loading Loading please wait....
Login

If you are a registered, please log in. If not, please click here to register.

Election Coverage

Offering politicians the use of your aircraft presents owners with liability exposure- warns Stuart Hope. Carefully examine your insurance coverage if you plan to use your airplane to assist politicians in the lead-up to the coming elections.

Stuart Hope   |   1st October 2012
print
Back to articles
Stuart Hope Stuart Hope

Stuart Hope is a co-owner of Hope Aviation Insurance. His career as an aviation insurance broker...
Read More

Election Coverage
Liability and the Carriage of Elected Officials.
Offering politicians the use of your aircraft presents owners with liability exposure- warns Stuart Hope. Carefully examine your insurance coverage if you plan to use your airplane to assist politicians in the lead-up to the coming elections.

In October 2002- Senator Paul Wellstone of Minnesota- along with his wife- daughter- three staff members and the two pilots died in a small airplane crash. Wellstone was in a tough re-election battle and was traversing the state making campaign appearances. Estates for the late Sen. Wellstone and the five other passengers reached a $25 million dollar settlement— apparently the policy limit—with the charter company that operated the flight.

Subsequent legal action on behalf of the co-pilot and possible lawsuits against the State of Minnesota- operator of the navigational aid- followed. As we approach November 6th- campaign managers are facing the challenge of having their candidates appear in two places at the same time. Although Business Aviation can’t quite make that happen- it comes extremely close. Many aircraft owners choose to give their favorite candidate a “donation” by allowing them to use their private aircraft in support of the politician’s campaign.

While there are many governmental rules and regulations from the FAA and IRS regarding the use of private aircraft and the aircraft owner’s right to provide air transportation to elected officials and candidates1- this article will concentrate on the insurance and risk management ramifications of doing so.

RISK MANAGEMENT
There are two primary areas of concern for owners. First and foremost- consider the high profile nature of the passenger(s) being carried. If an accident should occur while you are providing a candidate and his family or staff with transportation- it will make national headlines. As the aircraft owner- you and/or your company will be squarely in the spotlight of the media- the FAA- the Federal Election Commission- and the legal community. You will be fighting many fires at once.

Hopefully you have implemented a robust Emergency Response Plan as an initial counter measure2. The potential liability exposure for injury to a high profile or high-net-worth individual can be catastrophic. If your insurance house is in order and you have chosen an appropriate liability coverage limit- you will be protected. But as with any insurance claim many costs are not recoverable - primarily the valuable time you will spend having to deal with court proceeding- depositions- PR damage to the company image- etc.

Therefore the first decision you have to make deals with risk management. If the probability and consequences of loss are high- risk avoidance is typically your best strategy. That is- don’t engage in the activity that is creating the risk. If the probability of loss is low but the consequence of that loss is high- risk transfer [insurance] is typically your best choice. Aviation falls into the latter category. So the first choice you have to make is whether the liability exposure is worth the benefit of providing access to your aircraft. If the answer is yes- then you need to make sure your insurance policy covers exactly what you are doing.

INSURANCE POLICIES
Thus your next consideration deals with insurance. Are you carrying an adequate limit of liability protection? In the above Wellstone accident- as stated- it is believed $25m was the policy liability limit of the charter operator. Imagine if the passenger had been one of our wealthier Federal or State candidates. Since you really don’t know how much liability protection you need until after a loss- you are best served buying higher limits- particularly in the current soft aviation insurance market where the premium difference between $100m- $200m- or $300m liability limits is very reasonable.

Next- does your policy’s usage clause allow you to be reimbursed for flights in your aircraft at the amount prescribed by the Federal Election Commission? Does that reimbursement create an issue with the FAA with regards to Commercial vs. Non-Commercial flights? Violating the usage clause is a quick way to void your insurance coverage.

Therefore- it is critical to communicate with your aviation insurance broker the precise terms of reimbursement for these flights and secure a response in writing that they are approved under your policy. Do not skip this step!

In closing- sometimes it seems true that “No good deed goes unpunished.” If you decide to donate your aircraft to a political candidate- make certain your insurance program is in order so this phrase doesn’t find a way to be true.

Do you have any questions or opinions on the above topic? Get them answered/published in World Aircraft Sales Magazine. Email feedback to: Jack@avbuyer.com

FOOTNOTES:
1 – IRS implications of carriage of elected officials aboard your private jet was covered in these pages in the February and March 2012 editions. Find them online at:

http://e-ditionsbyfry.com/Olive/ODE/WAC/Default.aspx?href=WAC/2012/02/01&pageno=60

and

http://editionsbyfry.com/Olive/ODE/WAC/Default.aspx?href=WAC/2012/03/01&pageno=64

2 – Formulation of Emergency Response Plans was discussed in more depth within these pages in the August 2011 edition. Find it online at:

http://editionsbyfry.com/Olive/ODE/WAC/Default.aspx?href=WAC/2011/08/01&pageno=68


Related Articles

linkedin Print

Other Articles