Read the Policy
By Richard L. Collins
July 2008
 There is nothing more boring than reading an insurance policy. There can be bear traps in that small print, though, and it behooves us to either read the policy or get someone knowledgeable to do so. Any insurance broker worth his salt should know the policies that he issues and be willing to give you a summary of the things that you might do to endanger the coverage.
This question was raised in relation to a Cessna 525 (CitationJet) crash near Augusta, Maine, in February, and this discussion is based on both the NTSB preliminary report on that accident and an article by Betty Adams, a staff writer for the Morning Sentinel, a local newspaper. There is a possible insurance lesson here along with a lot of others.
Let's get to the insurance first. According to the local paper, after the accident was cleaned up the local fire chief sought reimbursement for emergency response and cleanup costs. The bill came to $51,000. An adjuster said that the insurer couldn't confirm two requirements that would ensure coverage and thus enable payment. They couldn't confirm that the pilot had a current medical certificate and had received the required recurrent training. Clearly, the medical is an FAA requirement. The recurrent training in question might have been a stipulation in the insurance policy.
According to FAA records, the pilot last got a second-class medical in December 2004. Lacking another, that means she was without a medical after December 31, 2006. The accident occurred on February 1, 2008. If the records are correct that means the airplane insurance policy was renewed when the pilot didn't have a current medical. If a pilot makes an incorrect statement on an insurance application it would void the coverage whether the statement was in relation to a medical, a certificate or a level of experience.
Certainly the FAA will play "gotcha" if they find you flying without a current medical. A friend once landed with the landing gear retracted and as the FAA investigated they found that his medical had expired a week before. My friend's contention was that the lack of a medical had nothing to do with him landing gear up. You can imagine the FAA's response to that.
Virtually all insurance companies require recurrent training on anything other than the most basic airplanes. This is specified in the policy and to not do the training as specified would breach the contract.
The medical is less clear because where some policies will deny coverage if you aren't in conformity with the FARs when you crash, others will pay. Apparently the company in question will deny. That's an important thing to know about your insurance policy, whether it is for an owned or a non-owned aircraft.
I reviewed my policy with USAIG for non-owned aircraft and there's nothing there that says they would deny coverage if I didn't renew my medical on time. I did run across an exclusion that is probably in a lot of policies but that pilots don't know about. The coverage is not valid if an airplane is operated on a waiver or a ferry permit even if the proper documentation has been issued by the FAA.
One other thing on the medical. I get a blizzard of postcards from Aviation Medical Examiners telling of the upcoming expiration of my medical and suggesting I call for an appointment. It would be hard to miss that. However, this pilot's address was blocked in the FAA Registry and was thus not available to any mailing lists.
It'll be interesting to follow this and learn whether or not the insurance pays anything on the loss.
The reported facts about the accident are worth a review.
Because there was winter weather, including freezing rain, the airplane had been hangared at the pilot's request. However, an hour or so before it was time for departure the airplane had to be moved out onto the ramp. A regional airline had priority on the hangar and had reportedly grounded all its flights over an hour before the accident, and one of its airplanes needed to be in out of the weather. The pilot was aware of this possibility.
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