Clear on Top

One of the best ways to come to understand your insurance policy is to work through a claims exercise.  The following situation is one that could likely arise for any of us following an accident.  Note that the claim quickly escalates beyond a simple “my airplane was damaged, and I’ll have to repair it” scenario and delves more deeply into how the policy is structured and who is protected from a liability standpoint.

In two weeks, I will revisit this scenario and provide some analysis.  In the meantime, pull out your own policy, substitute your name and aircraft information for the information below, and let us know what YOU think. The discussion will benefit us all.

The Scenario –

Aircraft:  2001 Cessna 182

Aircraft is owned jointly by two partners, each with the following logged pilot qualifications at the time of the loss:

Burt Reynolds – age 45 – Pvt / IFR / 500 Total logged hours / 50 MM

Danny Quaile – age 32 – Pvt / 175 Total logged hours / 0 MM

Aircraft is insured by Chartis / LAD on a standard light aircraft policy.  The aircraft is registered to an LLC and the insurance policy is in that LLC name – R&Q Flying, LLC.  The policy requires that Danny receive 2 hours of dual instruction prior to solo operation of the airplane.  The policy also has an Open Pilot Warranty, approving any pilot with:  Pvt Certificate / 750 Total logged hours / 25 hours in the make and model to operate the airplane without specific approval.

Danny hires a CFI to give him his 2 hours of dual.  The CFI is a local corporate pilot who has flown “about everything.”  At the time of the loss, the CFI holds an ATP / CFI / CFII / 5,500 TT / Citation and Learjet Type Ratings / but no time in a Cessna 182.

On takeoff during their first instructional flight, the airplane’s engine quits, and they crash off the end of the runway, severely damaging the airplane. Danny breaks his leg badly in the crash.  The CFI suffers a head injury.  The airplane is deemed to be a total loss.

The lawsuits –

Danny files suit for a sum of $250,000 against the CFI seeking to recover for injuries suffered in the crash.  Danny has $50,000 in hospital bills, 10 weeks lost wages, and $35,000 in physical therapy expense.  Danny’s suit alleges that the CFI failed to properly brief him in the handling of the engine failure and failed to take control of the airplane during the emergency in order to prevent the crash.

The CFI files a counter suit against both owners for a sum of $150,000 for medical bills, rehab, pain and suffering and lost wages.   His suit alleges that the aircraft owners failed to properly maintain the airplane, resulting in the engine failure.

Both owners and the CFI are sued by the property owner where the airplane landed, alleging $15,000 in losses to crops resulting from the accident and ground contamination from spilled fuel..

Coverage Questions:

1)      Is there hull coverage for Burt and Danny for the loss of the airplane?

2)      Is there coverage for Danny w/ respect to the suit from the CFI?  What about Burt?

3)      Are the aircraft owners covered with respect to the suit from the land owner?  What about the CFI?

4)      Are there issues with available limits on the policy?