February 1, 2005
By John S. Yodice
AOPA general counsel John S. Yodice is a director of the Lawyer-Pilots Bar Association.
"One of the worst disasters that can befall an aircraft owner is to be involved in a serious aircraft accident. No argument. Secondary to that disaster is to have the insurance company that insures the aircraft deny coverage for the accident." This is a quote from my column of a year ago (see " Pilot Counsel: Insurance and Airworthiness," February 2004 Pilot).
Sad to say but this has been a recurring and necessary theme in this column over the years. For example, problems with "airworthiness" (February 2004), "approved pilots" (see " Pilot Counsel: 'Approved' Pilots and Aircraft Insurance," April 2002 Pilot), "proper licensing" (see " Pilot Counsel: A Denial of Insurance Coverage," February 1999 Pilot), and more offer guidance on how to avoid these secondary "denial of coverage" disasters. These columns are based on actual cases. They illustrate traps for all of us. This month's column delivers the same message in a slightly different context. The message of the case here is that there is a crucial legal difference between actual flight time and what we may claim as "logged" flight time. This difference could cause a denial of insurance coverage after a loss and when it is too late to do anything about it.
This "denial of coverage" disaster comes out of a court decision involving the crash of a Cessna 414 twin-engine aircraft. Killed were the pilot and his two passengers. No other details of the crash are given in the accident report.
As you have already surmised, there was a dispute about whether the liability and damage insurance policy on the aircraft was effective at the time of the crash. The insurance company denied coverage for the losses associated with the crash because, the company said, the pilot had not "logged" the minimum flight hours required for coverage under the policy. The denial led the aircraft owners to sue the insurance company for breach of contract and for insurance bad faith. The insurance company counterclaimed, asking the court to declare that there was no coverage for the crash.
The policy wording that applied was in a pretty standard format (check your own policy). In addition to coverage for the "named" pilot owner, the policy's open pilot warranty provided coverage for a pilot with:
There is no doubt that the pilot who was operating the aircraft when it crashed was a well-experienced (more than 15 years) commercial pilot and flight instructor with airplane single- and multiengine and instrument ratings. The problem was that, after his death, only a single logbook could be found among the pilot's effects. The logbook could document only 236 pilot hours, all of which, according to the logbook, had been flown in single-engine aircraft within approximately a two-month period earlier that same year. Obviously, the pilot had logged more hours; otherwise, how did he get a commercial certificate and the additional instrument and multiengine ratings? Even the insurance company conceded that the pilot had flown more than was reflected in the logbook. Were there missing logbooks? Did the pilot fail to record his other time?
Whatever the possible explanations, the issue came down to the meaning of the term logged as used in the policy. The policy does not define the term. Given the situation, the aircraft owner predictably argued that the term should be interpreted to mean hours actually flown but not necessarily recorded. After all, the actual time is what the insurance company should be interested in. The owner was adamant, and he believed, that the pilot had logged well more than 1,500 hours of multiengine flight time, and more than 50 hours in a Cessna 414, "and, indeed, much more than that." As such, the amount of flight time the pilot actually had was a question of fact that the owners wanted the opportunity to prove in a trial. Not a bad argument considering that all flight time is not required to be recorded, and many pilots don't record all of their flight time.
FAR 61.51, the regulation that deals with pilot logbooks, provides that the only flight time that a pilot must log is the training and aeronautical experience used to meet the requirements for a certificate, rating, or flight review — and the aeronautical experience required for meeting the recent-flight experience requirements. That's all.
The owners' argument failed, both before the trial court that granted summary judgment to the insurance company (i.e., no trial) and on appeal. The courts' decisions rested on the interpretation of the term logged in the policy. Both courts concluded that the term means "hours actually flown and reliably recorded in a flight time log." If no reliable record can be produced, the insurance company wins, with no need for a trial.
In reaching this interpretation the appellate court noted that the obvious intent of the insurance company was to limit its liability for losses associated with inexperienced pilots. It is not unreasonable for an insurance company to require a record, said the court. "Human memory is so frail that a record needs to be made of the time, duration, point of departure, and destination of flights during which the [minimum] hours are accumulated. It is the record that gives reliability to the required time."
The appellate court's interpretation also rested on what the court said was the accepted meaning of the term logged within the aviation industry.
So, the court handed down a "disastrous" result to seemingly innocent aircraft owners. When many of us, each year, are called upon to complete an application for aircraft insurance, we should note particularly that the application typically asks for logged pilot time, a term easily missed or misunderstood. That term should have special significance to us in light of this case. It's also worth noting that if you are an aircraft owner who allows other pilots to fly your aircraft, visually check the pilot's logbook to ensure that he or she has logged the flight time that will satisfy your insurance policy's requirements. You may even consider making copies of the pertinent logbook pages for your records.
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