The Two Biggest Risks to Your Insurance Policy: Pilots and Training

Over the last several years, this topic has been as close to a recurring theme in Squawk Box as any. This is because of its dire importance when it comes to avoiding coverage issues following an accident. I can’t tell you how many times we’ve caught subtle references to additional exposures we weren’t initially made aware of that could jeopardize coverage. Among the most common sources of revealing these exposures is social media. A company’s Facebook page or LinkedIn page will be the first to tell when a new service is available or a new pilot is hired. Often, it’s the insurance carrier that’s one of the last to know, which creates a gaping hole in the coverage.

Just the other day I noticed the headline “Now offering charter flights!” for a tour company on the East Coast. Up to that point, the company was only covered for tours, making any coverage for charter flights null and void. Another example, which is far more common, is when new pilots are hired. Pilots come and go far more often than operators add/drop services, which means it’s much easier for new hires to get lost in the fray of day-to-day business, HR, and FAA dealings. In some cases, by the time pilots are passed along to us for review, they’ve already been flying. This instantly creates a massive exposure, because if any pilot isn’t approved for whatever reason, every flight (and by extension, every passenger) is without insurance.

Secondarily, but not mutually exclusive, is the pilot’s training. Even if a pilot came from another operator and was flying the same type of aircraft, approval is not guaranteed on the new company’s policy. Training requirements vary greatly from one policy to the next. Special training exceptions are made daily that can even be as specific as having named pilots train differently than those flying under the OPW.

Regardless of your training/hiring requirements, it is imperative that each and every pilot be approved by the insurance carrier. This involves a review of their merit and training. A shortcoming in either category may void coverage, and if an unapproved pilot has a loss, it may put an operator out of business. We’ve seen it happen, so this isn’t just a hypothetical. With the rash of aviation accidents in the past year, underwriters are only going to get more rigid and less accommodating, so never assume pilot acceptance until you have it in writing from your agent!