On what was to be your last landing you suddenly notice that you're way too far down the runway when you touch down. You apply full power, but the airplane doesn't want to fly. So you pull the throttle and brake heavily. After too much skidding you find yourself sitting there in the tall grass off the end of the runway with a bruised ego, some damaged runway lights, and a slightly bent airplane.
After the owner of the fixed-base operator tows the airplane into his shop and you really get a look at the damage, Mr. FBO informs you that he expects you to pay for the repairs and cover his lost income while it's off the rental line.
"But wait!" you exclaim. "I'm a student. I must be covered by your insurance!" Well, if that's your response, your bad day is about to get worse.
"The majority of times an FBO's insurance policy is designed to protect the FBO, not the renter pilot," says Greg Sterling, executive vice president and general manager of the AOPA Insurance Agency, Inc. "Their insurance coverage normally has zero coverage for the renter pilot. You aren't covered for liability or any damage you may do to the airplane."
Sterling suggests that you should examine the FBO's or flight school's written rental agreement -- if there is one -- to see what it says regarding total renter pilot liability.
"Most renter pilots never even think about it," he says. "They just take it for granted that they are covered. Unfortunately, they don't learn the truth until it is too late and they're faced with large repair costs or legal fees."
You break it, you bought it
"Even in the rare case where the FBO does offer some coverage to its renter pilots, that coverage is limited to personal liability, and that usually is limited to $100,000 -- let's face it, a hundred grand doesn't go as far as it used to," Sterling adds. "So, even though there is some liability coverage, renter pilots are still on their own to pay for any damage they do to the aircraft."
In the case of our accident scenario, the FBO or flight school is perfectly within its rights to expect you to pay for the repairs and loss of income. According to Sterling, the business can do one of two things: It can make you pay for the damages directly, or it can turn in a claim to its insurance company.
Option two may seem like it lets you off the hook. Well, as they say, "not so fast, my friend." "The insurance company will pay the FBO, but in return it now has the FBO's legal right of recovery -- it's called subrogation," Sterling explains. "So now the insurance company will just come after you for the amount it had to pay to the FBO."
And if that weren't enough, there's still the matter of the FBO's deductible. "An in-motion deductible today can run anywhere from $2,500 to $5,000 per incident," Sterling says. "That deductible, whether or not the FBO collects from its insurance carrier, has to be paid out of pocket, which means the FBO has the right to recover that amount from the renter pilot too."
A recent phenomenon
Student pilots in the 1970s and much of the 1980s probably never heard of renter's insurance. "If you rewind things to 15 years ago, insurance companies were more profitable and an FBO's [insurance] rates were more affordable, so if you did some damage to an airplane, more times than not the FBO would just take care of it," Sterling says. "They saw value in keeping you on as a renter pilot. Of course, their in-motion deductible back then was $500 on a Cessna 172.
"Today an FBO would have to rent you an airplane for a couple hundred hours to make up for that $5,000 deductible," he continues. "So with FBOs in much tighter financial positions today, the burden for taking care of any losses is shifting right down to the renter pilot."
Besides, we're in a different legal environment. We live in a very litigious society. In fact, according to Sterling, back in 1985, one in five people in the United States was sued for something. And that was 20 years ago!
Innocent, you say? Prove it!
Sterling shares a story of another unlucky student pilot whose training airplane's right main landing gear folded up while he was taxiing to the run-up area. "The FBO said it was clearly his fault because he was taxiing too fast," he recalls. "The student said he wasn't, but it was up to him to prove his innocence because the airplane was in his care." In this situation, Sterling says, "Now you break out your checkbook big time."
Why? Say you do $10,000 worth of damage to an airplane in an accident that you're sure wasn't your fault. According to Sterling, you are looking at spending $20,000 or more in legal fees defending yourself in court. And don't think that every FBO doesn't know that. "So you write them a check for 10 grand now or spend no telling how much time and money defending yourself. Which decision would most student pilots make?" he asks.
You're more alone than you thought
"But wait a minute!" we can hear you collectively saying. "I'm just a student pilot -- I still fly a lot with my instructor in the airplane with me. Surely, I'm covered then?" Maybe you are, and maybe you aren't. The simplest way to calculate your potential exposure is to view it in a direct relationship to how far along you are with your training.
"I have not yet seen any claims come in on a pilot who is presolo," Sterling says. "Those first few all-dual hours put students at a very low exposure in the event of an accident. Their instructor is clearly the pilot in command.
"But once your instructor kicks you out for your first solo, from that moment forward your exposure increases," he continues. "So when you do something wrong to or with the airplane, it's not to say that your instructor or the FBO doesn't have some liability, but the student will probably have a level of liability also -- purely from the fact that you are operating the aircraft."
And that exposure to liability will grow as your training and experience increase. "While most people would say that a post-solo student is still under the supervision of an instructor, if you're on a cross-country and something happens, it's going to be hard to determine just how well that CFI was able to supervise you," Sterling says.
"It is my opinion that as you progress in your pilot training your exposure to lawsuits gets greater and greater because with greater experience comes greater responsibility," he adds. "Once you are a full-fledged private pilot, it becomes pretty cut and dried -- the FAA has given you total responsibility for your actions, so there's no pointing back at your instructor or FBO."
Is renter's insurance your golden parachute?
The truth is general aviation pilots have enjoyed an excellent safety record -- and that includes student pilots. So chances are the vast majority of you who've read this far will fly accident-free.
But, bad things can happen to good people, and through the simple process of purchasing renter's insurance, you virtually eliminate any potential catastrophic aircraft accident liability and repair costs.
"Right from the beginning we teach pilots all the bad things that can happen if they don't do a proper preflight or check the weather," Sterling says. "We teach them to be on the constant lookout for an emergency landing site if the engine quits. But, nobody ever mentions what can happen to them if they are not adequately covered by insurance. Sure, nobody wants to use it, but it's there for that one time that something bad does happen.
"So here you are with all the unknown costs associated with even a simple accident hanging there, while over here, for just a few hundred dollars a year, you can lock down your coverage and eliminate your worries," he says. "Once you have a renter's policy you know you'll have liability coverage. And you can add aircraft damage coverage -- so if you do bang up an airplane, you're not only covered, but you'll have the benefit of someone coming to defend you in court. And all this costs the same as a few hours of flight training."
The average renter's policy runs around $350 a year, according to Sterling. In the world of general aviation, it's a small amount to pay for all that peace of mind. Unfortunately, the majority of renter pilots don't give it a second thought.
"Most renter pilots are and will stay out there flying without any coverage," Sterling says. "The unfortunate ones won't learn their lesson until after they suffer a loss and find out that they're not covered. Now they're between a rock and a hard place." Even the bill for a simple bit of hangar rash can run $3,000 or more.
What usually happens, Sterling says, is that the cost associated with the unprotected loss means the renter pilot simply stops flying altogether. "We not only lose an active pilot, we also lose a potential aircraft owner," he adds. "Worst of all, we lose someone who quite possibly would have introduced the joy and excitement of flying to the next generation of general aviation pilots." And none of us can afford for that to happen.
So, dear reader, before you take another lesson or rent another airplane, contact the AOPA Insurance Agency or another carrier and discuss your renter policy needs. Your flying future will be more secure.
Dale Smith is an aviation journalist in Jacksonville, Florida. A private pilot, he has been flying since 1976.
