Non-Owned Aircraft Liability
What You Don’t Know
May Hurt You
Introduction
• Doug Meyer, ARM
• Gallagher Aviation Insurance Services
A division of Arthur J. Gallagher Risk Management Services, Inc.
Aviation Clients
Over 25 University aviation clients
Including
University of Texas
Baylor University
University of Southern California
University of Colorado
Purdue University
University of Minnesota
California Institute of Technology
Charter Aircraft
Employee Business Travel
Athletic Department
Team Travel
Coaches Recruiting
Aerial Survey / Mapping
RW Slung Load Move Equipment
Donated Aircraft
Athletic Recruiting
Team Travel
Alumni Fundraising
Fractional Aircraft
Fractionally Owned Aircraft
Employee Pilots


Flying Owned Airplane
Flying Rented Airplane
Aviation Training
School provides classroom instruction and
contracts with a third party to perform flight
training.
Unmanned Aerial Vehicles
(Drones)
Design and Build
Testing (install devices and then test)
Atmospheric Research
Balloons
Tethered/Non-Tethered
Atmospheric Research
Miscellaneous
Rockets / Satellites
Identify
• Not always easy
• Requires a full understanding of the
University’s programs for aircraft use
• Ability will depend on your knowledge of
University operations
Helping Hand
• Survey sent out to all departments
-Request information on aviation
exposures
• Purchasing Department
-Aviation expenses
• Expense Accounts
-AvGas
-Aircraft Rental
Basic Principles of Liability
• Law
Administrative / Civil / Criminal
• Civil
Tort Law / Contract Law
Tort Law
• Act or omission that causes injury to
another person by breach of a legal duty
not arising out of a contract and subjects
you to liability for damages in a civil
lawsuit
Negligence
Four elements of a negligence case
1. A duty to be reasonably careful
2. A failure to be reasonably careful
3. Which is the proximate cause of
4. Injury to another person or property
How Am I Negligent?
Contingent Liability
• Liability is incurred for acts other than
those of your own employees
Airline Liability
Important Distinction
Common carrier represents to the public:
1. Carry for hire
2. Uniform price
3. Accept all persons applying
Degree of Care
• Common Carriers
Courts have held airlines and its
employees to a highest degree of care
standard to exercise Greatest Degree of
Human Care and Foresight Possible to
ensure the passenger’s safe conveyance
Degree of Care
• Private and Contract Carriers
Courts have held private and contract
aircraft airlines and its employees to an
ordinary degree of care standard to
exercise
• What does that mean?
Managing Exposures
• Contractual Transfer
-Hold Harmless
-Can be problematic
• Retention
-Low Frequency / High Severity
• Insurance
-Recommended
Am I Covered?
• General liability forms typically exclude
aircraft related operations……..
With some exceptions
United Educators
• Broad aircraft exclusion with exceptions
-Regularly Scheduled Airlines
-Model Aircraft (Defined)
-A Lighter-than-air craft that is an
unmanned balloon
-Non-Flight related curriculum-related
instruction
Lexington
• Broad aircraft exclusion that does not
apply to:
An aircraft you do not own that is
chartered by you and operated by a
professional crew
Munich Re
• Any liability arising out of the ownership,
maintenance, loading or unloading,
control, use or operations of any aircraft,
airfields, runways, hangars, buildings or
other properties in connection with aviation
activities
No exceptions
Texas Tort Claims Act
• Governmental Immunity
Texas Torts
• Proprietary Activities / Governmental
Functions
• Future Decisions
Recommendations
• Insurance Transfer (Aircraft Operator)
• Travel Policy
• Non-Owned Aircraft Liability Policy
Operator’s Insurance
(Primary)
• Always:
-Require a certificate of insurance from
aircraft operator naming the University as
additional insured
-Include a waiver of subrogation on the
hull in favor of University
Operator’s Insurance
Primary
• Concerns:
-Are limits adequate – (look for a minimum
of $1mm per seat)
-Personal aircraft used on University
business
-Damage to rented aircraft
Aircraft Operator
Loss Control
• Know your charter company
-Experience
-Management
-Financial Condition
-Turnover
-Condition of Aircraft
-Quality of Pilots
-Risk Management
Aircraft Operator
Loss Control
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•
•
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Liability limit
Personal visit
Recommendations
ARGUS
Cheaper may not always be better
Travel Policy
• Can be very detailed
-Address and define approved air-travel
-Detailed schedule of equipment,
operations, weather and pilot qualifications
• Can be very simple
-Air travel must be on regularly scheduled
airlines
Internal Policy
• Should have a policy or directive that
addresses the use of aircraft on University
business
-Aircraft use must be approved by a
specific member of senior management
-Risk management should be informed of
the details so the exposure can be
properly identified and conveyed
Why Gamble?
•
•
•
•
•
Non-Owned Aircraft Liability Policy
Excess over any other available insurance
Provides defense
Broad coverage
Very affordable
Policy Terms
• Limits available $1mm to $300mm
• Aircraft defined excluding
-Aircraft owned in whole or part
-Seats 50 or less / Unlimited
-Aircraft under long-term lease or service
agreement
• Broad Named Insured includes directors
officers and employees
Exclusions
• Third-Party Liability - does not cover for:
Workers’ Compensation
Unemployment Compensation
Disability Benefits Law
• War and Associated Perils
• Terrorism Act
Underwriting
• Will need to provide:
-Estimate number of hours flown annually
-Brief description of operations/equipment
-Average passenger loads
-Number and details on employee pilots
operating aircraft
-Certificates with additional insured
Final Note
• Proper control of your non-owned aircraft
exposures is critical
-Keeping staff and students safe
-Protecting University assets