Non-Owned Aircraft Liability: Covering Planes You Borrow, Rent, or Share

What is non-owned aircraft liability coverage?

Non-owned aircraft liability covers a pilot or an organization for bodily injury and property damage arising from the operation of an aircraft they do not own. It typically includes two parts. Liability protects you against claims by passengers and third parties. Aircraft damage liability, sometimes called hull damage liability, covers your responsibility for damage to the aircraft itself, which is the part most renters overlook and the part most likely to be triggered.

• Liability limits commonly 1 million dollars per occurrence with a per passenger sublimit of 100,000 dollars
• Aircraft damage liability commonly 25,000 to 250,000 dollars, matched to the value of the aircraft you fly
• Covers rented, borrowed, club, and partnership aircraft as defined in the policy
• Extends to legal defense costs, which are frequently larger than the settlement in a disputed claim
• Corporate versions extend to employees flying on company business

Why does the owner's policy not protect the renter?

Because it was not written to. An owner's policy names the owner as the insured and protects the owner's assets and aircraft. Many policies define who may operate the aircraft through an open pilot warranty, and a renter who does not meet the stated hours, ratings, or checkout requirements is simply not an approved pilot, which can leave the flight uninsured entirely. Even when the renter is an approved operator, the hull coverage protects the owner's property interest, and the insurer can subrogate against the renter who caused the damage.

• The named insured is the owner, not the renter
• Open pilot warranties set minimum total time, time in type, ratings, and recent experience
• Falling short of the warranty can void coverage for that flight
• Hull coverage protects the owner and permits subrogation against the pilot at fault
• Waiver of subrogation is sometimes available but must be requested and endorsed in advance

What do flying clubs and partnerships need?

Clubs and partnerships occupy the most misunderstood space in aviation insurance. A club is an entity with members, assets, and officers, which means it needs entity coverage in addition to hull and liability on its aircraft. Members flying club aircraft need their own non-owned coverage unless the club policy names them as insureds. Many clubs believe their members are automatically protected and discover otherwise after a gear up landing, when the club's carrier pays the hull and then seeks recovery from the member who was flying.

• Entity liability for the club itself, covering operations, ground activities, and events
• Hull and liability on each club aircraft, with named insured status properly structured
• Clarify whether members are insureds under the club policy or need individual non-owned coverage
• A cross liability or severability clause so one member's claim is not barred as a claim by an insured
• Directors and officers coverage for club officers, who are exposed to member disputes and financial decisions
• Written checkout standards and currency requirements, which carriers will ask for and price against

How do businesses handle employees flying non-owned aircraft?

If an employee flies an aircraft for company business, whether rented, borrowed, or personally owned, the company has vicarious liability exposure and the company's general liability policy excludes aircraft. Corporate non-owned aircraft liability closes that gap. It is inexpensive relative to the exposure and it is one of the more common uncovered risks we see in businesses that do not think of themselves as aviation accounts, including construction firms, real estate developers, and agricultural operations whose principals fly themselves to job sites.

• General liability policies exclude aircraft liability almost universally
• Corporate non-owned aircraft liability covers the company for flights made on its behalf
• Set limits to match the company's overall liability structure, often 1 million to 5 million dollars
• Define whether employee owned aircraft are included, since this varies by form
• Establish a written company policy on who may fly for business and what minimums apply
• Coordinate with the umbrella, since many umbrellas also exclude aviation unless scheduled

How much does non-owned aircraft coverage cost?

Less than most pilots expect. A renter pilot policy with 1 million dollars of liability, a 100,000 dollar per passenger sublimit, and 50,000 dollars of aircraft damage liability commonly runs 400 to 900 dollars per year for a private pilot flying single engine piston aircraft. Higher aircraft damage limits, complex or high performance aircraft, and instrument or commercial operations move the price up. Corporate non-owned programs are priced on exposure and typically start in the low four figures. Against a 60,000 dollar engine and prop strike repair bill, the math is not close.

• Typical renter policy: 400 to 900 dollars per year for basic single engine coverage
• Aircraft damage liability of 100,000 dollars or more raises premium modestly and closes the biggest gap
• Multi engine, turbine, and high performance aircraft price higher
• Corporate non-owned programs commonly start around 1,500 to 3,500 dollars annually
• Instructional flying and flight instruction given require separate consideration

Ready to review your aviation exposure?

Grandbay Financial Services places aviation coverage for owners, renters, flying clubs, and businesses whose principals fly themselves. If you or your people operate aircraft you do not own, this is a small premium that removes a large personal exposure. Schedule a conversation at calendly.com/grandbayfinancial.