Insurance Tip: Named Insured vs Named Pilot

[LRingeisen]

When it comes to aircraft insurance, a couple of important terms to understand are named insured verses named pilot.

The named insured is the person or entity that owns the aircraft and is listed as the primary policyholder. They are responsible for the aircraft and any potential claims or issues that may arise. The insurance policy should match the FAA registration, so the named insured should be the owner of the aircraft. If there is a claim or if the policy is canceled, any refund or payment will be made out to the named insured.

A named pilot, on the other hand, refers to the specific pilots who are authorized to fly the aircraft on a regular basis. These pilots are listed by name in the insurance policy. However, there may be exceptions for occasional use pilots who fly the aircraft infrequently. These pilots may qualify to fly under an open pilot warranty, which means they are covered without being specifically named in the policy. Keep in mind, most insurance companies require the registered owner to be listed as a named pilot.

It's important to remember that insurance policies can vary, and the specific coverage and requirements for named insureds and named pilots may differ. If you have any questions or concerns about your coverage, it's always best to reach out to your insurance broker for clarification.

 

[RWoodard]

How concerned should a pilot be when operating an aircraft under the open pilot clause versus as a named pilot. I’m thinking specifically about the possibility of subrogation, but I’d also be interested in hearing any other potential pitfalls.

A friend of mine talked to you today or yesterday about having me on his Bonanza and RV-4 insurance. I’m apprehensive to fly under the open pilot clause versus a named pilot.

 

[BobTurner]

How concerned should a pilot be when operating an aircraft under the open pilot clause versus as a named pilot. I’m thinking specifically about the possibility of subrogation, but I’d also be interested in hearing any other potential pitfalls.

A friend of mine talked to you today or yesterday about having me on his Bonanza and RV-4 insurance. I’m apprehensive to fly under the open pilot clause versus a named pilot.

I asked Leah this exact question some years ago. The answer was yes, if you are flying under the open pilot warrantee with no subrogation waiver, the insurance company could sue you to recover their loss. She thought it was very rare (she knew of no such cases) but legally it was a possibility. Another negative, in my policy, was that I was legally required to help the insurance company with their lawsuit by testifying.

 

[LRingeisen]

I asked Leah this exact question some years ago. The answer was yes, if you are flying under the open pilot warrantee with no subrogation waiver, the insurance company could sue you to recover their loss. She thought it was very rare (she knew of no such cases) but legally it was a possibility. Another negative, in my policy, was that I was legally required to help the insurance company with their lawsuit by testifying.

Although it's true the insurance company can subrogate back to a pilot flying under the Open, subrogation is about making sure the responsible party pays for the damages. This way the insurance company can recover the costs they've paid. Sometimes, the insurance company may need help from the policy owner to prove their case and establish who is at fault. This might include testifying in a lawsuit to support their claim for reimbursement. However, the main goal of subrogation is not to limit the insurance company's right to get their money back. Of course, all claims are handled on a case-by-case basis.

 

[RWoodard]

Although it's true the insurance company can subrogate back to a pilot flying under the Open, subrogation is about making sure the responsible party pays for the damages. This way the insurance company can recover the costs they've paid. Sometimes, the insurance company may need help from the policy owner to prove their case and establish who is at fault. This might include testifying in a lawsuit to support their claim for reimbursement. However, the main goal of subrogation is not to limit the insurance company's right to get their money back. Of course, all claims are handled on a case-by-case basis.

The responsible party pays unless he has insurance. That’s the whole point of insurance. Short of willful acts, insurance pays if we do something dumb and crash an airplane. The open pilot warranty gives the illusion of insurance to the pilot who relies on it thinking he’s insured to fly his buddy’s plane.

People need to be aware of this smoke and mirrors provision. I asked the original question mostly for rhetorical purposes because I’ve always cautioned pilots from relying on the open pilot clause because of the subrogation clause. Like so many other boilerplate provisions, I believe Bob when he says it’s hardly ever used, but if that’s the case, then remove it. I won’t fly any airplane I can’t afford to write a check for based on reliance upon an open pilot warranty.