There is no corresponding provision.

Family Trusts
 

The Wealth Management folks can set up a Family Trust to hold your assets and disburse to the beneficiaries.

When your children marry, the trust can take a mortgage on their house. If they split up, the mortgage has to paid back to the trust:E Or the trust can buy the house and rent it to them:E

If a beneficiary does something stupid, the assets in the trust are beyond reach.

Yes, such trusts have been in use for many many years, for family owned businesses, otherwise as family members marry and divorce, the family wealth would be rapidly dissipated in the divorces. Every time the owner of a business divorces, anything up to half the valuation of the business would be blown away. You can do that only so many times - as any divorced man past age 40 or so will have sussed out ;)

But you don't need an offshore trust for that purpose. Any suitable trust will do. I think the current shareholder of the family business must not be a Trustee, though (if he intends getting married).

I looked into this a while ago. It is a very specialised area, and most high street solicitors are not capable here - it also involves tax issues.

If you faithfully declared your flying activities (or lack of them) as they were at the time the life insurance (the term policy) was taken out, the Insce Co has zero business enquiring about your subsequent lifestyle. You remain insured, as long as you pay the premiums.

IO540

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Insurance does cover negligence, fortunately :)

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Insurance policies may or may not cover negligence.
It depends upon the terms of your policy.

If you are negligent and in consequence crash, have you complied with “all air navigation ….. orders and requirements ….. affecting the safe operation of the Aircraft”? In particular, articles 73 and/or 74 of the ANO?

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I want to see actual cases of where insurance was voided on the basis of alleged illegal flight conditions, or indeed on the basis of anything at all taking place after departure.

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There is no significance in the fact that the two examples I gave related to ‘failures’ which existed at the moment the flight began, rather then during flight.
I used them simply because I happened to have easy access to the relevant documents from "actual cases" so could give precise details.
When I was at the Bar I was also involved in “actual cases” in which insurers refused to pay relying upon breaches of aviation legislation which occurred in flight.

It is correct to say, as some have, that insurers sometimes choose to pay claims notwithstanding breaches which, under the Condition Precedent clause, would entitle them to refuse. If they do, they usually do so in the form of an ex gratia payment. ie The payment is not an admission of liability to pay under the policy.
However, the fact remains, again as others have pointed out, that whether or not payment is made in such circumstances depends upon how the insurers choose to exercise their discretion.

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Re specific legal questions:
For reasons I don’t want to go into, I’m no longer in a position to answer them. Sorry. I did for many years when I was a barrister but I now have to keep my comments on legal threads very general.


FL

I don't know about the CAA, but the FAA routinely tacks on a 'reckless endangerment' charge onto almost every violation (the comparable sections to 73 and 74 of the ANO). This has included altitude deviations, poor fuel planning, continued VFR into IMC, operation with inoperative equipment, failure to divert on a timely basis, etc.

Even if you can't give precise details on these cases, it would be useful to get a flavour of the sort of breaches which the insurers used to deny payment.

Playing devil's advocate for the moment, surely it would be better to maintain the status quo?

At the moment the insurers are using technical breaches to wheedle their way out of some claims - let's say 20% by value, for the sake of argument. The insurers may be profiteering from this 20% windfall, but that seems unlikely given the small number of companies willing to underwrite GA risk. I understand that there is now only a single company underwriting all the risk in the London market. Although there are a number of companies offering insurance, it all goes back to this single underwriter. If the insurers aren't profiteering, then closing the loophole provided by the technical breaches will have to be made up by a proportional increase in premiums of 20%.

From my point of view, which would I prefer: my insurance premiums to increase 20% or to make sure my paperwork is in good order? I'm intending to keep it in good order anyway, so this is just a good incentive to make absolutely sure I do.

Even if you believe that paperwork breaches shouldn't form the basis for denying payment, surely you still have to draw the line somewhere? Would you be happy to pay a much bigger premium so that the insurance pays out even for accidents like the Solihull crash where there were numerous airworthiness and licencing lapses?

I'd be interested to hear about other cases, though, because I'm sure there are ways of getting caught out which haven't occurred to me. For the moment, though, we have to work with the system as it is, and the best solution for each of us would seem to be to make absolutely sure our paperwork is 100% correct so it never becomes a basis for the insurance company to refuse payment.

Of course, even with your best effort, it's still possible to make mistakes and overlook something. Perhaps, then, the best course of action is to find somebody knowledgeable to ramp-check you. Who fancies a fly-in somewhere to go through each other's docs and look for problems?

I have had similar worries, because of a question concerning my own paperwork, since resolved. I had the feeling that it was grossly unreasonable to deny cover for what was in my opinion at least, a trivial detail with absolutely no bearing on safety. As well as all that I was in a voluntary recurrent training program and reckoned by that alone I ought to have qualified for a reduced premium (wishiful)

So I get on the email and got a fairly stock reply. The gentleman who replied was the company principal and I called him. Our phone conversation ranged around a number of issues already discussed here. He did state however that they were known to have paid out in some instances where there was some illegality. I told him I was able to take some comfort from that, but old Groucho Marx left us in little doubt what a verbal contract is worth.

One suggestion was to do with a sliding scale of discount for breaches of paperwork Ts & Cs. I think they are looking at that.

I made it clear to him I did not want insurance with a sword hanging over my head. After all we are paying not to worry about bad stuff, and they with that legalistic attitude are in the business of undermining our confidence that an accident will have the least worst outcome. I want insurance that is very lenient on immaterial breaches of any kind, and that rewards people like myself who invest money in post PPL refresher courses, casual or otherwise. I think that's a sensible deal even from the POV of the insurer. He pays in the currency of fairness and gets our money for that reason. He rewards persons that continue to focus tangibly on safety awareness in the form perhaps of credits for training, seminars, books read, all of those good things.

Time to reword the policy, and especially away with the BS that is condition precedent. Some other poster suggested that keeping paperwork is a sign of a good approach to flying discipline. That may well be true, but I would prefer a higher priority being accorded to practical safety work by the insurer.

I think it would take a genius to invent a human attitude indicator/recorder, thereby separating negligence and bravado from genuine human error and misfortune.

thus endeth my 2c

I think that if at the time of the accident, the aeroplane is airworthy and the pilot licensed and holds a medical certificate then they should pay out and that insurance companies should discount any paperwork irregularity that has no bearing on the accident.

For example lets say someone fitted a new transponder without the correct paperwork, and this was uncovered by the AAIB during their investigation. As this had no bearing on the accident (as determined by the AAIB) then the insurance company should not be allowed to use this as an excuse not to pay out.

Otherwise this gives them unlimited scope to not pay out. What would happen say if some hypothetical person went for their medical renewal and forgot to mention that 6 months ago they were ill in hospital with pnumonia (for example - assume it is something that kept them ill for a month). During the time they were ill they didn't fly, yet should probably have declared this to the CAA, and should certainly have declared it on the medical renewal form...but they didn't.

Subsequently 6 months after the medical renewal they go and crash and cause a lot of damage and kill a few people, due to something unrelated. Could the insurance company use their episode 12 months ago as an excuse not to pay out? How deeply would they dig? I assume they would have access to medical records.

It is all very well saying "we should keep our documents in order" and I agree as far as possible, but I reckon that in the past 10 years I have probably been to see the GP for something like an ear infection, he has given me antibiotics, then I have totally forgotten to mention this at the medical renewal. It doesn't seem a big deal but if it can lead to invalid insurance, it could be a massive deal.

Englishal: Good post, I often wonder same. From reading this thread though it looks like they would dig very deep if the claim was a biggie (3rd party injury etc)...but in the case of a minor breach not related to accident they would probably payout if claim was limited to hull value or less...??

Last time I looked into this in any detail (c. 2003) there were four Lloyds underwriters, plus one insurance company with a name like AIG or BAIG.

There were of course many brokers, and there still are a fair few despite Haywards (a very good company which I insure through, BTW) having absorbed some.

If there was just one underwriter or insurer, we would see skyrocketing premiums, which is clearly not the case. They have been falling recently, which indicates competition.

The large # of brokers can confuse people, who contact multiple brokers thinking they will get competitive quotes!! But sometimes one goes through 2 or more brokers in a chain, when they split the commission between them.

I think it is right for insurers to not pay out on blatently illegal pilot or blatently illegal aircraft, otherwise people would take the micky.

What would greatly worry me is if they did e.g. a back to birth maintenance audit, because there is not one plane flying, not even those landing at Heathrow right now, which would pass that without any irregularities. So there is a grey area here, which presumably they have a corporate policy to not probe into. But there is NO evidence they are doing that - ever.

There is also NO evidence they are getting out due to alleged poor airmanship. I've never heard of it. Rumours, rumours, sure, but forums are full of them. Like the SR22s busted for illegal IFR without an ADF/DME (totally false).

I think that keeping the papers legal, and paying the premiums etc, one is covered.

For almost 7 years I have been somewhat spooked by FlyingLawyer's warning about the Condition Precedent clause. I note that the Insurance Act 2015 comes into force on 12 August 2016.

It includes

11 Terms not relevant to the actual loss
(1)This section applies to a term (express or implied) of a contract of insurance, other than a term defining the risk as a whole, if compliance with it would tend to reduce the risk of one or more of the following—
(a)loss of a particular kind,
(b)loss at a particular location,
(c)loss at a particular time.
(2)If a loss occurs, and the term has not been complied with, the insurer may not rely on the non-compliance to exclude, limit or discharge its liability under the contract for the loss if the insured satisfies subsection (3).
(3)The insured satisfies this subsection if it shows that the non-compliance with the term could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred.
(4)This section may apply in addition to section 10. [Breach of Warranty]

Does this eliminate or at least mitigate the concern about a Condition Precedent clause?

This, on the face of it, seems to be a very fair improvement on a situation which one might have supposed to have otherwise been covered by the unfair Contract Terms Act.

Interesting ruling today by the Supreme Court:

'Collateral' lies need not spoil insurance claims, rules Supreme Court - BBC News

I assume that this will prevent insurance companies from failing to settle claims where there are minor irregularities on the part of the insured party.