Bruce, additional named insured on MY airplane's insurance with AOPA was $80 for the state of TX in year 2000. (The state insisted it be named addt'l named insured before they'd allow me to operate on their ramp or their personnel to operate my aircraft. It provided the state and it's personnel every benefit it provided the aircraft owner.) I'm hoping that if you can be addt'l named insured on the student's personal aircraft policy that you will have the coverage you require... although you might have to investigate whether or not it will provide you protection from the student/family themselves. I once asked the atty whether it might be a good idea to get a release of liability from a student (before beginning training) and the answer given was that....it's a good idea...it might even convince the student that he has not a chance to sue...but in-fact it is impossible to enforce a release of liability given prior to the event of loss because it is impossible to predict the nature of the loss or the nature of the negligence they might claim. In other words....one cannot actually "pre-release" someone from their liability towards you.

That was an eye-opener for me from the legality standpoint. Anyway... addt'l named insured on each/every student's airplane might be the best course if you do that sort of thing regularly.

[Bruce Fenstermacher]

George, there is no doubt that more layers of insurance i.e. as a named pilot or better as an additional insured helps. But one thing gets unclear in most of the policies I've read and in conversation with brokers. And that is the act of teaching or instructing which considered a commercial operation because it is assumed the instructor is charging and commercial operations are not covered by most normal insurance coverage.

The crazy thing is that my student is not rated. His insurance underwriter KNOWS he has to fly with an instructor. His underwriter is CHARGING him accordingly. But the instructor is most likely not directly covered.

Aside from this discussion while reviewing my own policy which had a requirement in a few circumstances, that I have 5 hours of instruction prior to acting as PIC. In this instance for this 5 hours of instruction, a instructor meeting the requirements was covered by the policy.

It is these other layers of insurance i.e. being a named pilot or an additional insured that makes me wonder if under the right circumstance, the lower personal CFI coverages make sense at all.

I've pretty much resolved to buy the same level of CFI insurance as I have on my personal aircraft and hope that my student is committed enough to complete the training in a reasonable amount of time and I can cancel the CFI coverage. I believe he will be after all he did commit to buying an aircraft which is a big commitment. The minimum time frame for coverage is 6 months.

[canav8]

Bruce, I know it is very complicated. All policies as you know are completely different. A freelance instructor is the problem. If he worked for a flight school there is no problem with coverage for the instructor. It really gets complicated when the instructor tries to instruct a non rated pilot.
I also have a funny binder. Here is an example. I can take a primary student with no time and solo him in my aircraft. He is covered under the policy. As soon as he gets his private ticket, he is no longer covered by the school policy. I have another instructor as well which complicates things even further. You must read each individual binder. The important thing in insurance coverage is that you dont have duplicate coverage. That is the only way you can save money. The other alternative is to have your friend sign an indemnification contract and then forego the insurance and self-insure like the old days. Doug