Sponsor’s Corner: Non-owned Liability Insurance

Peter M. Lindberg’s article was recently published in the Southern Methodist University Journal of Air Law and Commerce.  79 J. Air L. & Comm. 463 (Summer 2014).  This article focuses on the liability of flight schools and flight instructors for allegedly failing to provide pilots with the skills necessary to fly safely. 

Why Should I Buy a Flight Instructor Non-Owned Liability Insurance Policy?

Chances are you will live a long life, fly thousands of hours and instruct hundreds of students who go on to have many years of accident free flying. Unfortunately, aircraft are occasionally involved in accidents, and Flight Instructors are blamed. Students and/or other third parties may even file a lawsuit against the flight instructor seeking monetary damages. Importantly, the non-owned insurance policy also covers the costs and expenses associated with defending you in Court. Consider the following to help you build a solid risk management plan as it relates to your flight instruction business.

 Build Solid Documentation

Regardless of the type of instruction you are providing, documentation is critical to create a history of what actually happened. The Federal Aviation Regulation 61.189 provides a minimum standard of what Flight Instructors must document:1) signing the logbook of each person whom the instructor has given flight or ground training to; 2) maintain a separate record of each student the instructor has endorsed for solo flight, the date of the endorsement and anyone who you have endorsed for a knowledge test or a practical test. The record must contain the kind of test, date and the results. Going above and beyond this MINIMUM requirement will help defend you in the event of a lawsuit.

Keep your records for more than three years

Who knows what the future will hold? But luck always favors the prepared. Keeping records longer than the minimum requirement will certainly come in handy if a lawsuit is filed against you. By exceeding this basic and minimum requirement you will also build your credibility as an operator who will go above and beyond.

Make notes on every flight

Keep accurate records of any ground instruction given and what topics you covered.

Consider using an electronic platform to capture more information and make record keeping more accurate and less cumbersome. There are some third party vendors who provide platforms specifically designed for Part 61 or Part 141 flight training operations.

Consider taking a video of the flight

Many areas of society have seen the benefit of “video tells no lies” – the video review can also enhance the training experience by allowing the student to review their lesson, if the data can be made available to them. If something does go wrong during the flight, or years later, you have undisputable evidence of exactly what happened. Video is not just risk management, but value added service. Many other instructional services use video to enhance their product (golf instruction, driving schools, etc.) so why not flight instructors.

Transfer Risk

We encourage any flight instructor who is providing services to an aircraft owner to secure through the aircraft owner’s policy an “additional insured” endorsement and a waiver of subrogation. This will provide an initial layer of coverage if something goes awry during the flight. As an additional insured in the owner’s policy, you are afforded certain coverages in the event a third party makes a claim against you. The waiver of subrogation precludes the owner’s insurance company from making a claim against you for damaging the aircraft.

Insure Your Risk

A non-owned aircraft liability policy covers your legal liability arising out of the use of a third party’s aircraft. If you are sued, the insurance company has three basic responsibilities 1) defend you – which means hiring an attorney, and experts if needed, to protect your legal interests in the matter 2) indemnify you – if you are found negligent, then the insurance company will pay those sums which you are legally obligated to pay, up to the limit of liability in the policy. If you are employed by a flight school and the flight school has insurance, then you are likely covered by their policy for flight instruction given during the course and scope of your employment with the flight school. If you elect to provide flight instruction outside of your employment with the flight school, then you will need to consider your own insurance coverage. Maybe you only provide a flight review or an IPC to some select clients outside of your employment. In these cases the flight school will not be able to help, and you will need your own policy to defend you, or slug it out on your own, which again may really put a damper on your pocket book.

Closing – Knowing the Law and dealing with it

Generally, the courts will not hold an educational facility liable for the training they provide. Example: universities are not sued for their graduate’s liability. How would society ever be able to function if a learning institution could not train doctors, nurses or other professional trades such as engineers? Outside of a university, professional flight instructors are just that – a for-hire business, therefore some courts allow a lawsuit to move forward as it relates to a for-hire flight training institution. See the recent article from the Southern Methodist University below. There are ways to protect yourself and your future. Documentation, record retention, transferring your risk and insuring your risk are just a few measures you can take to shield and build your empire.

The courts have traditionally held that plaintiffs’ claims that an educator failed to provide them with adequate skills are barred as a matter of law under the educational malpractice doctrine, for the following reasons:

(1) The lack of a satisfactory standard of care by which to evaluate an educator;

(2) the inherent uncertainties about causation and the nature of damages in light of such intervening factors as a student’s attitude, motivation, temperament, past experience, and home environment;

(3) the potential for a flood of litigation against schools; and

(4) the possibility that such claims will embroil the courts into overseeing the day-to-day operations of schools.

While many courts continue to rely on the educational malpractice bar to dispose of claims asserted against flight educators, there have been a growing number of decisions indicating that flight instructors and flight schools may face liability for failing to adequately instruct.

Instead of mounting a generalized attack on the quality of the education or alleging that the defendant generally failed to make him or her into a competent pilot, injured plaintiffs typically allege discrete acts of negligence on the part of the flight educator (i.e. a failure to instruct on stick shakers, a failure to instruct on proper response to icing conditions, a failure to instruct upon proper response to known torque roll propensity, etc…).  In these cases, the courts have differentiated between the generalized education of schoolchildren and “for-profit commercial entit[ies], teaching a narrowly structured course on the operation of a specific [piece of equipment]” or specific set of well-defined safety-critical skills.

Claims asserting distinct acts of negligence in failing to provide a discrete set of safety-critical skills with foreseeable risk of harm have gained acceptance in some jurisdictions.  See In re Cessna 208 Series Aircraft Products Liability Litigation, 546 F. Supp. 2d. 1153 (D. Kan. 2008), In re Air Crash Near Clarence Center, New York on February 12, 2009, 2010 WL 5185106 (W.D.N.Y. Dec. 12, 2010), Murphy v. Cirrus Design Corp., 2012 WL 729263 (W.D.N.Y. Mar. 6, 2012), and Newman v. Socata SAS, 924 F. Supp.2d 1322 (M.D. Fla. 2013).

Plaintiffs have also tried to recover from flight educators under some alternative theories, such as tort liability growing out of contractual relationships, voluntary undertakings, entrusting a dangerous instrumentality to an inexperienced user, the duties owed to third parties under tort and contract law, and products liability. These theories have not gained much acceptance to date.

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