Home' Heliweb Magazine : Heliweb Magazine November 2014 Contents 16 heliweb.com
for the small operator this is not guaranteed, even with a long
history of no claims and a very favorable experience modification.
The bottom line is that many deserving aviation operators find
themselves relegated to the assigned risk or state mandated pools
with its associated higher costs along with the operator with a
poor accident history or particularly hazardous business such as
crop dusting, logging, or lifting.
The higher costs combined with the low profile of small aviation
operations could offer an employer a very seductive temptation to
avoid purchasing worker’s compensation insurance. Some operators
have pointed to the liability provisions in their aircraft aviation
insurance policy as an alternative remedy. This could be described
as a juicy rationalization with a tenuous guarantee of protection.
The liability provisions of an aircraft policy are intended to protect
and defend the aircraft owner, operator, and its employees
against third party claims, including claims by passengers. While
a passenger can be defined as “anyone who enters the aircraft
to ride in or operate it,” there is usually language that expressly
excludes those who are providing professional pilot services. In
addition, there are usually specific exclusions which attempt to
eliminate or drastically reduce the insurance company’s exposure
to claims under a worker’s compensation, unemployment
compensation, disability benefit, or similar law. The intent is to
exclude “employees” (who should have other remedies) from
making third party liability claims against the liability provision of
the policy. Thus, the classification of an “independent contractor”
becomes important. When there is a disagreement, the process
of determining the answer is usually a court of law.
While a small aviation operation may not be required to purchase
worker’s compensation insurance, it is important to note that this
does not exclude the employer from the liability for an injured
employee. Forgoing worker’s compensation insurance exposes the
employer to a lawsuit and a potential settlement far beyond the
worker’s compensation limits and the premiums he would have paid.
The solution isn’t difficult. First, a true independent contractor
should be able and required to provide a certificate of insurance
as proof carrying worker’s compensation insurance. Otherwise, a
full service aviation insurance broker will have access to all of the
aviation worker’s compensation markets as well as the assigned
risk pool. They can help you put together a program that is easy
to administer, track, and pay. Since worker’s compensation is, in
the end, paid on the actual payroll, providing it for a contract pilot
may be easier and less expensive than it may appear and certainly
better than the alternative.
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between a voluntary company and the assigned risk pool to be 15
to 20 per cent or more.
This disparity has prompted many aviation operators to look for
ways to avoid the additional cost of being in the assigned risk pool.
Large companies that generate large insurance premiums for the
aviation insurance companies don’t have a problem with access
to the voluntary markets. Likewise, safety minded companies with
formal safety programs designed by organizations such as NATA and
the NBAA can find their way into the “preferred” status. However,
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