Questions about insurance for a newly qualified FI(R)

[sjb112]

Hello there

I'm looking for some thoughts on insurance cover for a newly qualified FI(R). I understand that Besso (direct or via AOPA) offer "INSTRUCTORS LIABILITY INSURANCE" either sold directly or via your employer.

Is this insurance mandatory or optional?
How does it sit with employers liability insurance if as an FI you are an employee?
Are there any similar products on the market?
Does anyone have any claims experience with this insurance they would be prepared to share?

Also, as a trade union, BALPA offer insurance and legal cover to commercial pilots. How does this fit with Instructors Liability insurance? Is there crossover?

Finally, I'm aware of the BALPA-negotiated £850 tax allowance for uniformed commercial pilots and the 2/3 allowance for BALPA membership. Are FIs allowed to claim tax deductions for Instructors Liability Insurance and/or the cost of licence and medical renewals in addition?

Sorry about length of post, appreciate any thoughts.

Thanks

[Duchess_Driver]

Others better qualified will be along in a mo with more relevant or detailed comments.

But to start the ball rolling Insurance is optional at an instructor level, but I am sure there would be some Employers liability requirement which would cover them. The level of cover would determin how much you as an employee/contractor were/weren't covered.

I would suggest this is fairly high up the list of questions to ask your boss or supervising FI.

As regards to taxable deductions.... best person to ask would be an accountant. I am sure that there are ways in which things can be offset against tax liability at PAYE (Is it still called that?) but I've never bothered. Perhaps I should. As a self employed/contractor level there would be more and different tax issues to consider. IIRC there used to be a way to claim back VAT on training - but I'm not sure thats still around and whether its worth it or not.

[sjb112]

Thanks for that Duchess Driver. Job not finalised yet, so making sure we understand what questions to ask.

I'm sure I read a tax judgement somewhere confirming the training loophole had been shut, as you suggest, although I wonder what the tax office view on expenses related to post-training, such as getting night, aero restrictions etc lifted?

[sjb112]

Any other thoughts on FI insurance very welcome.

[mrmum]

Just to be clear on what you're asking here. It's about some cover to protect you from personal liability, in the event one of your students or a different party comes to some harm, and they or their dependents try to hold you responsible. Yes?

If so, employers liability insurance, (which it's mandatory to have) isn't really relevant. ELI is there to protect you, if the employer can be found responsible for you being harmed.

What you're interested in, is the liability insurance that your employer has in place for the aircraft (for which there is a mandatory minimum amount), and/or any general public liability policy they may have.

I think the Besso/AOPA product has only been around a couple of years, if you want to be sure, or not dependent on the school you're flying for, then yes, get your own.

If you're distrustful of your employer, then the ELI certificate must be on display, check the aircraft documents for the insurance certificate, ask about their public liability insurance. I once worked for an unscrupulous character, who owned a couple of flying schools, he was a bit of a serial liquidator/phoenix restarter, in the final reincarnation, the aircraft all appeared to be insured as the certificates were there, however it later came to light that no payments had ever been made to the broker and the insurance had all been cancelled, but he'd refused to return the certificates. If any of us had had an incident, we'd have been totally uninsured, it was however, not compulsory to have it back then.

In my experience, which is just the once (and that's enough). Following a crash with very minor injuries, the school insurance handled everything, including looking after the interests of the instructor (self-employed), when the TL got themselves a no-win/no-fee lawyer and set out to take everyone involved to court.
In that case though, there was no blame really to be laid on the PIC. The problem may come, when the PIC could be said to be at fault, or done something illegal. In that scenario, the club's insurer could actually take action against you, so it would be good to have your own.
You should really see what kind of Ts&Cs, exclusions and limitations are in the Besso product.

[dobbin1]

I'm self employed, sub contracting my services to a local school.

I believe I am covered by the school's 3rd party liability insurance when I am flying for them, but I might not be covered by their ELI as I am not an employee.

In any case, I have taken out the Besso Instructor Liability insurance, just to be sure and to cover me when I am flying as instructor outside of the school. The only issue with the Besso cover that I can see is that the cover is quite low at only £1.0 million.

I certainly claim this as an expense against my business - one of the benefits of being self employed. Not sure if you would be able to treat it as an allowable expense if you are an employee, but the tax people could advise.

[mrmum]

I might not be covered by their ELI as I am not an employee.
When we get the forms to renew the ELI each year, we are told by the broker/insurer to include self-employed instructors, as we would actual employees. You would infer from that, they would benefit from the same cover.

[spittingimage]

Never (knowingly) had liability insurance while I was instructor. Crossed fingers and hoped for best. Looks like I got away with it, given I no longer instruct, ... unless of course some disgruntled ex-student comes after me in 20 years time saying from his hospital bed that I taught PFLs badly ! :eek:

Hmm .. how does one cover oneself against that little scenario then ? Pay for further liability insurance each year in perpetuity ? :}

[Dan the weegie]

The aircraft always has third party liability insurance as far as I'm aware that covers passengers so long as instruction isn't excluded you will be fine. Employers Liability insurance normally only covers the landside part and the airside part would normally be covered on the aircraft insurance policy.

Theoretically, the aircraft insurer, or ambulance chasing scum (no win no fee) could attempt to take an instructor to court suggesting that the instructor was in some way negligent. It's unlikely but it can happen. In this instance it would kick off instructors liability insurance, but honestly this would only happen when A) the instructor was worth any money at all (LOL!)
B) The instructor had liability insurance to actually pay out
C) the ambulance chasing scum were just idiots.

Basically in my opinion if you have such insurance you're more likely to get sued and would be feeding the fire. You make your own choice, I didn't and still won't.

[sjb112]

Thanks all for your inputs. I think this has given us ( I am the FI's other half who deals with all the financial stuff) a better idea of what to look out for when (fingers crossed) a job offer comes along.

[FANS]

The first question is whether you're self-employed or not.

If you are, this can require your own insurance to cover your position, as the flying school could argue that it's subcontracted out the FI to yourself and hence you could then be liable.

I.e. student has contract with flying school and therefore sues flying school when it goes wrong. Flying school sues flying instructor if not employee.

Insurance can easily be forgotten about, but you're right to check from the start your position.

It's a mindfield depending upon the contractual relations and your flying club.

Lastly, if you haven't got many assets then you could be more relaxed!

[Pilot DAR]

take an instructor to court suggesting that the instructor was in some way negligent.

Is not the evidence of the instructor's compotence the fact that the student earned a license? Once licensed, the instructor would be "off the hook" as the license issuer has declared compotence, not the instructor?

[sjb112]

Thanks also DAR and FANS for the input.

I suspect from the feedback that this insurance is primarily designed for the self employed FI, and I'm obviously not sure if that will apply in our case til he gets a job. Obviously if SE then will be Ltd Co, but if he gets a job as an employee we will need to investigate the school insurance situation carefully and make a decision as to whether it is worth it.

As for assets, he has none and mine have diminished rapidly over the last 18 months. But then we are not married, so not sure I could be pursued in a claim?

Of course, like everything in flying, it is all so expensive. Aaaagh:eek:

[mrmum]

PilotDAR
Yes, pretty much to a large degree I would say you were right, that them being a licence holder, would be the foundations of a reasonable defence, and the longer they've had it the less liable we would be.
I do know of an instance where a PPL holder crashed and died, immediately after getting their licence and the family took civil proceedings against the instructor. There were though, some shenanigans going on at the time at that facility, involving a number of students and the CAA did actually get involved and took some appropriate action.

[sjb112]

Thanks mrmum. It is a product of our increasingly litigious society, in my view. The danger is that someone brings a spurious and chance-y claim via an ambulance chaser, as dantheweegie mentions, which then swallows up money in defence.

I'd be interested in anyone's opinion whether that type of situation would be taken up by BALPA?

[mrmum]

Obviously if SE then will be Ltd Co
Why?
Almost all the self-employed FIs I've known have simply been sole traders for tax purposes. You don't make enough as an FI to make the advantage of paying yourself the tax-free allowance as salary, then taking the rest as dividends worthwhile. The costs of setting up and running a limited company will be more than that.
Also, if you form a limited company to sub-contract instructor provision to a school, won't the other half have to be an employee of said ltd. co., rather than being s-e?

[sjb112]

Well I suppose mainly for the limited liability. I've been a director before and have done my own accounts and have a background in employment, so we wouldn't need to hire out to do the books, just a year end check.

[mrmum]

With regard to the BALPA benefits. I'm personally not aware of any new FIs who join BALPA. Do they even take instructors? While the CPL will satisfy their licence requirements, not sure if club instructing counts as their definition of "commercial flying", if no-one comes along with experience of them, which may be an answer in itself, then you'll have to ask them direct.

[sjb112]

Well they were happy to accept him as a student member knowing he was doing his FI and asked him to let them know when he got a job for the upgrade to full member.

[mrmum]

Hmmm, interesting, please do let us know how much they end up charging and what the legal/insurance benefits actually are. Might be a good alternative option to the Besso/AOPA package.

[sjb112]

From memory I think the annual subs were a % of income maybe 0.5%?? Not sure how that works out for SE or those on an hourly rate per hour instructed though. I'll update the post when I find out.

[FANS]

For the liability risk, I'd be more concerned about when instructing/trial lessons and something goes wrong and clearly the FI is PIC. I could see a trial lesson involved in an incident being an ambulance chasing solicitor's dream.

Realistically if he's instructing at one school as his only job, he "should" be an employee to avoid IR35 issues and it also affords him better protection rather than going down this self-employed route, which is a lot of hastle for the individual when we're talking minimal pay anyway.

DISCLAIMER:
Do not rely on anything that I have written.

[dobbin1]

If not self employed (and therefore able to off-set travel and other expenses against income) minimal pay would become negative income!

I am fortunate enough to have a pension which puts me in the 40 percent tax bracket. If I were a PAYE employee I would earn on average a lot less after tax than it costs me to drive to the airport.

[Piper.Classique]

I have insurance through th A.N.P.I (association nationale de pilotes instructeurs) in France. 58€ subscription and 113€ for the insurance, which cover liability and a small amount of accident cover. The FFA do instructor insurance as well.

[Whopity]

For the liability risk, I'd be more concerned about when instructing/trial lessons and something goes wrong and clearly the FI is PIC.A lesson is a lesson why would one lesson be any different from another? The Instructor is always PIC. Probably the greatest area of liability risk is on a Skill Test where the Examiners is still PIC but the candidate is flying the aircraft. If the Examiner takes over, the candidate has failed, so the Examiner must judge the candidates performance to a point where there is always a margin for any situation to be rectified.