(Rick Durden) wrote
(if you are getting less than $1 million smooth you may very well have
inadequate coverage as the "$100,000 sublimit" policies mean only
$100,000 is available per injured/deceased person, which is not
adequate for such a claim and puts your assets at risk)?

In an ideal world, everyone would be covered for millions for
everything. Ideal for attorneys, that is.

The best advice I ever got about liability insurance came from a
retired aviation attorney who had practiced in GA for 20 years. He
had just recently signed me off for my glider checkride, and was
suggesting that because of my prior experience as a skydiving
instructor, I needed to start working on my CFI-Glider. Since he was
a man of means and protection of personal assets was certainly an
issue for him, I asked him about liability insurance, specifically for
instruction. What developed was a fairly long and mostly one-sided
conversation on aviation liability insurance in general, the high
points of which I am going to relate here.

The first thing he told me was that he was telling me the dirty little
secret of the profession - something a practicing attorney was not
likely to tell me.

Here it is - all liability insurance does is make you a target. It is
VERY difficult to get an aviation attorney excited about taking a case
against an uninsured person unless that person has extensive assets -
and now we're talking about someone with enough assets that he is not
getting his risk management advice over the internet or via any other
informal method - he has people on retainer. Or, to put it another
way - if you need hull coverage, you really don't need liability
coverage. There is a reason why you can't buy hull coverage without
buying liability.

There are all sorts of reasons for this. Juries have a tendency to
make large awards (that are usually reduced later) against
corporations, but not so much against individuals. In most cases,
liability is tough to determine, so the suit is a long shot. And most
importantly, while an insurance company will usually settle a suit, an
individual will usually fight it out - and even if he loses, there's
usually little or nothing to collect for the plaintiff's lawyer
because the defendant's lawyer got it all. Of course the defendant's
lawyer could advise the defendant to settle - meaning give the money
to the plaintiff's lawyer. Yeah, that's likely.

It's also a little known fact that it's general insurance company
policy not to write a check to the plaintiff unless he accepts that
check as a complete settlement. If the plaintiff chooses not to
accept, the insurance company will defend the claim. Given the choice
between a possibly inadequate but sure thing settlement (of which the
plaintiff's lawyer will get a cut) and putting time and effort into a
case that may pay nothing, and will involve trying to get blood from a
stone, what do you suppose the plaintiff's lawyer will recommend?

So I asked this retired attorney what kind of aviation liability
insurance he carried. After all, he routinely flew and instructed in
aircraft he didn't own. The answer was none. I asked him what he
would do if he bought an aircraft, and he replied that he would get
the minimum he could get in order to have hull insurance, and
suggested I do the same. And so I have.

Michael