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Renter's insurance: Do I need it?Renter's insurance: Do I need it?

A new fixed-base operator has opened on the airport, with an interesting variety of rental aircraft available. Or a friend becomes the proud owner of a new aircraft, and offers to "put you on the insurance" so you can fly it now and then.

Neither of these scenarios is unusual for many general aviation pilots. But even if the FBO informs you that it is fully insured for losses associated with aircraft rentals, and if your friend delivers on the promise to name you on the aircraft insurance policy, are you protected in the event of a claim arising from your operation of the aircraft?

Following are some important ideas to understand about renter’s insurance that AOPA Insurance Services frequently reviews with pilots to enhance their ability to analyze their insurance coverage needs for the operation of a non-owned aircraft.

What’s the difference between a policy that contains a sublimit for per-person liability coverage, and a policy that has a per-passenger liability coverage sublimit? Which type affords the greater coverage?

Using the example of $1 million in coverage for an occurrence, and either a $100,000 sublimit per person, or a $100,000 sublimit per passenger, both policies would limit the passenger liability coverage to $100,000. However, the policy with the per-person liability sublimit would also limit any other injured person (such as someone outside the aircraft) to $100,000. Under the policy with the per-passenger sublimit, an injured person outside the aircraft would only be limited to the $1 million liability limit for the occurrence. So the policy with the per-passenger sublimit offers more coverage.

Do renter insurance policies cover an insured person’s legal costs?

To varying degrees, yes. A policy that covers an insured person’s legal defense as a component of liability coverage would pay up to the policy limit for the legal expenses incurred. However, the experts at AOPA Insurance Services explain, some policies limit the amount of coverage for legal defense costs. It is something to examine when considering purchasing a policy.

What’s the difference between a named pilot and a named insured? 

As the terms suggest, specific persons may be identified as approved pilots, or as insured persons on an aircraft insurance policy. But there are distinctions that it is important to understand, to limit your liability exposure if you plan to rent or borrow another party’s aircraft.

Being listed on an aircraft owner’s insurance policy as a named pilot does not eliminate the need to have your own liability coverage. If an accident or other covered occurrence takes place while you are operating the aircraft, your status as a named pilot "would not exclude" the owner’s coverage from being applicable to the occurrence. However, as the pilot of a non-owned aircraft, you could still be a target for subrogation by an injured party seeking damages. (Subrogation means that you, as renter, could be substituted for the aircraft owner as the target of a legal action for damages.) Your policy for liability coverage for piloting a non-owned aircraft would protect you up to the policy limits if you were found liable in such a case.

What else does a renter’s insurance policy cover?

In addition to offering liability protection, renter’s insurance policies also provide optional coverage for physical damage to an aircraft that you are operating, with the cost of the coverage determined by the amount of coverage a purchaser opts to acquire. Policies may also afford protection for you against bearing the cost of the aircraft owner’s loss of use of the aircraft. A renter should also ascertain whether the policy contains a provision covering a deductible on an owner’s insurance policy.

What aircraft can I fly under my renter’s insurance policy?

Terms vary, but most renter’s insurance policies are specific on the subject of covered aircraft. AOPA Insurance Services cites the example of a policy that provides insurance "for your personal and non-commercial use of a non-owned, single engine land, fixed wing, non-pressurized, aircraft having a non-turbine engine of 450 horsepower or less (including non-powered sailplanes), capacity of seven (7) or less total seats, and a standard, experimental, restricted or light sport aircraft certificate." Note this important provision: "Multi-Engine, Rotorwing and Seaplanes are not included unless specifically selected and quoted."

What aircraft are considered to be non-owned aircraft under a renter’s insurance policy?

Using the same policy’s language as an example, a non-owned aircraft is "an aircraft that you use with the owner's permission, but excluding any aircraft owned in whole or in part by, or furnished for more than thirty (30) consecutive days to, or under a lease and/or purchase agreement to you or your spouse, parent, child, sibling, corporation, partnership, or other organization in which any of these entities own more than twenty percent (20%)."

AOPA Insurance Services, which has been offering renter’s insurance online for 15 years, is also frequently asked how much insurance is required, and how much protection a pilot should carry. Only seven states require liability insurance coverage for aircraft. However AOPA Insurance Services recommends that because FBO policies rarely provide adequate coverage for pilots, renters should carry as much protection as affordable to avoid personal liability for many thousands of dollars of repair costs and legal defense fees.

Topics: AOPA Products and Services

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