CFI insurance?

[YaMama]

Hey everybody,

Been worrying lately about my exposure to liability as a CFI, just wondering if y'all do anything for insurance and if so where did you get it? Say the worst happens and a student flies into a smoking hole, how can I protect myself from having to start over financially, if the family decides to sue me? Realistically, I'm small potatoes compared with the wealthy flight school owner, but I do have some equity in a house, and obviously I'm much more directly involved in the student's training - but is it more realistic they would just go after the owner and his insurance company? And how long after I give the training can I continue to be liable, I mean say I have some real money myself in 10 years and some guy I signed for a private checkride back in 2004 crashes himself and his family - would they still try to get me?

Anyway, sorry for the rambling, appreciate any advice!

thanks,
-ym

 

[midlifeflyer]

Three primary places to go for aviation insurance if you don't already know an agent.

AOPA Insurance Agency which handles the AOPA plan
Avemco, which has CF insurance
and
Falcon Insurance which handles the NAFI plan.
There are some small differences among the three (I use the NAFI one), but they are pretty similar in overall coverage and premiums.

Essentially, a CFI policy is a non-owned aircraft policy (like you'd get if you were a renter) with an additional provision that covers you for instructor liability. The difference in premium between a regular non-owned policy and the equivalent CFI policy is about $100 per year.

The biggest limitation to the policy is that you can't really buy huge limits. As I recall, the max is $1M with a $100K per seat limitation. For a number of reasons (including my personal calculus of my real overall exposure as a CFI), I'm not that concerned about the this limitation, but if you are, then you want to meet with a lawyer to talk about asset protection strategies in addition to insurance.

 

[Ralgha]

The Falcon NAFI plan is what I have. After compareing it a bit with the AOPA plan, I decided that the Falcon one is much better. Among other things, the AOPA one didn't cover twins, though that may have changed by now, they said they were working on it when I asked. The Falcon one also covers up to $5,000 of legal fees, which isn't much but it's better than nothing.

Same price for Falcon vs. AOPA too.

Oh one other tidbit of trivia, my policy has a specific clause that denies claims resulting from hostile detonations of nuclear weapons...maybe they know something I don't...

 

[TEXAN AVIATOR]

Is the NAFI plan included in the membership?

 

[mattpilot]

different question .... even if you get sued, what is the likelyhood of the sueing party winning?

I mean the CFI can claim that at the time he flew with the student, he did everything correct and to the standards prescribed within the FAR's, but when he solo'd I guess he got confused. How would the CFI be responsible? The burden of proof would ly with the prosecution, which would have to prove he did NOT give adaquate instruction to the (now dead/injured) student .. how would one prove that?

Or is it a McD & hot coffee "joke" where, i guess, anything can happen ?

 

[Ralgha]

No the Falcon plan is not included with NAFI membership. Membership costs $39 per year, and is required to get the Falcon plan, which is $650/yr for the 1 mil policy.

mattpilot: pretty good in this country probably. Remember, the jury most likely knows nothing about aviation. If the CFI neglected to log a particular ground topic (very common), bam, toasted. If the CFI neglected to log a particular flight topic, bam, toasted. If the CFI incompletely logged a particular topic, bam, toasted. For example, if you log "power on stalls" in one of your lessons, the lawyer might nail you to the wall for teaching stalls but not recoverys. Logging it as "power on stalls and recovery" might be a more complete way to log it.

 

[midlifeflyer]

different question .... even if you get sued, what is the likelihood of the suing party winning?

Excellent question. FWIW, here's the latest version of my FAQ on CFI liability. Just food for thought.

As a veteran of a number of CFI liability discussions, it seems that the CFI liability that everyone worries about is virtually non-existent, and the liability that exists is one few CFIs worry about. My personal analysis (which means I rely on it but you can't) is that our liability as instructors are, in order of highest to lowest):

1. When we are in the aircraft giving instruction. Pretty obvious, but this seems to be the one that most CFIs don't seem to worry about.

2. When a student pilot is soloing.

[Big Gap. Cavern, actually. But these are the ones that CFIs tend to be most concerned about]

3. The day after a BFR or IPC.

4. The day after the pilot passes a checkride based on our recommendation.

[Grand Canyon]

5. Sometime later.

Truth is that I've never even heard of a real case that isn't covered by (1) or (2). Not too surprising. When the last time you heard of a medical school sued for a graduate's malpractice?

And I've asked. I've been running an on-line challenge since 1999 or 2000: Tell me about a real situation when a CFI was successfully sued because of something that happened when the CFI was not in the airplane. No urban legends allowed. No, "Well, I heard about this guy who was the third cousin of a nephew of my ex-sister in law who..."

I've managed to collect a total of two solid references.

First is a case from 1958. A flight school was successfully sued when a student pilot took off with the control lock on.

Second is not a case. In response to my "challenge" someone mentioned (and I was able to verify) an NTSB determination of "improper instruction" as a probable cause of the accident in which there was a fatality. I count it because it's highly likely that the CFI was sued or that his insurance settled (unless he was totally uncollectible).

So that's about it. Two real examples over the last 36 years.

I'm still collecting.

 

[pilotman2105]

different question .... even if you get sued, what is the likelyhood of the sueing party winning?

The kicker for me and why I carry the insurance is not the monetary costs of losing a case, but the monetary costs of paying a lawyer to defend me if it gets that far.

If you are acquitted, found not negligent, or whatever, that's great. It still leaves you with $20,000 in attorney fees.

Moral of the story, log only what is required, but log it completely, and ALWAYS have an ace in your hand.

 

[YaMama]

Thanks, Mark. Of course it makes sense that we accept the most responsibility when we're actually in the airplane, but of course we have much greater control over the situation too! For me, the spooky part of instructing has always been sending students solo, especially on cross-countries. Besides, if something really bad happens with me in the plane, I'll probably be too dead to worry about lawyers anyway. Do you know of any cases where the CFI was on board, survived the accident, and still lost some real money? Also, what are the details of the fatal solo crash where the NTSB found the instructor at fault?

 

[midlifeflyer]

Thanks, Mark. Of course it makes sense that we accept the most responsibility when we're actually in the airplane, but of course we have much greater control over the situation too! For me, the spooky part of instructing has always been sending students solo, especially on cross-countries. Besides, if something really bad happens with me in the plane, I'll probably be too dead to worry about lawyers anyway. Do you know of any cases where the CFI was on board, survived the accident, and still lost some real money? Also, what are the details of the fatal solo crash where the NTSB found the instructor at fault?

Here's the NTSB probable cause finding on the solo crash:

http://www.ntsb.gov/ntsb/brief.asp?ev_id=20001213X27554&key=1

The real cases I don't have an don't know about. But clearly a death or a severe permanently disabling injury that is attributable to a CFI's carelessness is going to result in a high award or settlement, just as if it were a car accident. Probably higher, actually, since juries tend to make higher awards in certain situations. A common example is that awards for the same motor vehicle accident injury will tend to be higher if the defendant is a trucker. Whether it's because most folks don't like truckers or because they are supposedly professional drivers.

Compare that with a solo in aviation. For better or for worse, we are teaching what is essentially a risky activity and we are responsible for our students until they get their certificates. Certainly a jury is going to look at it that way.

There are actually (fee-based) databases that will give a range of reported awards and settlements for injury and death cases, but I don't have access to them.

The defense tends to be good record-keeping. Showing that the proper things were reviewed and covered and evaluated - one of the advantages of a graded student folder or individual flight sheets. Part 141 schools traditionally use the former. I use the latter for every flight. Settlement is a game. Sometimes the strategy is to have enough defensive material so that the plaintiff is more inclined to settle within the limits of the available insurance than to roll the dice with the jury and then have to fight to collect it.

 

[Flyingmariner]

No clear answer

Call me dumb or not but I've thought about getting insurance for a few years now and just never get around to it. I currently have none and can't remember how many students I've soloed. The problem is as I see it is that you can't have enough insurance and if there is a lawsuit no amount will cover a case going against a CFI. I have one or two friends who flat out refuse to instruct any more due to the risk. They still keep there rating although I'm not sure why.

Insurance companies are in the business of selling fear and they do a really good job of it. Although to be fair they don't really spend a lot of time putting the fear of personal financial ruin into flying magazine ads.

An MD friend has all assets in some kind of trust and I believe this might be the way to go. If I worried about being sued every day then I wouldn't be instructing.

 

[midlifeflyer]

I have one or two friends who flat out refuse to instruct any more due to the risk.

That's a shame. I'm convinced that most of the things they are afraid of are shadows. The fact that it costs about $100 more for a CFI insurance policy than a regular non-owned aircraft policy gives me a pretty good indication of the increased risk factor. The minimal amount of insurance would, of course, not cover a really bad case, but insurance companies don't shell out $100,000 or more on a regular basis in exchange for $100. Not for long, anyway.

If I worried about being sued every day then I wouldn't be instructing.

Me too.

 

[TCAS]

First step... Get insured. The Avemco, AOPA and NAFI plans all provide comperable coverage. Shop the premiums to the coverage and figure out which is best for you.

Second step... Establish your flight training activites as a Limited Liability Corporation, also refered to as a LLC. Most states have a download packet or guide that helps you establish a LLC. The cost is very reasonable. Your students make their checks out to the LLC and not to you. You then draw your pay from the assets of the LLC. This provides an additional layer of protection for you and your personal assets. It also provides tax advatages to you as you obtain your CFII or MEI since you are "investing" in the business. Need a new set of Dave Clarks or set of Jepps? It's an asset of the corporation and a business expense. Talk to your tax preparer for guidance on expensing purchases to the LLC.

Third step... Keep good records. Follow the practical standards guides set out by the FAA. Come up with some phase sheets. As the student completes a phase of the training have them sign that sheet acknowledging they've completed that training and you covered those topics with them. Keep those records for each student at least for two years when they will have had to have completed a biennial flight review and some other instructor has signed them off as being competent. You may need to someday provide to a court that sheet showing that you covered crosswind landings, etc.

Fourth step... If you have more then a pot to "pizz" in (I know, a stretch for most flight instructors) then an hour spent with an attorney who specializes in aviation litigation discussing your liability and protection can be a well spent couple of hundred dollars. When I did that it actually led to me getting two new instrument students... The attorney and his partner.

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