Part I: The Happy Owner
Congratulations! You are the proud owner of your first airplane — a high-performance, retractable, at that. So, having just parted with a year’s salary and most of your children’s inheritance, you’re ready to do something remotely responsible: You purchase all the insurance available. You get a policy that includes coverage for pleasure and business, and everything in between — or so says your gleeful broker. Satisfied that you’re taken care of, you don’t bother to read the policy. Well, you try to read it, but it quickly dawns on you that the thing is so full of fine-print, legaleze-jibberish, written by obsessive-compulsive lawyers who don’t know jack about airplanes that if you attempt to read it, you will probably go blind — which would sort of destroy the whole point of having your own airplane. Besides, your broker is a nice guy, you trust him to take care of the details and life is good … for now.
Time passes and your business partner catches the itch. She enrolls in the local flight school and gets her private certificate. By this time, you’ve grown comfortable with the airplane and your partner has a solid 100 hours of total time under her belt. She persuades you to teach her how to fly your airplane. You take her through the paces and feel confident that she can handle the airplane, so you let her.
Part II: The Not-So-Happy Owner
One day, the soon-to-be ex-partner calls you from the airport to confess that she managed to run off the end of the runway. No one is hurt, but she took out a couple of runway lights, collapsed the nose gear and had a prop-strike. You rush out to the airport and find your machine in a hanger undergoing an NTSB inspection. A mechanic hovers nearby, silently estimating about $25,000 for the repairs, including a top-end overhaul, landing gear and prop replacement, and new paint.
You confirm the worst and tell the grease-monkey to have at it. After all, you’re insured. You call your insurance company to authorize the repairs and make arrangements with the facility for an inspection. The insurance adjuster calls back a few days later to ask you a few questions about the incident. “So, you weren’t flying?” “Who was?” “You weren’t on board?” “Well, sure she’s a licensed pilot … and how many hours did you say she had?” ‘About a hundred or so.’ ‘Thank you sir, we’ll be getting right back to you.’
Part III: Definitely — Unhappy…
A week later you receive a certified letter from Blackheart Insurance Co., Ltd., advising you that it is respectfully declining coverage for your loss. Reading your policy, they quote:
“Pilots: When in flight the aircraft will be piloted only by ANY PILOT WITH A RATING PROPERLY CERTIFICATED BY THE FAA HAVING A MINIMUM OF 250 TOTAL LOGGED AIRCRAFT HOURS, 100 OF WHICH HAVE BEEN IN COMPLEX AIRCRAFT, INCLUDING NOT LESS THAN 15 HOURS IN THE MAKE AND MODEL AIRCRAFT BEING FLOWN.”
You just met your first ‘pilot warranty’ and it is not your friend. Generally, when a pilot fails to meet the minimum requirements of a pilot warranty in an insurance policy, and has an accident, the insurance company will usually (if not always) try to deny coverage for the damages. In some states, the insurance company may be required to prove that the lack of qualifications was the actual cause of the accident, but others, such as Ohio and Maryland, have no such requirement. So, the practical effect is that lack of qualifications by the pilot voids the coverage of the policy.
Moral #1: Always read the entire insurance policy, especially the warranties and the exclusions.
Moral #2: Never let anyone fly your airplane who does not meet the minimum requirements of the insurance policy.
OLD REPUBLIC INSURANCE COMPANY v. MICHAEL B. GORMLEY, et al. UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND 77 F. Supp. 2d 705; 1999