The vast majority of private pilots in South Africa are financially restricted to flying aircraft they don’t own. Whether these are rented or borrowed, the problems faced by the pilot are generally similar. In this article, we’ll look at some of those problems and offer a few practical tips to avoid them.

Let’s start by dispelling a myth. The mere fact that an aircraft is insured, does not mean that a pilot is bullet-proof in the event of an accident. Far from it. However, there are a lot of things a pilot can do ahead of time to ensure that his pre-flight checks don’t lead to post-flight cheques.

Insurance is a widely misunderstood and, therefore, mistrusted subject. It needn’t be. Most times, it’s plain commonsense. But you need to understand a couple of basic principles.

Firstly, insurance is an agreement between the owner (of the aircraft) and the Insurer. That’s all. Anyone else (including a pilot) is a third party to that contract. Unless the insurance specifically says so, a pilot has no right of protection under the policy.

Secondly, there is principle of insurance known as subrogation. Simply put, if an Insurer agrees to pay the owner’s claim, and does so, then the Insurer is entitled to take over any rights the owner has against any third party. In other words, once the Insurer pays, it can try to get its money back from someone else.

Now consider the position of a pilot: we’ll call him Fred. Fred happily hires an aircraft and unhappily has an accident. The aircraft may be insured, but Fred is a third party to that contract and has no automatic right of protection under it. Furthermore, once the Insurer has paid the owner for the damage to the aircraft, the Insurer takes over any rights the owner has…. against Fred. It gets worse. Fred was carrying passengers and they’ve been badly injured. They want money. Lots of it. Fred’s.

So what are those steps that Fred can take ahead of time? Well, it’s commonsense, really.

Firstly, Fred can establish whether the aircraft is insured and ask to see a copy of the insurance paperwork. Better still, get a copy of the current insurance certificate. He can make sure that his intended operation of the aircraft is permitted in terms of the “coverage envelope”, meaning the permitted “Pilots”, “Uses” and “Area”, which should all be clearly spelled out. If necessary, Fred should ask the owner to arrange for the insurance to be endorsed to note that the aircraft will be rented or loaned to him, for specific purposes, over a specific period.

Fred should also take careful note of any amount payable in the event of a claim – the Excess – which we will come back to.

Fred should also take note of the sums insured, particularly in relation to third party and passenger liability. Again, more of that later.

It would be as well for Fred to establish the identity of the Insurer. Knowing the insurance broker is one thing. But the broker is not a party to the contract and does not pay the claims. Fred should find out who actually provides the insurance. If the name is not familiar, or if Fred struggles to pronounce it because he didn’t study any eastern European languages at school, he should make further enquiries. If Fred doesn’t like what he hears, it’s really simple: go find another aircraft, Fred!

If Fred intends taking the aircraft into an unlicensed airfield, it’s as well to find out what the insurance has to say about it. Many policies, especially those issued by South African Insurers, restrict the use of unlicensed airfields and impose stringent conditions which, if not adhered to, can lead to disastrous consequences. For example, only landings and take-offs by day are covered (even if night facilities are available) and prior inspection of the airstrip – from the ground – is required! The Insurers don’t offer suggestions as to how this should be achieved. However, in the event of a loss, the onus of proving that the airfield was “suitable” rests entirely with the owner (not Fred). This might be difficult if the aircraft ended up in a ditch running across the middle of the runway and which Fred hadn’t spotted during his flypast prior to landing and is likely to result in Fred being sued by the owner! Many insurance brokers, who don’t know any better, believe that the policy clause that contains all this is actually an extension and proudly announce that they have included it “in order to ensure that you have the widest possible coverage”. Meanwhile, it is a restriction. The brokers don’t know it…but the Insurers do.

Next, Fred should enter into a simple agreement with the owner. It can be verbal, but written is better. The agreement should be along the lines that the owner has agreed to maintain insurance for the benefit and protection of both parties and that, in the event of an accident, Fred’s liability for uninsured losses will be limited to the amount of the Excess. It needn’t be longer or more complex than that.

If the Excess is more than Fred can afford to lose, he can insure himself against that loss. Pilot Excess insurance is simple to arrange, cheap and can be paid for by monthly debit order. Furthermore, it would apply to any aircraft that is not owned by Fred, with few exclusions.

The only other area where Fred is exposed will be in the event of compensatory claims made by third parties or passengers who suffer a loss as a result of an accident. In terms of most insurance policies, any pilot who is permitted to fly the aircraft under the policy, and who does so with the owner’s consent, is automatically protected against compensatory claims, up to the policy sum insured, provided he complies with all the policy terms and conditions. Remember that, in general terms, accidents are the result of negligence and negligence gives rise to a common law right for compensation. If Fred was the negligent party, it is Fred who will be sued, particularly by passengers. This is why ensuring that the owner carries an adequate level of legal liability insurance is so important…Fred may end up relying on that coverage as the only thing standing between him and lifelong poverty. Some pilots prefer to take matters into their own hands and arrange their own legal liability insurance, which then covers them in any aircraft that they fly, regardless of any other insurance in force. This is an option, albeit one with a price attached.

As with so many things, it’s the effort you put in ahead of time that will determine the quality of the outcome. So it is with sport, so it is with school, so it is with business and so it is with borrowing or renting aircraft.

Given a bit of effort, and careful enquiries, there is no reason why Fred’s pre-flight check should lead to a post-flight cheque.

In the next few articles, we’ll discuss other aspects of owning and operating aircraft from an insurance viewpoint.