Who is Insured on Your Aircraft Policy?

Aircraft owners often conduct flights carrying passengers, employees or other pilots. Many aircraft purchased today are financed and have lien holders with an interest in the aircraft. Some aircraft are purchased or operated on a lease agreement by another party. Given these variables you may ask, “who is covered (insured) on my policy?”

Read your policy first as the answer will vary based upon the insurance company selected. The answer can usually be found under “who’s covered” or “who’s an insured,” generally located in the definitions section of the policy.

Let’s review answers to this question that are common on many pleasure and business use policies. Please keep in mind that not all policies will exactly reflect the following definitions.

Who’s covered?

• An insured is “you,” which is defined in the definitions section of the policy, typically worded as: the person or organization who is listed as the “named insured” on the policy (policyholder). The “named insured” is usually the person or organization for which the aircraft is registered or leased and is the only insured party who may make changes to the policy.

Liability is further extended to other parties, including:

• Any person who is using or riding in your aircraft with “your” permission, or any person who is legally responsible for the aircraft. This includes passengers and pilots who are not the “named insured.” Pilots must meet the pilot requirements and use the aircraft within the scope of its approved uses.
• Other individuals or organizations that fall under “who’s covered” who are “Additional Insureds” that are endorsed in the policy. These may include the lien holder, a lessor or someone else who has been deemed to have an interest in the aircraft and its use thereof. These “Additional Insureds” are
typically presented to and agreed upon by the company.

Who’s NOT covered?

• A student pilot, unless listed by name as a pilot on the policy. Many people often justify instructing student pilots who are not named to the policy by claiming the certified flight instructor meets the pilot requirements and is the pilot in command. However, student instruction is excluded in most pleasure and business use policies, unless that student is named to the policy.
• A person or organization renting your aircraft. Rental is a commercial use and not part of a standard pleasure and business use policy.
• A person or organization other than you or your employees or agents, while at work for you who design, make, modify, repair, service, maintain, rent, sell, finance, lease or charter aircraft, aircraft engines, parts or accessories, own or operate a flying school, provide flight instruction, own or operate an airport, hangar or aircraft tie-downs; if the claim arises out of such activity by such person or organization. Pleasure and business policies are intended to cover the “named insured” for their private use. They are not a means to provide coverage for ANY type of commercial operation whether he or she is named pilot or not. This is often referred to as the “Aviation Professional Exclusion.”
• An employee who injures a co-employee. Often called “Fellow-Employee Exclusion,” this prevents coverage when one employee sues another.
• An owner or lessor of an aircraft you lease, rent or borrow unless otherwise endorsed. Likewise, if another pilot is using your aircraft, his non-owned coverages will probably not cover you. Non-owned policies are usually in addition to that of the aircraft owner.

What does the policy do for all of the insureds?

It provides liability coverage and a separate legal defense for each insured; however, the policy limits will not increase for each insured. There is one “occurrence” limit for all parties. You are essentially sharing your liability limit with each of the insureds. It is not desirable to have numerous “Additional Insureds” on a policy with a lower liability limit, as it dilutes your own coverage.

Again, read your policy carefully so you are fully aware of who and what is covered. If any wording appears problematic you should contact a PIM representative immediately to discuss amending the policy.

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