IMPORTANT- Seeyou V's Strepla and airspace violations.

Ramy wrote:

This is an interesting assumption. I didn't dig my insurance policy
yet, but I don't recall that violations are excluded. I think, like car
accidents, you are covered whether it is your fault or not.


Wow - it's amazing pilots are so oblivious on their insurance coverage
(don't take that personally Ramy). In point of fact, insurance
companies can and will find every possible reason to avoid paying a
claim. Violation of FARs is one of the first places they will look.
This includes but is not limited to:

- Airworthiness of the aircraft (ship is within anual inspection,
required intrumentation operatinge, etc.).
- Pilot is properly qualified for the flight (cockpit checkouts,
Flight Review, etc.)
- Operation is conducted within FARs
- etc.

The concept of "no fault" primarily exists in some personal auto
policies (depending on the state) and all worker's compensation
policies. Other than that, fault is absolutely one of the first
things that is looked at.

Imagine the scenario where a collision occurs between a glider at
18,500 and a Piper Malibu on a flight plan. In the best case, let's
assume that both the Piper and glider pilot escape with their lives.
Now, there's this little problem of $500K worth of damage to the Piper
in addition to the written-off glider. The insurance company for the
Piper figures out that the glider shouldn't have been there and
immediately subrogates to collect back their $500K from the glider
pilot's insurance company. At the trial, it is determined early on
that the glider pilot was in fact not cleared into Class A airpspace.
Guess who is going to be stuck, not only with the cost of their glider,
but the $500K in damages to the Piper as well? Hint: It's not the
glider pilot's insurance company, nor is it the Piper pilot's insurance
company.

My firm is currently managing the claims information systems for one of
the 800lb gorillas in the global insurance business. We see that they
contract out investigations for especially costly aviation incidents to
specialists who do nothing but try to find out if one party or the
other was operating outside of the regs. These sorts of folks are
pilots like us, and they will use every method (including some pretty
unethical approaches) to make sure their employer doesn't get stuck
with a $500K bill if they can help it.

Bottom line: Operating at the margins our outside of the FARs will
mor than likely invalidate your insurance in the event of a claim and
may have very severe financial repurcussions for the pilot.

For more on this, you can check out this sobering article by John
Yodice in AOPA Pilot Magazine:
http://www.aopaia.com/display_article_07.cfm

Erik Mann

Erik,

Insurance policies are "exclusionary contracts". This legal term means
that if something doesn't appear in writing as an "exclusion", then the
insuree has coverage. This came about because the law recognizes that
the insuree has no ability to change the contract, but rather must buy
it as it comes from the insurance company. To level the playing field,
the law will find in favor of the insuree unless the policy
specifically says in writing that something will not be covered.

I have an SSA policy on my glider issued through National Fire
Insurance of Pittsburgh, whose address is in New York City(!). Nowhere
in the policy does it state that I must operate the aircraft in
accordance with the FARs. I do not have any intention whatsoever of
violating the FARs, but if I did so inadvertently and something
happened, I would still have insurance coverage. I'd also have trouble
with the FAA, but that's another matter!

Interestingly, my policy doesn't say anything about an annual being
required, unless that could be tortured out of the following phrase:
"If (I) know that the aircraft is not certificated by the FAA under a
Standard Airworthiness Certificate in full force and effect while in
flight". It does, as you say, require that I have (a) "a current and
valid FAA Pilots Certificate with ratings and endorsements applicable
to (my) aircraft", (b) "if required, a current and valid Biennial
Flight Review", and (c) "a written endorsement from a Certified Flight
Instructor to solo the same make and model as (my) aircraft.

Bottom line: read your policy very carefully, word by word. If
something isn't specifically excluded, then you do have coverage.

-John

Papa3 wrote:
Ramy wrote:

This is an interesting assumption. I didn't dig my insurance policy
yet, but I don't recall that violations are excluded. I think, like car
accidents, you are covered whether it is your fault or not.


Wow - it's amazing pilots are so oblivious on their insurance coverage
(don't take that personally Ramy). In point of fact, insurance
companies can and will find every possible reason to avoid paying a
claim. Violation of FARs is one of the first places they will look.
This includes but is not limited to:

- Airworthiness of the aircraft (ship is within anual inspection,
required intrumentation operatinge, etc.).
- Pilot is properly qualified for the flight (cockpit checkouts,
Flight Review, etc.)
- Operation is conducted within FARs
- etc.

Erik Mann

Further to my last note. I forgot to point out that there are two
fundamental concepts in Erik's post that are being convolved. One is:
do you have insurance coverage? The second is: who pays for damages?

As I said above, if something isn't explicitly excluded in your
insurance contract, then you do have insurance coverage. This means you
will be defended by the insurance company in the lawsuit which will be
held to find fault, and that you will be reimbursed for your loss.

The second issue, who pays, is what I think Erik was really getting at.
In the lawsuit following an accident, someone will be found at fault.
If it's you, then your insurance company must pay the other party as
well as you. If it's the other party, then their insurance company will
pay you and their insuree.

Hope this clears up any confusion I might have left in people's minds.

-John


jcarlyle wrote:
Erik,

Insurance policies are "exclusionary contracts". This legal term means
that if something doesn't appear in writing as an "exclusion", then the
insuree has coverage. This came about because the law recognizes that
the insuree has no ability to change the contract, but rather must buy
it as it comes from the insurance company. To level the playing field,
the law will find in favor of the insuree unless the policy
specifically says in writing that something will not be covered.

I have an SSA policy on my glider issued through National Fire
Insurance of Pittsburgh, whose address is in New York City(!). Nowhere
in the policy does it state that I must operate the aircraft in
accordance with the FARs. I do not have any intention whatsoever of
violating the FARs, but if I did so inadvertently and something
happened, I would still have insurance coverage. I'd also have trouble
with the FAA, but that's another matter!

Interestingly, my policy doesn't say anything about an annual being
required, unless that could be tortured out of the following phrase:
"If (I) know that the aircraft is not certificated by the FAA under a
Standard Airworthiness Certificate in full force and effect while in
flight". It does, as you say, require that I have (a) "a current and
valid FAA Pilots Certificate with ratings and endorsements applicable
to (my) aircraft", (b) "if required, a current and valid Biennial
Flight Review", and (c) "a written endorsement from a Certified Flight
Instructor to solo the same make and model as (my) aircraft.

Bottom line: read your policy very carefully, word by word. If
something isn't specifically excluded, then you do have coverage.

-John

Papa3 wrote:
Ramy wrote:

This is an interesting assumption. I didn't dig my insurance policy
yet, but I don't recall that violations are excluded. I think, like car
accidents, you are covered whether it is your fault or not.


Wow - it's amazing pilots are so oblivious on their insurance coverage
(don't take that personally Ramy). In point of fact, insurance
companies can and will find every possible reason to avoid paying a
claim. Violation of FARs is one of the first places they will look.
This includes but is not limited to:

- Airworthiness of the aircraft (ship is within anual inspection,
required intrumentation operatinge, etc.).
- Pilot is properly qualified for the flight (cockpit checkouts,
Flight Review, etc.)
- Operation is conducted within FARs
- etc.

Erik Mann

The other thing to remember is that your insurance coverage has $ limits.
If you engage in activity that makes you liable, and the damage exceeds your
insurance liability limits, you will still be personally on the hook for the
balance. It's not hard to imagine this being a real issue if you are at
18,500 ft without a clearance and get hit by a business jet.

Mike Schumann

"jcarlyle" wrote in message
ps.com...
Further to my last note. I forgot to point out that there are two
fundamental concepts in Erik's post that are being convolved. One is:
do you have insurance coverage? The second is: who pays for damages?

As I said above, if something isn't explicitly excluded in your
insurance contract, then you do have insurance coverage. This means you
will be defended by the insurance company in the lawsuit which will be
held to find fault, and that you will be reimbursed for your loss.

The second issue, who pays, is what I think Erik was really getting at.
In the lawsuit following an accident, someone will be found at fault.
If it's you, then your insurance company must pay the other party as
well as you. If it's the other party, then their insurance company will
pay you and their insuree.

Hope this clears up any confusion I might have left in people's minds.

-John


jcarlyle wrote:
Erik,

Insurance policies are "exclusionary contracts". This legal term means
that if something doesn't appear in writing as an "exclusion", then the
insuree has coverage. This came about because the law recognizes that
the insuree has no ability to change the contract, but rather must buy
it as it comes from the insurance company. To level the playing field,
the law will find in favor of the insuree unless the policy
specifically says in writing that something will not be covered.

I have an SSA policy on my glider issued through National Fire
Insurance of Pittsburgh, whose address is in New York City(!). Nowhere
in the policy does it state that I must operate the aircraft in
accordance with the FARs. I do not have any intention whatsoever of
violating the FARs, but if I did so inadvertently and something
happened, I would still have insurance coverage. I'd also have trouble
with the FAA, but that's another matter!

Interestingly, my policy doesn't say anything about an annual being
required, unless that could be tortured out of the following phrase:
"If (I) know that the aircraft is not certificated by the FAA under a
Standard Airworthiness Certificate in full force and effect while in
flight". It does, as you say, require that I have (a) "a current and
valid FAA Pilots Certificate with ratings and endorsements applicable
to (my) aircraft", (b) "if required, a current and valid Biennial
Flight Review", and (c) "a written endorsement from a Certified Flight
Instructor to solo the same make and model as (my) aircraft.

Bottom line: read your policy very carefully, word by word. If
something isn't specifically excluded, then you do have coverage.

-John

Papa3 wrote:
Ramy wrote:

This is an interesting assumption. I didn't dig my insurance policy
yet, but I don't recall that violations are excluded. I think, like
car
accidents, you are covered whether it is your fault or not.


Wow - it's amazing pilots are so oblivious on their insurance coverage
(don't take that personally Ramy). In point of fact, insurance
companies can and will find every possible reason to avoid paying a
claim. Violation of FARs is one of the first places they will look.
This includes but is not limited to:

- Airworthiness of the aircraft (ship is within anual inspection,
required intrumentation operatinge, etc.).
- Pilot is properly qualified for the flight (cockpit checkouts,
Flight Review, etc.)
- Operation is conducted within FARs
- etc.

Erik Mann

Mike,

Quite true - you can certainly be underinsured! One way to remedy that
is to buy higher limits, or you can also get an umbrella liability
policy that would cover your home, your car and your plane.

But to me the interesting issue is whether you have insurance coverage
if you violate the FARs. I'm sure that I would be covered, given how my
policy reads, but it's possible that others may have different
language.

Does anyone have an aviation insurance policy that specifically states
that they won't be covered if they are in violation of the FARs?

-John

Mike Schumann wrote:
The other thing to remember is that your insurance coverage has $ limits.
If you engage in activity that makes you liable, and the damage exceeds your
insurance liability limits, you will still be personally on the hook for the
balance. It's not hard to imagine this being a real issue if you are at
18,500 ft without a clearance and get hit by a business jet.

If you get hit by a business jet, you could easily see property damages in
the $10-20 Million range plus damages for personal injury or death claims.

I don't think there are very many pilots who have liability coverage that
comes anywhere close to this.

Mike Schumann

"jcarlyle" wrote in message
oups.com...
Mike,

Quite true - you can certainly be underinsured! One way to remedy that
is to buy higher limits, or you can also get an umbrella liability
policy that would cover your home, your car and your plane.

But to me the interesting issue is whether you have insurance coverage
if you violate the FARs. I'm sure that I would be covered, given how my
policy reads, but it's possible that others may have different
language.

Does anyone have an aviation insurance policy that specifically states
that they won't be covered if they are in violation of the FARs?

-John

Mike Schumann wrote:
The other thing to remember is that your insurance coverage has $ limits.
If you engage in activity that makes you liable, and the damage exceeds
your
insurance liability limits, you will still be personally on the hook for
the
balance. It's not hard to imagine this being a real issue if you are at
18,500 ft without a clearance and get hit by a business jet.

jcarlyle wrote:
Erik,

Insurance policies are "exclusionary contracts". This legal term means
that if something doesn't appear in writing as an "exclusion", then the
insuree has coverage. This came about because the law recognizes that
the insuree has no ability to change the contract, but rather must buy
it as it comes from the insurance company. To level the playing field,
the law will find in favor of the insuree unless the policy
specifically says in writing that something will not be covered.

I have an SSA policy on my glider issued through National Fire
Insurance of Pittsburgh, whose address is in New York City(!). Nowhere
in the policy does it state that I must operate the aircraft in
accordance with the FARs. I do not have any intention whatsoever of
violating the FARs, but if I did so inadvertently and something
happened, I would still have insurance coverage. I'd also have trouble
with the FAA, but that's another matter!

Interestingly, my policy doesn't say anything about an annual being
required, unless that could be tortured out of the following phrase:
"If (I) know that the aircraft is not certificated by the FAA under a
Standard Airworthiness Certificate in full force and effect while in
flight". It does, as you say, require that I have (a) "a current and
valid FAA Pilots Certificate with ratings and endorsements applicable
to (my) aircraft", (b) "if required, a current and valid Biennial
Flight Review", and (c) "a written endorsement from a Certified Flight
Instructor to solo the same make and model as (my) aircraft.

Bottom line: read your policy very carefully, word by word. If
something isn't specifically excluded, then you do have coverage.

-John

Papa3 wrote:

John,

Absolutely correct. I was operating from memory without the benefit
of having my SSA Group Policy in front of me. I had a policy in the
past which specifically had verbiage to the effect that the aircraft
must be "operated in compliance with all applicable federal regulations
under CFR parts..." I'll see if I can dig that one up.

A few comments related to your post.

- As you note, the SSA Group Policy does in fact specify pilot and
aircraft airworthiness qualifications. There is an endorsement which
modifies the section you cited to include Experimental Airworthiness.
- In practice, the insurer can and will use any limitations to their
benefit if there is a major claim. Everyone needs to remember that
the insurer's goal is to avoid paying claims. So, even if
airworthiness (for example) is not the cause of an accident, that can
be used to void coverage (see the case history in Yodice's article).
I have several more examples of this available.
- As far as all of the different company names and addresses on your
policy, that has to do with the fact that insurance is regulated by the
states. Insurers typically acquire or establish entities in a given
state in order to meet licensing requirements. In our case (SSA Group
Policy) it all rolls back to AIG.

I guess my bigger mission was to point out that there is a significant
personal, financial risk involved in operating at the boundaries of
what is legal. Since the altruistic approach of looking out for our
fellow sportsmen doesn't always work, I hoped that the idea of looking
out for one's selfish interests might be additional incentive to play
by the rules.

Regards,

Erik

Erik,

I'm really intrigued that at one time there was specific language
that nullified aviation insurance coverage if you weren't operating
in compliance with the FARs. If you could find the exact phrase they
used, I'd love to see it.

Agreed - insurance companies will do everything they can to avoid a
payout, and it's smart to keep that in mind. Probably it would also
be wise to note that most (all?) US states have an insurance department
or agency. There's a very good reason for this - 100 years ago
there wasn't much difference between an insurance company and a
privateer.

The reason I gave my insurance company name and address was to make an
ironic point, and it clearly failed. You see, the company was formed in
Pittsburgh, PA, while the address is in New York. Furthermore, I live
in Pennsylvania. Oh, well...

I understand your mission to persuade/coerce people to play by the
rules. My own incentive to stay legal is simple - if it weren't for
bad luck I wouldn't have any luck at all. Thus any rule I try to bend
will bite me in the butt. Instant rule enforcement!

-John

Papa3 wrote:

John,

Absolutely correct. I was operating from memory without the benefit
of having my SSA Group Policy in front of me. I had a policy in the
past which specifically had verbiage to the effect that the aircraft
must be "operated in compliance with all applicable federal regulations
under CFR parts..." I'll see if I can dig that one up.

A few comments related to your post.

- As you note, the SSA Group Policy does in fact specify pilot and
aircraft airworthiness qualifications. There is an endorsement which
modifies the section you cited to include Experimental Airworthiness.
- In practice, the insurer can and will use any limitations to their
benefit if there is a major claim. Everyone needs to remember that
the insurer's goal is to avoid paying claims. So, even if
airworthiness (for example) is not the cause of an accident, that can
be used to void coverage (see the case history in Yodice's article).
I have several more examples of this available.
- As far as all of the different company names and addresses on your
policy, that has to do with the fact that insurance is regulated by the
states. Insurers typically acquire or establish entities in a given
state in order to meet licensing requirements. In our case (SSA Group
Policy) it all rolls back to AIG.

I guess my bigger mission was to point out that there is a significant
personal, financial risk involved in operating at the boundaries of
what is legal. Since the altruistic approach of looking out for our
fellow sportsmen doesn't always work, I hoped that the idea of looking
out for one's selfish interests might be additional incentive to play
by the rules.

jcarlyle wrote:
Erik,

I'm really intrigued that at one time there was specific language
that nullified aviation insurance coverage if you weren't operating
in compliance with the FARs. If you could find the exact phrase they
used, I'd love to see it.

Agreed - insurance companies will do everything they can to avoid a
payout, and it's smart to keep that in mind. Probably it would also
be wise to note that most (all?) US states have an insurance department
or agency. There's a very good reason for this - 100 years ago
there wasn't much difference between an insurance company and a
privateer.

The reason I gave my insurance company name and address was to make an
ironic point, and it clearly failed. You see, the company was formed in
Pittsburgh, PA, while the address is in New York. Furthermore, I live
in Pennsylvania. Oh, well...

I understand your mission to persuade/coerce people to play by the
rules. My own incentive to stay legal is simple - if it weren't for
bad luck I wouldn't have any luck at all. Thus any rule I try to bend
will bite me in the butt. Instant rule enforcement!

-John

Papa3 wrote:


Sorry I was slow on the irony uptake. Friday and all that...

I filed away old hardcopy insurance policies when we moved and assume
they are buried somewhere beneath a godawful ugly cut glass picture
frame we got as a wedding present and some outgrown kids clothes. But
I digress.

I'm sure I recall the exclusion I mentioned. Googling around leads
to various aviation insurance brokers and court cases, and several
mention failure to operate in compliance with FARs as a potential
Exclusion. All of them very clearly point out the issues related to
pilot qualification and airworthiness. Articles include:

http://www.globalair.com/discussions...cle~/msgID=133

http://www.ca9.uscourts.gov/ca9/newopinions.nsf/A49420EE0F8959C588256FC500824CBC/$file/0316671o.pdf

Interestingly, AVEMCO hilights the fact that they have "done away with
blanket FAR exclusions", implying at least that these used to exist.


Regardless, as others pointed out, $1M limit of liability that most
people carry won't scratch the surface if they were involved in a
serious accident where they were clearly at fault. Just another reason
not to tempt fate...

P3