Originally Posted by
rickair7777
Yes, it will be very hard to get a suitable umbrella policy for flight instructing. Each passenger is worth at least $2M, so you'd at least $8M assuming students only operate C-172 class planes. Plus whatever damage happens on the ground.
Since there is a very tiny market for such policies, there is no solid acturial data, so underwriters will charge very high premiums or more likely decline to cover.
Underwriters are precise business people, not vegas high-rollers.
In theory you can't be totally insulated from a wrongful death claim. Reality is quite different. I'm in claims for an insurance company and see those crusty underwriters every day, although "business people" is a stretch.
If a pilot crashes a 172, and the estate sues the flying club and CFI, it becomes all about the bottom line. The plaintiff has to be able to prove the CFI was negligent in his/her training, which caused the crash. That's hard to do, and it cost money. The insurance company will consider putting money on the table to get out of the suit, and that becomes the focus of the negotiation, because if it goes to trial, the plaintiff could always lose. I've seen ironclad cases fall apart in court, it's very risky for both sides. So the insurance companies for the Flying Club and the CFI(hell, and Lycoming and Cessna if they are sued, which they are...and that's why their reps are at crash sites before the NTSB) combine forces and settle the claim. They all make an offer sufficient enough for the plaintiff to accept, given fact that it costs money to continue litigating and the possibly of losing in court. 99% of the time the CFI's personal assets aren't touched.
Sure it's always plausible, but if you live your life afraid of the worst case scenarios, you'd just lay in bed all day. And believe me, I see worst case scenarios in aviation for a living, but I still fly...well...now and then.