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Business Liability?

SteelMike

SteelMike

Well Known Member
Hey guys,

I think I remember reading a thread about this a while back, but I can't find it and I thought I would ask the question again - maybe someone can point me in the direction of that thread, if it exists.

Anyway, the question is this: I'm an employee. I don't own the business. I don't run the business. I have this airplane, and I'd like to fly it for business purposes. The president of our company is okay with this idea, as long as I can indemnify the company from liability.

How do I do this? Is it possible (legally)?

So far, the insurance company is willing to list the company as a named insured, but I can't figure out if I can indemnify the company as requested.

Any aviation lawyers out there y'all can point me to?

Thanks, as usual - Mike
 
SteelMike said:
So far, the insurance company is willing to list the company as a named insured, but I can't figure out if I can indemnify the company as requested.

Thanks, as usual - Mike
Click to expand...

In very loose terms, the typical liability insurance policy places two duties upon the carrier: 1) the duty to defend the insured against claims; 2) the duty to indemnify the insured against losses, up to the limits of the policy. Obviously, the policy will have conditions. For example, the premiums must be paid current. But, in short, by securing coverage, you are arranging for the company's indemnification.

I hope that is helpful.
 
Monte:
I'm not an insurance guy, but even if the business I work for is "covered" under my policy, the limits of that coverage are specified on my policy and may be substantially less than the what the company may consider adequate. In my prior job, the company owned a Citation which was manned by a full time crew and carried hefty coverage. They also leased a CT210 for me, which was also covered under an individual policy, as well as the company's liability umbrella. I was also required to undergo recurrent training which was overseen and documented by the company's chief pilot. Regarding general liability, the usual MO is to go after everyone even remotely attached, but focus on the deep pockets.
Terry, CFI
RV9A N323TP
 
Definitions

Worth a definition. For you to indemnify your employer = for you to take responsibility and make the company whole for any damages that you cause due to your negligence in the course of operating your aircraft on their behalf.

If you add your employer as an "additional insured" to your aircraft policy, your insurer will pay to defend your employer (as well as you) from any suits and pay on their behalf (and yours) should there be a judgment. As mentioned above, the insurance payout (excluding legal defense costs) is limited to your policy limit - probably $100,000 for each passenger and $1,000,000 overall.

Depends on the size of your employer, but this limit is really only enough to partially indemnify your employer if someone is hurt or killed, or property is damaged because of your negligence.

I would provide the employer with a certificate of insurance showing them as additional insured - and see if that makes them happy. I would not sign any agreement saying that you agree to indemnify them without limitation. If you do, and your insurance limits are exhausted, you could be on the hook for a potentially huge uncovered loss.
 
If it's an Experimental aircraft....

...the fact that you are probably violating the Operating Limitations may come into play...

b. The following operating limitations shall be prescribed to experimental amateur-built aircraft:

(1) No person may operate this aircraft for other than the purpose of meeting the requirements of ? 91.319(b) during phase I flight testing, and for recreation and education after meeting these requirements as stated in the program letter (required by ? 21.193) for this aircraft.

The comparison to driving your own car on company business is not really applicable, your car registration is still valid for both personal and business uses.
 
For the FARs, not insurance policy

Business use may violate the ops limitations - but it won't violate the "Purpose of Use" on an insurance policy, which is - (private) pleasure and business.

Does operating in turbulance or bad weather violate the operating limitations for recreation or education if the flight isn't fun and you don't learn anything? :rolleyes:
 
JDRhodes said:
Does operating in turbulance or bad weather violate the operating limitations for recreation or education if the flight isn't fun and you don't learn anything? :rolleyes:
Click to expand...

ahhhh - but you DID learn - you learned not to fly on those days unless you really NEED to.
 
Hahaha - good point, guys. I didn't want to admit it here, but I did make that airplane purchase (spam can) that I inquired about a number of months ago (bought a grumman Tiger). So, although the RV progress has slowed considerably, I'm flying!

Anyway, given that the business use is not outside the operating limitations and that I've got my company as a named insured on my policy, is there anything else I can do? And you're right, a $1M liability policy is nothing, and I wouldn't want to be on the hook for expenses over and above that amount...

Now, where's some wood to knock on?
 
More liability insurance

If it's a spam can, get higher liability limits. If you have some experience and appropriate ratings (IFR, etc.), you should be able to get at least 2 Mil limits. Excess liability coverage is also available up to maybe 4 or 5 Mil.

It ain't cheap. But it is available.
 
<<...the fact that you are probably violating the Operating Limitations may come into play...(1) No person may operate this aircraft for other than the purpose of meeting the requirements of ? 91.319(b) during phase I flight testing, and for recreation and education after meeting these requirements as stated in the program letter (required by ? 21.193) for this aircraft.[/I]>>

Maybe, maybe not. I'd argue the flight in your AB-experimental is for recreation, and merely incidental to the business you'll conduct on the ground.

Anyone aware of a test case specific to this OpLim issue? Plenty of examples relate to FARs. You can fly your certified airplane on a business trip, even fly a client, but you don't need a 2nd class medical or Commercial ticket to do it. The usual FAA test seems to be "are you being paid to fly, or to transport people or things?" or put another way "does the flight itself generate compensation?" If the answer is no, the flight is incidental.

<<I would not sign any agreement saying that you agree to indemnify them without limitation. If you do, and your insurance limits are exhausted, you could be on the hook for a potentially huge uncovered loss.>>

Excellent point Mr. Rhodes.
 
Demonstration too!

az_gila said:
...the fact that you are probably violating the Operating Limitations may come into play...

b. The following operating limitations shall be prescribed to experimental amateur-built aircraft:

(1) No person may operate this aircraft for other than the purpose of meeting the requirements of ? 91.319(b) during phase I flight testing, and for recreation and education after meeting these requirements as stated in the program letter (required by ? 21.193) for this aircraft.

The comparison to driving your own car on company business is not really applicable, your car registration is still valid for both personal and business uses.
Click to expand...

How about Demonstration, do I have the legal right to demonstrate the cool and unusual fasteners that I have upgraded on my RV6.

I would like to show my customers in person what I have done and whats available, once I have aeronauticaly transported myself to the interested parties location.

Can I deliver an order in my RV6 as long as I do not charge for the service, and the parts are already paid for?
 
Is there a problem here?

Maybe it's just me but ,... if this is true and you feel strongly about it,...

<< And you're right, a $1M liability policy is nothing, and I wouldn't want to be on the hook for expenses over and above that amount... >>

<<I would not sign any agreement saying that you agree to indemnify them without limitation. If you do, and your insurance limits are exhausted, you could be on the hook for a potentially huge uncovered loss.>>

,.... just for discussions sake,.... then why would you want to put your company in that position and what a great boss to accept that liability just so we could fly our personal planes on "business."

Maybe, doing something just because we can, isn't always the best thing to do. Just a suggestion that we all think hard about the liability we might be really exposing our company(s) to and be sure they understand it as well. The world has way too many hungry lawyers and a problem here would smell like meat on a charcoal fire.

On the other hand, if it's just us AND we never carrry a passenger, we cut the real liability by a ton,... fly on and prosper ;-)

Bill S
7a
 
Bill - I understand where you're coming from, but don't give up your liberties just because some lawyers might take advantage of the situation! Don't give in, man!
 
Let Freedom Ring

Amen....... don't let insurance salesmen scare you (that's their job). You stand a better chance of getting struck by lightning then hurting someone on the ground with your airplane. Yes, it happens and people do get struck by lightning, but we don't plan our lives around thunderstorms. Flying small piston powered airplanes is risky business for those in the plane... just don't carry passengers
 
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It does happen

Not trying to scare anyone...

But in the last year I personally have seen:
2 aircraft hit houses after departure, one with injuries to person on the ground.

2 aircraft taxi into other aircraft on the ground. One claim was $95,000 the other has $750,000 (that one hit and totaled or near totalled 4 other aircraft).

An aircraft struck and injured a ground marshaller at an airshow. $20,000 claim.

A taxiing airplane run over a parked RV-7, nearly totalling it. Right, Dana?

A helicopter flip a parked airplane, totalling it.

Manage your risk as you see fit, but there is liability exposure when flying airplanes - or, doing anything else.
 
It's the other guy's risk?

I guess I wasn't clear but it really isn't the person flying or our liability that I was getting around to. It was the liability we impose on our employer when we lightly insure our aircraft but fly it for business.

If something happens, the harmed party will go through your insurance like exlax through a goose and take the company for whatever they can get! If your employer thought that he was "indemnified" just because you were carrying a $1,000,000 limit policy, he would be greatly mistaken.

If you happened to be carrying another employee or customer and had some kind of accident, the FIRST bit of negligence would be to point at the employer "encouraging" flight in an "experimental" airplane. Any buck fifty PI attorney would have a field day and it could bankrumpt your employer.

Soooo, all I was really suggesting is that if the personal liability worries the person flying,.... you should be sure that your employer understands thier liability and what the reality is if an accident ever happens. Let's don't let them take a risk that we wouldn't personally.

Obvioulsy, SteelMikes boss didn't want to ante up for additional insurance because he wanted SM to indemnifiy him. The fact is there is no good way other than a LARGE insurance policy for you to indemnify your employer if you don't have the personal assets to cover the settlement.

I know it's not popular to worry about our employers but we shouldn't put them at risk unless they really understand "their" liability. We are talking about flying an Experimental aircraft on business. It's only fair to be sure they have the whole picture if they are letting us indulge ourselves a little on company time :) (Should be saving them some money as well so it does work both ways.

Just my .02

Bill S
 
Indemnity agreements

Indemnity agreements are somewhat difficult to make stick. If you really want to protect your employer, you will need two things 1) adequate insurance coverage and 2) an indemnity agreement protecting your employer against the consequences of his own negligence. There are lots of reasons for this, and the analysis is complex, but that's the end result.

I would say that a million dollars of coverage is not adequate to do what you say you want to do.

You want to see a lawyer about drafting the indemnity agreement. It's tricky, and you will want to consider the laws of the states where you fly. Texas, for instance, has specific rules about the language of indemnity agreements.
 
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