GA and Insurance
 

IO540
There was no post-crash litigation - or none that had to be decided in court. The Hill family paid the claims without argument, which ruined them financially.
Some describe it as frightening; others as very worrying.


An owner-pilot's insurance policy will contain a 'Condition Precedent' to making a claim under the policy in these or similar words:

The Insured shall comply with all air navigation and airworthiness orders and requirements issued by any competent authority affecting the safe operation of the Aircraft

and shall ensure that

(a) the Aircraft is airworthy at the commencement of each Flight;

(b) all Log Books and other records in connection with the Aircraft which are required by any official regulations in force from time to time shall be kept up to date and shall be produced to the Insurers or their Agents on request;

(c) the employees and agents of the Insured comply with such orders and requirements.

Bear in mind that, given how widely the clause is drafted, if the insured fails to comply with any of the above insurers may refuse to pay under the policy even if the failure had nothing whatsoever to do with the accident.


..

The ANO in a nutshell says, don't crash the aircraft.

Many accidents involve a flight which has not complied with some aspect of the air navigation order and in general the pilot population seems happy with how insurance companies treat them, so they don't appear to enforce the letter. Any trivial violation of any logging, ANO or airworthiness order - no matter how un-connected to the cause of the accident could be used to avoid payment - and there doesn't seem to be an uproar from the estates of third parties who have died in accidents or spouses being bankrupted.

At what point is the insurance company likely to walk away. I would find it very disappointing if my insurer was going to walk away because my medical was a week over due, yet if I told them I was an ATPL with 1500 Citation hours and no accidents (really expired NPPL, 35 hours, in three wrecked flex wings) and then crashed my jet into central London I would expect the insurance company to walk away.

Some case examples would be interesting to have a feel for how the insurance companies view this continuum (or maybe I should be moving my assets into an offshore trust and holding the aircraft in a Ltd company so I don't need to worry about liability insurance ;) )

The other problems are the varying rules.

Example, a RV9 with funky glass panel and owner panel mounted G496 crashes. Insurance pays out.

A privately run PA28 with normal instruments and panel mounted G496 crashes, yet insurance doesn't pay out due to "illegal" (note not dangerous) mod.

I don't think that in an instance like this then the insurance should NOT pay out, and in my hypothetial case of the PA28 with GPS, had the GPS not had anything to do with the crash then I think the insurance should cough up. Otherwise insurance companies will use any loophole to not pay out, even if it had no bearing on the accident and we might as well give up flying now.

Interesting that in the Graham Hill case the AAIB kept refering to (paraphrase) "he didn't have a licence but met all the requirements had he applied". It sort of implied that he was qualified to fly the approach but that his papers were not in order.

From a layman's POV how are we to know that a maintenance place is doing their duty and actually doing the correct maintenance? I have heard a horror story of one well known place passing off second hand parts as new, or not actually doing the work that has been logged and paid for. If this is subsequently dug up as part of an AAIB investigation, you can bet the maintenance place will wash their hands of it and cover their arse the best way they can (lie?)......

I doubt the AAIB digs all that deep, in GA accidents. Most GA planes have a long history with lots of gaps in the records.

The insurers don't dig all that deep either but I know they will check the pilot and aircraft papers (CofA etc) to make sure the flight was legal before it got airborne.

In this accident, they probably just rolled their eyes upwards at the extent of the stuff they found - not that any of it directly contributed to the accident (other than through pilot attitude and one can't do anything about that).

Based on past conversations with loss adjusters I am sure that insurance won't pay out in this case, so the pilot's estate will be exposed to civil claims.

I kind of think deservedly so as well. Letting things lapse through absentmindedness or stupidity is one thing. Clearly and consciously avoiding the system is another thing.

10540

I dont know so only guessing but I would imagine where there has been loss of life there would be a thorough investigation which would also be required by the police to discount suicide, murder etc.
We also have to remember that it is not only the deceased persons family who would be looking to make a claim but also a claim would be made to damages on the ground where the aircraft came down.

Pace

AAIB reports are not produced for nor guided by either the Police or Insurers requirements.

“claim would be made to damages on the ground where the aircraft came down.”

The cost of closing the mainline for several days will easily exceed the likely insurance.

“AAIB reports are not produced for nor guided by either the Police”

True up to a point, but the G-STYX case shows that the Police can use the AAIB report as a basis to bring charges.

Rod1

True in theory but not really the whole story, as it is well known that until all the parties agree, the report doesn't come out - unless there is an overwhelming public interest factor which is practically never the case in GA.

Also, it seems clear to me that the AAIB avoids certain areas which are going to be contested. I recall reading one report where it was really obvious that the maintenance company should be taken to pieces and closed down, but nothing was mentioned about that angle.

Sure, but without a CVR, FDR, a suicide note, and all parts accounted for at the crash site, I don't think they have much to go on.

mm flynn

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Many accidents involve a flight which has not complied with some aspect of the air navigation order and in general the pilot population seems happy with how insurance companies treat them, so they don't appear to enforce the letter.

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That is a non sequitur. Even if your first two propositions are correct, your conclusion does not logically follow. Most pilots with aviation insurance policies never need to make a claim under their policy so don’t know how their insurers would treat them if they did. Most policy-holders don't fully understand the far-reaching effect of the Condition Precedent clause; in particular, that even a minor breach which has nothing whatsoever to do with the accident can lead to insurers declining to pay.

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I would find it very disappointing if my insurer was going to walk away because my medical was a week over due

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Then avoid the risk of disappointment by ensuring your medical is current, just in case you have an accident and need to claim under your policy. You might be lucky if it’s a relatively small claim but the chances reduce in inverse proportion to the size of the claim.
An accident in which a couple of high-earning passengers each with young children are either killed or so badly injured that they can’t work again can easily result in damages running into £millions.
Insurance is a business. I leave you to assess the chances of insurers voluntarily paying out large sums if, under the contract, they are not obliged to do so.

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yet if I told them I was an ATPL with 1500 Citation hours and no accidents (really expired NPPL, 35 hours, in three wrecked flex wings) and then crashed my jet into central London I would expect the insurance company to walk away.

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Given that you would have obtained the insurance policy by false representations, so would I.
Valid UK PPL, valid FAA ATPL and IR, valid Medical. Pilot had 2500+ hours (1200+ on type), flew the aircraft frequently, voluntarily undertook six-monthly refresher training (consistently excellent reports) and, just two months before the crash, had achieved a high standard both during refresher training and in his FAA Type Rating and IR tests.
Because the aircraft was registered in Xxxxland, the pilot was required to hold an Xxxxland Certificate of Validation. Certificates issued on the basis of a current FAA licence, and payment of $50. No test requirement.
The most recent Certificate had expired.
Fatal accident.
The AAIB considered that the absence of a current Certificate of Validation was not a factor in the accident.
Insurers did not suggest it was.
However, relying upon the Condition Precedent clause, they declined to pay because the pilot was flying without a valid licence.

Airworthiness example
Aircraft meticulously maintained, confirmed by detailed maintenance records and other evidence.
Aircraft exceeded maximum certificated take-off weight.
Fatal accident.
AAIB considered that aircraft weight was not a factor in the accident.
Insurers did not suggest it was.
However, relying upon the Condition Precedent clause, they declined to pay because the aircraft was not airworthy when the accident occurred.

bose-x
I agree but, in the context of an aviation insurance policy, there is no difference.

Rod1

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the G-STYX case shows that the Police can use the AAIB report as a basis to bring charges.

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Many informed people consider there were many very unsatisfactory aspects of that accident investigation.
Whether or not using AAIB material for a criminal prosecution is in the long-term interests of flight safety is obviously a matter of opinion.

IO540

Quote:

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it is well known that until all the parties agree, the report doesn't come out ……….

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That is not correct.
A draft copyof the report is sent to the pilot or his/her representative and to individuals or organisations whose reputations may be adversely affected by the report. If representations are made concerning the draft, there will be some delay in publishing the final report while the AAIB considers them; it may or may not accept them. The AAIB does not wait until all parties agree with the contents of the report; in many cases that would be impossible.

Quote:

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Also, it seems clear to me that the AAIB avoids certain areas which are going to be contested.

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Again, that is not correct. When I was a barrister I dealt with several cases in which aspects of the AAIB's findings and conclusions were contested, either by the party I represented or others.

The AAIB is not infallible and wouldn't claim to be. However, with only one exception in over 20 years, I had enormous respect both for the expertise, investigating skills and objectivity of individual investigators and for the conduct of the AAIB as an organisation.

.

Thank you for the very interesting examples. While I agree about the 'its business point', it does seem like poor public policy to allow retail contracts to be structured in a way that omissions not related to the loss can be used to avoid payment.

Both of the referred cases fall into IOs 'Illegal before it got off the ground' category. Are there similar examples for an initially legal flight that for instance ran out of fuel, went VMC to IMC, failed to remain above the MSA or other similar examples of a pilot error that contravened an aspect of the ANO an resulted in the claim being denied.


My 'non sequitur' reflected the noticeable number of accident reports where some aspect of non-compliant paperwork is mentioned and the generally positive view as to how insurance companies handle claims (admittedly the positive comments are from people not involved in fatal accidents).

I too see this as very worrying as it does appear that an insurance company can get out of paying by pointing out something in the small print which may have nothing to do with the crash.

It is a known fact in motoring that the average car driver breaks numerous laws every day without even realising it.

As MM pointed out in flying there are situations where a pilot can be drawn into something which his licence does not cover him for, everything from inadvertant entry into IMC to inadvertant night landing due to unforecast headwinds etc.

In that way I can understand the pilot in this case not bothering with his insurance as from whats been said here its pretty pointless having it anyway?
If the claim is large enough the insurance company will find a way of not paying it.

Pace

I am not a lawyer but gather that aviation insurance is covered by different regs to say domestic insurance.

In the latter, there have been amply publicised moves to force insurers to not avoid payouts due to irrelevances e.g. a tree falls on your house and they avoid a payout because you were using one room as an office without declaring you were running a business out of there.

One example I recall is that in aviation there is no liability to passengers unless the pilot is found negligent.

OTOH there is a strict liability for ground damage - this incidentally why AFAIK it is pointless to have the plane in a Ltd Co (for liability reasons) if the owner/operator is the only person ever flying it.

When people enter the contract, they agree to fulfill one part of the bargain like (a) maintaining their licence currency, (b) maintaining their medical currency (c) etc. In return, the insurance company agrees to maintain their side of the bargain in paying out in case of a loss. If one side doesn't keep their side of the bargain, why should the other?

Why are so many people here continually trying to find loopholes and wriggle out of minor points like OBEYING THE LAW???????

10540

I run my own aviation interests as a freelance commercial pilot through a limited company.

I do this as I fly as a Captain on business jets worth $ millions.

There is always the worry that if you do something stupid and the insurance wont pay out that whoever will go for you as the Captain and your personal assets.
I dont even want to go into Ferry flying which I have also been involved in in the past as the normal rule book goes out of the window in that. Overweight takeoffs etc etc etc.

Pace

Pilot X is flying VFR, the weather deteriorates. His licences are all in order as a VFR pilot. He gets amongst hills and makes one mistake after another (the usual case in an accident) He ends up flying outside his licence privalages ie in IMC and crashes killing two of his passengers.

The insurance refuse to pay out.

I wish things were as simple as obeying the law because sometimes even attempting to do that will kill you.
The law up in the sky in a nasty situation wont help you the right descisions for that situation will, whether that means flying to the letter of the law or totally against it.

Pace

Pace, I'm not talking about simple mistakes such as the example you quote.

I'm talking about (e.g.) the pilot in current practice who disregards the fact that his medical has expired and who still carries on flying. Something totally unrelated - say, fuel contamination - causes a crash. The Insurance company should pay up, or not?

Captain stable

From our legal expert!!! makes one think about an insurance to cover an insurance :ugh:

Pace

Captain Sable,

I am quite pleased that you have never inadvertently violated any law, rule, regulation, or order and hope that you have a very diligent review process for all of your actions to ensure that all of the myriad of obligations in modern life are 100% complied with at all times.

I have to confess to becoming aware (after the event) in my flying career of two occasions of technical paperwork lapses. Neither of which was intentional (or recognised at the time) and neither of which had any substantive bearing on the safety of the operation - as in slightly different geographic circumstances other paperwork for the same operation was valid.

It is of concern that with a good faith effort to comply with the laws, and carrying substantially more than the minimum required liability insurance, a minor oversight can leave one swinging in the breeze.

Even more relevant to someone like Pace, who as a diligent sole will have checked the owner of the aircraft has it insured. But whose estate discovers an AD was not complied with (not relevant to Pace's unfortunate demise), the owner's insurance declines the claim and the owner and Pace's estate (as the pilot) are both sued for multi millions - because the jet 'plummeted' into a school and a puppy farm.

Pace, I'm well aware of what Flying Lawyer posted, and I agree with his posts on this thread. I have the greatest of respect for him and know him personally, and have worked with him professionally.

My point was, if you re-read this page, aimed at those who seek to have insurance companies pay out even if they have breached the terms of the contract. See mm flynn's post above.

My public policy points was,

1. The law now requires us to carry a minimum level of third party insurance. This is so that the reasonable financial consequences of an error on our part can be insured (rather than being met from the estate of the pilot - whom if flying professionally is likely to have a minimal estate due to the current levels of pay in the industry).
2. This seems like good public policy, we pay to insure the public against our actions.
3. However, the more significant the damage to the public, the more likely the insurer is to dig for a reason not to pay - and these reasons need have nothing to do with the accident in question. In fact, read literally, these reasons are so numerous that many to most fatal accidents will have a non-compliance.
4. So, not withstanding the public policy requirement to have third party liability insurance, there is a significant chance the injured parties will be facing an uninsured pilot

Is this good public policy?

Captain Stable

Just a very quick post for the moment .....

We know each other personally but it's an over-statement to say you have worked with me professionally. The possibility was discussed on one occasion several years, but no more than that.

If you keep going back to disagree with things people have said about the particular accident earlier, the thread will not move on into what could be a very interesting discussion - and one which could be very useful and informative for those who hold aviation insurance policies. Concentrating on the facts of one (apparently) extreme instance achieves nothing.

mm-flynn has raised very interesting public policy issues which merit further discussion.
It may be that others don't share the very 'black & white' views you've expressed in your most recent posts. I don't.

FL

FL

What is the answer? is it that pilots insist on third party NO FAULT payout clauses or that the law insists on this.
One question I would like to know is my own situation regarding my Ltd flying company and charging for commercial flying through that as a freelance pilot?
How secure is that and as one poster mentioned running an aircraft through a Ltd company for private use?

Pace

I don't think it's an overstatement, FL.

If you recall, the solicitors briefing you sent me a large amount of reading, which took me a couple of weeks to plough through and on which I reported and we held a meeting at which I gave you and your learned brethren my opinion.

As to the matter of insurance, it could be that the insurance companies could be persuaded (but probably only by legislation) to go to some form of no-blame insurance in the manner of motor insurance.

The problem lies (or will quite possibly be found to lie) in how far one could go in such a matter as, say, an expired medical, which was one of the factors mentioned by the AAIB.

Take a hypothetical case.

Assume that a pilot in reasonably current practice, experienced in low-G undemanding aerobatics takes a couple of friends up and writes himself, his aircraft and his passengers off in an accident. It is subsequently found that his medical had expired.

Is his expired medical a reason for the insurance company to deny the claim?

Quite possibly not. It could well be a mere oversight, the medical had only expired by a few days, and the pilot was in perfect health.

On the other hand, possibly. Possibly the pilot had been having chest pains recently and was afraid of going to his AME to renew his medical for fear of what they might find. He hadn't mentioned it to anyone, and being "of an age" was planning on giving up flying to spend more time with his pruning and weeding. But he'd been in the pub with a couple of friends, and decided on another quick fun trip with his mates. He'd screwed up the entry to a manoeuvre, and the extra stress had his heart going just that little bit too much.

Who is to say where the truth might lie?

Lawyers could make a real killing out of cases like that! ;)

Obviously not a proper answer (not being a lawyer), but AIUI, the Ltd Company for your flying is not going to be much protection assuming only you are involved in it - as if there is negligence it almost by definition was you own - hence both the company and yourself could be sued.

The aircraft one is the same if you are the owner and operator. However, if the owner(s) and the operator/pilot are different, then both groups are liable for the totality of any claims for damage on the ground (I don't remember about injury to passengers). So in the case of two people sharing - holding the aircraft in a ltd company should insulate the non-flying owner from the liability of the flying owner.

In the US, there is such legislation in some states. IIRC, it broadly says that the omission must be relevant to the incident at hand. So for instance

• Circuit Break AD not complied with - Accident - VFR into IMC - Insurance pays out
• CB AD not complied with - Accident - Inflight fire - cause unclear - Insurance doesn't pay out as the CB AD could reasonably be material.

In CS's hypothetical case, there would normally be a post-mortem as part of the investigation which would either say - no evidence of pre-existing medical condition or medical blah blah ... might have contributed to loss of control.

As a general principle it seems like having tight conditions on the hull aspect makes good sense, I am less convinced of the merits of 'punishing' third parties for the errors of the pilot.

The prospect of mcuh of so called insurance protection bieng invalid is insteresting / disturbing / worrying.

If the case come from FL then I'n obviously not in a position to argue - but I wonder where that leaves things in terms of the Unfair Contract Terms Act?

If a blanket clause is being used to avoid liability by the insurance company would it not be possible to challenge it under the terms of this act if the discrepancy is not causal in the accident.

Otherwise aircraft insurance is almost worthless - any multipart flight - out and back for instance would mean the logbooks would not be 'up to date' - unless they were filled in after every stop - a somewhat unusual practice....

MM

This is quite important because if true I was given dud information from my accountants. They naturally make charges for the accountancy work on the company.
My assets away from flying and the number of aircraft I was involved in caused me to seek an extra level of protection and a Ltd company was advised.
If there is no extra level of protection then the money spent has been a waste of time and err "Money".

Regarding third party payouts maybe the onus should be put on the insurance company to prove beyond reasonable doubt that the reason they are not paying was the reason the aircraft crashed.
ie in the case of NO valid medical that alone would not void the insurance. If it was proved that the pilot had a heart attack in the flight which caused or contributed to the crash and did not have a valid medical then they would have a case to not pay. etc ?

Pace

Captain Stable
I do recall - it was the occasion I had in mind. After that meeting you had no further involvement in the ongoing case. (ie Your report was not used.) I really would prefer not to say any more.

FL

I find it a bit worrying that the insurance company can choose not to pay out due to the clause that FL kindly pointed out.

My worry is that one does something inadvertently which breaches the ANO and has an accident (take the VFR into IMC scenario) - low houred pilot flies into IMC, loses control, gets into a spin, crashes, killing a couple of people. Now if I read what FL wrote correctly it seems that an insurance company *could* choose not to pay out, as the pilot was flying outside the privileges of his (her) licence....In other words, make a mistake and they won't pay out because you are in breach of the ANO.

I'd like to think that in the above example an insurance co. would pay out, because if not then it potentially exposes all of our estates to massive legal bills (and bankrupting those we leave behind) should me mess up in a similar manner. We shouldn't mess up of course, but that is another discussion.

Englishall

I am afraid we as pilots like other humans do mess up as you put it. Some more than others hence why insurance is there.
Messing up is not just the wings falling off your plane but off the pilot too.

This should be an area that is legislated on and not in the goodwill hands of an insurance company otherwise the insurance especially regards large claims is pretty pointless.

Pace

Pace - I am 99% sure there is no feasible protection for your personal assets if you are the pilot when you prang it into the school / nursery / convent / football match [delete as appropriate].

There may be liability scenarios not related to you being at the controls, where a Ltd Co would be effective. One possibility might be a ferry flight on which the aircraft is lost, and the client sues for the aircraft value, and for some reason (unforeseen by you) your insurer walks away from paying. In that case, if the client contract is with a Ltd Co (which you own 100%, or whatever) the most he can do is force the Ltd Co into liquidation, and provided you have properly discharged your duties as a Director (which includes having "reasonable" insurance) you are not personally liable.

I don't know how this works in airline crashes, many of which - unlike GA where 3rd party damage is virtually unheard of - cause massive mayhem on the ground. I imagine that the airline insurance policy indemnifies the pilots. I would not want to be a commercial pilot otherwise... taxi into another 747 and lose your house!

Irrespective of this theoretical risk, is there any evidence of an insurer ever avoiding a payout in such a case? How would such an insurer know the actual flight conditions? This kind of concern reminds me of the "duty of care" stuff, which has caused such mayhem in all walks of life (schools not taking kids on trips, the whole yellow jacket brigade, etc) but 99% of which has never been tested.

There are several recent fatal accidents where the flight conditions where unambiguously IMC at the point of the crash - A CFIT into a mountain on which hill walkers heard the crash while they were in Fog is pretty conclusive - a number of recent cases could fall into this category. 'Fortunately' for all of us, most GA damage is confined to ourselves, our aircraft and our family members - so we may have less case history then one might expect.

The lack of examples may be more to due with us not knowing how to find them rather than the examples not existing - but it is still surprising given the number of accidents in which some administrative anomaly is commented upon (and dismissed from relevance by the AAIB)


A note to Mods - I think this insurance aspect is a very important conversation and not really related to the Failed Stunt title of the thread - should the thread be split?

I don't doubt it at all, but "us being damn sure" is not the same as the insurer being able to prove that on the balance of probability

1) that the pilot's flight conditions were IMC, and

2) that the pilot had a choice

Insurance does cover negligence, fortunately :)

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.

Insurance
 

Read your policy and (as appears to be the case on many people) you don't understand then ask your insurance company the question. The AAIB report doesn't lay blame, purely reports on the facts of the matter. Flyng lawyer is correct if you read his comments correctly! Someone said, oh if I didn't renew my medical until after expiry and had an accident in the meantime surely the insurance company should still pay because I am a great guy, then be disappointed. Mr Policeman I am going to renew my insurance when I get round to it - explain to the Judge! In all my years of buying of insurance for several different risks I have never seen the 'sorry I forgot clause' or 'insurance company will pay anyway'. Keep up your poor work pprune - ers.

Insurance: Get your house in order
 

looking back over the last year I can identify several fatal accidents where the insurers will not be paying out.

Pilots flying beyond their skills in bad weather/ overloaded, paperwork/licences out of date/ flying for commercial sorties/etc.

There seems to be a perception in flying that insurance is some sort of old fashioned benevolent charity.

If you take someone to their grave then your family can lose everything.

Any thoughts?

Yeah, why would my family be held responsible for my fatal error?

I would expect that any payments would have first come out of my final will and testament, so my dependants probably wouldn't receive their inheritance. But is that as far as it goes, or are they deemed responsible for my debts as well through no fault of their own?

SpeeedBird,

Interesting point, but for retail insurance (which I am sure you do buy) the compliance requirements are much less onerous. If you drive with an expired MOT or less than minimum tyre tread (illegal of course and subject to a small administrative penalty) it does not totally void your third party liability cover. In addition, my understanding of the law (limited as it may be) is that these types of very broad conditions are generally not enforceable in common end consumer contracts.

I will try and keep up the poor work and remain bemused as ever that EASA have imposed an insurance requirement to pay-out for damage to people and things on the ground, the CAA spends money writing to everyone to verify compliance and then on the day the third party needs to call on it - effectively the insurance is void! Great public policy.


PS -

It seems desperately unreasonable in one case FL referred that what appears to be a highly conscientious pilot with a full set of ratings from two countries - both current, with exemplary training, excellent aircraft, current medical, can have his family bankrupted and the lives of people he injured/killed only partially compensated due to his failure to renew a based on CoE - which probably was only relevant due to the flight being outside the UK. Yes, I know the operation was therefore not legal, but it does seem an extraordinary penalty on the family and the injured parties.

Note - I have no idea what third party liability might have existed in the specific case FL quoted.

I think that is what Phil was referring to, they will lose out on the inheritance, but they will not be held personally liable.

GA and Insurance
 

Split off from the "Failed stunt causes crash" thread.

SD