Flying Non-Owned Aircraft

In recent articles, we have been looking at the question of insurance from the viewpoint of the owner of an aircraft. Statistics show, however, that anything up to 95% of non-military aviation activity worldwide involves the flying of aircraft by individuals who do not own the aircraft concerned.

So this month I would like to look at the potential problems faced by the non-owner-pilot and, as usual, I’ll refer to our pilot as Fred. Whilst Fred might easily be short for Frederick or Frederica, I will assume Fred is a man, with apologies to Fredericas everywhere!

There are any number of reasons why Fred might find himself flying an aircraft that he does not own. He might be a professional pilot, flying for a living, whether for charter, scheduled airline operations, instruction, aerial work or as an industrial aid pilot, flying a corporate-owned aircraft. Fred might be flying privately, having hired or borrowed an aircraft, he might be receiving instruction or undergoing a flight test. He could be helping out a friend by positioning an aircraft, acting as a safety pilot or he could be carrying out a test-flight, assuming he carried the appropriate rating.

But irrespective of the reason Fred finds himself behind the controls of a non-owned aircraft, there are a range of potential problems awaiting him and, as always, a little forethought may save considerable headaches later.

In the broadest terms, Fred needs to consider his responsibility and exposure to three different groups of people: the owner of the aircraft, the public at large and, thirdly, himself and his family.

Before we go further, however, there are certain basic fundamentals that Fred needs to establish very clearly.

The most obvious, perhaps, is to ensure that the aircraft is fit to fly. By this I do not mean a pre-flight check, but something even more basic. For example, does the aircraft have a certificate of airworthiness and a valid certificate of safety? Will the intended flight be completed before any mandatory inspections or maintenance fall due?

Then we move onto Fred’s own flying privileges. Is he properly rated for this specific type of aircraft and does his licence and ratings permit the type of flying that he intends to carry out? Where the aircraft is registered in a country other than that which issued Fred’s licence, does he have the appropriate authorities, validations, etc., bearing in mind that regulations do vary from country to country and Fred needs to comply with the requirements of the country of registration, as well as the country in which he is licensed and into or over any country that he may intend to fly.

One type of flying, which needs to be considered very carefully, is the question of test flights. Test flights – which may best be described as any flight necessary for the purpose of the initial issuing or reinstatement of a certificate of airworthiness – may only be performed by pilots who are specifically authorised to do so, either by virtue of their holding a commercial pilot licence or if they are in possession of a test pilot rating issued by the applicable authority. These types of flights are, by their nature, potentially hazardous and are best left to professional pilots who specialise in such things: the mere fact that a pilot may be commercially licensed, for example, does not infer that he is necessarily properly qualified or experienced to handle the emergency situations that may arise, particularly where the type of aircraft is not one that the pilot flies regularly: an airline pilot doing a test flight in a homebuilt aircraft for example.

Where an aircraft has sustained damage and is to be flown for the purpose of recovering the aircraft to a place of safety or a repair facility, such flights may only be carried out by a commercial pilot.

But let’s assume that Fred has established that all the paperwork is in order: his as well as the aircraft’s.

The next question Fred needs to ask himself is “What if I have an accident?” Some may say that this is the last question that Fred should be worrying about before he goes flying but nothing could be further from the truth. After all, pilots are constantly being trained to deal with the “What ifs”: what if an engine fails, what if the aircraft depressurises,. What if I lose my avionics, what if…..

In terms of his relationship with, and exposure towards, the owner of the aircraft, Fred should be asking about insurance that the owner carries and ensuring that it protects Fred as well. In this sense, Fred needs to be as careful as the owner was (or should have been!) when he effected the insurance. Does the insurance cover what Fred is planning to do i.e. does the flight fall within the coverage envelope (“Uses”, “Pilots” and “Area”). Fred needs to satisfy himself that he is protected under all sections of the insurance (physical damage as well as legal liability) and that the Insurer concerned is one that Fred would be happy to have standing between him and eternal poverty: after an accident is not a good time to discover that the Insurer has no experience in handling aviation claims, or is one of those that are that are cutely described by some insurance brokers as “the alternative market”. Fred wants an Insurer with an instantly-recognisable name which owns a big building with marble pillars outside. And if it has just announced massive underwriting profits, that’s even better!

Once Fred has satisfied himself that there is insurance in place and that it protects him, Fred then needs to consider the issue of uninsured losses and who will be responsible for them. Not all aircraft owners insure themselves in the same way. Some will carry higher Deductibles, or Excesses, in order to reduce premiums. Certain types of insurance may not be carried at all, whether by design or default (because they cannot be arranged at all) and these may include “Loss of Use” or “Engine Breakdown” insurance.

In extreme cases, the owner may be unwilling to even submit a claim following damage, not wishing to besmirch his insurance record lest he loses his No Claims Bonus or sees his future premiums increased.

Fred needs to agree with the owner that the insurance is there to protect both parties but, importantly, that Fred’s responsibility is limited to the Deductible or Excess payable and that any other loss suffered by the owner is one for which the owner is responsible with no right of recourse against Fred.

A simple written agreement is often all that is needed and will save arguments later. As someone once said “Pre-flight checks need not lead to post-flight cheques!”.

If Fred is dissatisfied with any aspect of the insurance, he has two options: arrange his own coverage or simply don’t fly the aircraft.

Many pilots carry “Pilot Excess” insurance, which provides a source of compensation where the pilot becomes responsible for the Deductible or Excess applicable to the Hull insurance.

Others may prefer to go further and carry their own legal liability coverage, providing protection for claims by third parties or passengers, lest the owner’s legal liability coverage proves inadequate to cover all the claims that may flow from a bad accident. The question of legal liability insurance is often overlooked and great care should be taken. In general terms, it is the pilot himself who will be liable for injuries, fatal or otherwise, suffered by passengers and the pilot may also find himself on the hook for any damage to people or property on the ground. If the owner of the aircraft has carried a low level of coverage in order to save money, Fred may find himself personally liable to pay the claims, with no insurance to rely upon. In the event that Fred is fatally-injured himself, the problem does not go away, but merely becomes one to be resolved by his estate, which can often lead to insolvency and financial tragedy for Fred’s family.

So, in summary, what advice do we offer Fred when he is rushing off to the airport to fly a non-owned aircraft?

Hey, Fred, are you listening to me? Turn of the radio and concentrate for a minute will you?

Have you established that the aircraft is airworthy and within its maintenance cycle? Are you properly rated for the flight you are about to undertake? Do you have relevant experience (for undertaking test flights, for example)? Have you established that the aircraft is insured properly (Uses, Pilots and Area) and are you comfortable with the Insurer concerned (i.e. Santam, Lloyd’s, etc.). Does the owner carry adequate legal liability insurance, or have you arranged your own “top up” coverage? Do you have Pilot Excess insurance sufficient to pay the Deductible or Excess in the event of a Hull loss? Have you agreed with the owner that any other loss he suffers, for which his is not insured or for which he decides not to claim, is his baby, not yours?

If the answers to all these questions are “Yebo”, then Fred’s in pretty good shape. However, if any come back with a “No” or a “Don’t know”, Fred would be well-advised to postpone the flight or cancel it altogether until such time as he has turned those answers into “Yes” as well.

Fred should never avoid seeking proper advice from a specialist aviation insurance broker: it’s usually free (good value for money!) and may save potentially-huge problems later.