How Much Is Enough Insurance
When talking about Non-Owned Aircraft Physical Damage Insurance the common misconception seems to be that we should purchase just enough to cover the deductible set force on the current policy. That may seem like the penny wise decision at first glance, but lets look at what this coverage is designed for. Non owned physical damage insurance is a way to transfer the risks incurred in operating non-owned aircraft and covers the physical damage to the aircraft that a renter/non-owner pilot may be held liable for through negligence. Let’s not forget that an insurance company may subrogate (file suit) against a third party in order to recover their loss if negligence can be proven.
Are you carrying enough insurance to cover the value of the aircraft (if available) or just enough to cover the deductible on the policy carried on the aircraft by the flight school or individual owner? If you are carrying just enough to cover the deductible you could be in big trouble. In the event of an accident in which an insurance company pays $25,000 to repair the aircraft you as the pilot could be held responsible for the entire amount paid out if negligence could be proven. What if you had chosen to carry only $5,000 to cover the deductible? Your Non-Owned Policy would respond to pay the $5,000 deductible and you could end up receiving a letter advising that the insurance company is willing to set up a payment plan for the remaining $20,000 portion of the loss. This letter can be avoided by purchasing Non Owned Physical Damage coverage up to the full value of the aircraft that you normally fly. Think of it along these lines, the non-owned policy is written with YOU as the named insured meaning it exists to protect YOU, not the owner of the aircraft. The owner should have thier own policy in place to protect themselves.