Insurance Considerations for Using Independent Contract Pilots

As flight departments seek greater flexibility and cost-efficiency, the use of independent contract pilots has become increasingly common. While this staffing model offers operational advantages, it also introduces important insurance implications that must be proactively managed to protect both the company and its aviation assets.

1. Pilot Qualification and Policy Compliance

Most aircraft insurance policies include strict requirements regarding pilot qualifications and approval. When hiring a contract pilot, it's critical to:

• Ensure the pilot meets or exceeds the insurer’s minimum standards.
• Require the pilot to provide a current and fully completed Pilot Experience Form and present this to your insurer for their sign-off prior to flight.
• Maintain documentation of the pilot’s credentials, training, and flight experience.

Failure to comply could result in coverage denial in the event of a claim.

2. Liability and Risk Transfer

Independent contract pilots are not employees, so they typically fall outside the scope of workers’ compensation and employer liability coverage. Employees covered by Workers' Compensation are barred from bringing a lawsuit against their employer for work-related injuries. Independent Contract (IC) pilots are not. To mitigate this risk:

• Require the IC pilot to carry their own workers' compensation insurance. Often, this is cost-prohibitive for the pilot unless they are working for an FBO. Therefore, if possible, add them as a part-time employee to your own work comp policy, giving you the protection of the Work Comp Bar.
• Consider adding the pilot as an additional insured on the liability coverage and waiving the right of subrogation concerning hull coverage on your policy for their pilot service on your behalf.

Final Thoughts

Using independent contract pilots can enhance operational agility, but it requires careful attention to insurance and risk management. Flight departments should treat pilot contracting as a strategic decision – one that demands coordination, documentation, and ongoing review to ensure safe and insurable operations. Reach out to your AssuredPartners Aerospace broker to help you steer the course on your particular situation.

Disclaimer:
The information contained herein is offered as insurance industry guidance and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer financial, tax, legal or client-specific insurance or risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis.