A New Way of Flight Trainingâ¦ - American Bonanza Society

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Insurance By John Allen Premises Liability As aircraft owners, when you think about liability you probably think about aircraft insurance or passenger liability coverage. But you also need to be aware of the potential liability issues associated with owning or leasing a hangar. If you have signed a lease for a hangar or tie-down space recently, you probably know what I am talking about. Most hangar contracts require the tenant to carry coverage for liability arising out of their use of the premises. This coverage is commonly referred to as “Commercial General Liability,” “General Liability,” or “Premises Liability.” Although each of these terms covers slightly different things, the lessor is basically requiring the tenant to have coverage if someone is injured (or something is damaged) while on the airport premises due to the negligence of the tenant. The reason for a landlord / lessor to require this coverage is fairly straightforward. Just as a high-rise building owner cannot possibly be responsible for everything its tenants do, neither can an airport owner (or manager) be responsible for the actions or negligence of its tenants. Airport managers should carry liability insurance that will cover them against liability arising from their negligence, but if that protection were extended to cover the actions of their tenants, the likely frequency of claims would drive their premium to a point where the policy could no longer be afforded. In order to manage this risk, their attorneys and risk managers write lease agreements that address this problem. In these leases, the tenant is usually required to carry premises or general liability coverage that will cover liability arising out of their use of the airport. The lease will sometimes require that the landlord be named as an additional insured on the tenant’s policy and might also include a hold harmless and indemnity provision. By taking these steps, the landlord has 1) made sure you have liability protection, and 2) made sure he or she will be defended along with you on your policy with respect to liability arising out of your actions or negligence. If they (landlords) are found to be at fault, then it is their insurance policy that should respond. When confronted with this situation, it is important that you send a copy of the (unsigned) lease to your agent so that they can make sure your coverage is appropriate and issue the necessary certificates. Generally, a copy of the contract will be forwarded to the underwriter, so they have a chance to object to any wording that might conflict with the policy. We have seen many of these contracts go past the point of fairness. Many will require blanket hold-harmless and indemnification clauses that are completely one sided and might even apply to past pollution of the premises that you did not know about. These items can normally be negotiated out of the contract, if you address them before you sign the contract. Your agent 26 AMERICAN BONANZA SOCIETY JANUARY 2012
www.bonanza.org can be an excellent resource when negotiating the insurance provisions of the contract, but remember, most are not attorneys and you should consider having an attorney look at any contract you sign. Once the contract wording is addressed, there are a couple of ways we can provide the basic coverage you need. If you operate a business on the airport or have more than a typical tenant exposure, a separate airport liability policy might be required and can be purchased for as little as $1,500 (depending on the exposure of course). More often, we can get the aircraft hull and liability insurer to endorse the policy to include premises liability. They will also name the landlord as additional insured, if needed. Best of all, this can normally be accomplished for no additional premium. In fact, you may already have this basic coverage on your poli cy as most of the broad form coverage endorsements available for ABS members automatically include Premises Liability. So what if your hangar agreement has no insurance requirement at all Just because the contract does not require the coverage does not mean you do not have an exposure. Please give your ABS insurance representative a call so that we can discuss the issues and make certain you are properly covered. Best Training ... The ABS Insurance Program administered by Falcon Insurance Agency: There is no extra charge to the individual member and Falcon’s sponsorship of ABS programs helps us expand services to all members. The more members who use Falcon, the more Falcon is able to support the American Bonanza Society. Before your next renewal, call Falcon at 800-259-4ABS (4227) for a quote and become part of the ABS insurance program. John Allen is president and owner of Falcon Insurance Agency, which he founded in 1979 in Austin, Texas. Falcon now has 12 offices across the country employing over 90 full-time aviation insurance professionals. Prior to entering the aviation insurance industry as an underwriter for USAIG, John served in the United States Air Force as a pilot. • We have the best instructors • Train in sims, like the airlines do • Safer and much easier on equipment • Better training simply because aircraft makes for a poor classroom Bonanza Recurrent $1,099 Bonanza Initial $1,499 Recurrent Training Center rtcpilot.com KCMI Baron Recurrent $1,499 Baron Initial $1,899 800.727.1014 AMERICAN BONANZA SOCIETY 27
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A New Way of Flight Trainingâ¦ - American Bonanza Society