The major requirements that an aircraft insurance policyholder must adhere to in order to avoid those dreaded words, "Sorry, no coverage", are the 'use' and 'pilot' warranties located within an aviation insurance contract. For coverage to apply, the policyholder warrants the aircraft will only be used for the approved uses listed in the policy by pilots approved by the policy.

Examples of certain uses that can be approved by an insurance carrier are:

• Pleasure and Non-Commercial Business
• Instruction and Rental for Hire
• Sightseeing Rides for Hire
• Flying Club
• Charter

If the pilot had a loss while using the aircraft for Charter there would be no coverage if the approved use was only Pleasure and Non-Commercial Business. The use warranty would be breached.

Compared to the approved pilot section of the aviation insurance policy, the use section is seldom violated. Below are some pilot clauses to review. Once read, you'll begin to see how the pilot warranty section of the policy might more frequently be violated. Some subtle differences between certain clauses are underlined.

• No approved pilots. (Typically listed this way when the aircraft is insured for ground only, no flight coverage.)
• Student pilot John Doe while under the direct supervision of a certified flight instructor for each flight until obtaining his Private pilot certificate.
• Named pilots only:  John Doe a Private pilot, Jim Doe a Commercial pilot, and Jane Doe a Commercial pilot.  Only these three pilots may operate the aircraft in flight without voiding coverage.
• Open Pilot Clause:

1.  Any Private pilot or better having permission of the named insured. (The named insured is the policyholder.)

2.  Any Private pilot or better having a minimum of 500 total logged hours of which 10 hours were in the make and model aircraft being insured.

3.  Any Commercial pilot with an instrument rating having a minimum of 1000 total hours as pilot in command of which no less than 250 hours were in retractable geared aircraft, including at least 25 hours in the make and model aircraft being insured.

• Combination of Named Pilots and an Open Pilot Clause:

John Doe a Private pilot or any Private pilot or better having a minimum of 500 total pilot in command hours of which no less than 25 were in the make and model aircraft being insured.

Why so many different pilot clauses? The answer has to do with the complexity of the aircraft being insured. If the aircraft is somewhat unique or unusually complex to operate, the insurance company may want to approve each pilot. In such cases they name each pilot on the policy. Any pilot not named causing a flight related loss will violate the contract and no coverage will apply.

In other cases the insurance company may say they want to save handling costs by approving, in advance, pilots meeting certain minimum pilot qualifications. An Open Pilot Clause is provided. They would still name any pilot not meeting the Open Pilot Clause in every way. Here's an example.

The Open Pilot Clause is Private pilot or better with at least 500 total logged pilot in command hours of which at least 25 were in the make and model being insured. The owner wants to allow Jane Doe to fly the aircraft. She is a Private pilot with 510 total logged hours of which 450 were as pilot in command. She has 40 pilot in command hours in the make and model aircraft being insured. She does not meet the Open Pilot Clause. The policyholder should contact their insurance broker to have her listed on the policy as a Named Pilot. You might ask why she doesn't meet the Open Pilot Clause. She has 510 hours. The pilot clause only calls for 500.  She has more than 25 hours in make and model. Why shouldn't she be automatically approved? The answer is the pilot clause called for 500 pilot in command hours not total hours. Her dual instruction time had to be subtracted. She has only 450 pilot in command hours and falls below the minimum requirements of the Open Pilot Clause. Had the pilot clause said 500 total logged hours instead of pilot in command hours there would have been no need to contact the insurance company for her approval.

Then there is the 'make and model' requirement. The aircraft being insured is a Piper Cherokee 151. Note the model number of 151. The pilot clause calls for 10 hours in the make and model being insured. The owner loans his plane to a flight instructor with thousands of hours. He has 200 hours in a Piper Cherokee 161 but only 2 in a 151. The owner presumes the 200 hours in the more complex 161 must satisfy the 10 hour make and model requirement.  Unfortunately, that logic is not employed by the insurance company. If the pilot didn't have 10 hours in a Cherokee 151 he would need to become a named pilot on the policy for coverage to apply. Do not assume more complex aircraft experience will satisfy the make and model requirement of the Open Pilot Clause.

Here are three examples of how the pilot clause can be applied.

An aircraft owner loans his plane to a friend. The pilot crashes on landing. The claim is reported to the insurance carrier. The adjuster obtains the pilot's license and flight time information. The pilot clause was Private or better with a minimum of 500 total logged hours of which 10 hours were in the make and model being insured. The pilot has a Private license with 200 total hours of which 50 were in the make and model. The adjuster reviews the policy to see if the pilot meets the Open Pilot Clause. He does not. The adjuster then reviews the policy to see if the pilot had been specifically approved and named on the policy prior to the loss. He was not.  Regretfully, the adjuster contacts the insured to advise him the pilot warranty of the contract has been breached and no coverage applies. A simple call to the insurance broker in advance of loaning the plane could have prevented those dreaded words, "Sorry, no coverage."

An aircraft owner, not sure what his insurance contract says, calls his broker to advise him he'd like to allow a friend to fly his aircraft. The broker notes the policy allows only named pilots to fly the aircraft and advises the client he will have to supply certain details about the pilot which will be forward to the company with a request to have him named on the policy as an approved pilot. The policyholder asks what kind of information is needed. The broker indicates he will need the pilot's name, occupation, age, licenses, ratings, loss history, FAR violation history, and pilot times. The owner says, "I've known this person for over a year. He's a high time flight instructor. I'm sure he can handle my plane with ease. Do I really need to bug him for all this information?" The broker says yes and sends the client a Pilot Record Form for the pilot to complete. The form will assist the client in obtaining the needed data. A week later the client calls to thank the broker. By being forced to question his friend, he learned there was a pilot error loss and a DUI in the last three years. He decided he didn't want this flight instructor to operate his aircraft after all.

The aircraft owner wants his daughter to learn to fly in his aircraft. He knows he will need to add her to his insurance. He's expecting a premium increase due to her being a student pilot. So, to save a little money, he figures he'll call his broker to add her when she's ready to solo.  After all, the flight instructor will be acting as pilot in command till then. Regrettably, while shooting a landing with the flight instructor she loses control and crashes.  Everyone is all right but the plane is mangled. The loss is reported to the insurance company. The adjuster determines the client's daughter was "operating" the aircraft at the time of the loss.  She neither met the Open Pilot Clause nor was she named as an approved pilot. The adjuster advises the client there is no coverage due to the person operating the plane at the time of the loss not meeting the pilot section of the insurance policy. The pilot warranty had been breached. The owner exclaims, "But the flight instructor was pilot in command and he met the Open Pilot Clause?!" The adjuster says that's true but we don't care who was pilot in command. Our contract stipulates the person operating the plane at the time of the loss must either meet the Open Pilot Clause in every way or be specifically named as an approved pilot. The daughter, the operator of the aircraft at the time of the loss, was not an approved pilot.  Had the aircraft owner called his insurance representative to have his daughter added to the policy by name before she started her lessons there would have been coverage. The client may have saved a few dollars in premium but lost thousands in repair costs.

If you borrow someone's aircraft, suggest the owner review the pilot section of their insurance policy to see if you would void coverage. If you don't meet the Open Pilot Clause in every way, ask to be listed as a named pilot prior to flying the plane. Plan to supply the owner with your pilot and loss information as their insurance carrier will ask for it. Be a good friend by helping the owner avoid violating the pilot warranty of their policy.

If you're an aircraft owner be sure to review the pilot section of your insurance contract prior to allowing others to fly your plane. If the pilot does not meet your Open Pilot Clause in every way, call your insurance broker to see if he can be added to your policy by name. If you are an owner/pilot be sure you are also approved in the pilot section of your insurance contract.

For coverage to apply after a flight related loss, pilots, whether the aircraft owner or not, should be approved on the policy by name or meet the Open Pilot Clause in every way.

Here's to avoiding those ugly words, "Sorry, no coverage."

Safe flying to all!!!

Soaring Magazine June 2008