Recreation in the wild and scenic beauty of the Last Frontier is a way of life in Alaska. Many Alaskans own and operate private aircraft and watercraft so they can enjoy these recreational opportunities. But what is the potential risk to the owners and operators of the aircraft and watercraft when they take friends and neighbors hunting, fishing, camping, or sightseeing?
Alaska law recognizes that owners and operators of aircraft and watercraft want to take friends, family, and neighbors on recreational trips, but don’t want to be liable for potential accidents. Consequently, Alaska law has some unique provisions that can provide liability protection against claims of passengers who suffer death or injury while riding in an aircraft or watercraft. Let’s look at how this works in several scenarios.
No Liability Insurance for the Owner/Operator
Let’s assume that the owner/operator elects not to have any liability insurance on the plane or boat. The owner/operator will be protected from liability to passengers under Alaska law if the passengers are informed before entering the craft that the owner and operator are uninsured. This seems like an easy way to be protected from liability, but owners and operators of aircraft and water-craft rarely, if ever, announce to the passengers, “Please be advised that I do not carry liability insurance on this aircraft or watercraft.” Moreover, when accidents occur, it is unlikely that injured passengers are going to remember being told that there was no liability insurance, or they may say that they misunderstood what the owner/operator was trying to communicate about insurance.
The alternative to giving a verbal disclaimer regarding insurance is to have a written release form where passengers acknowledge that they understand that the owner/operator of the aircraft or watercraft does not carry insurance. But again, how often will owners/operators of planes and boats ask their friends to sign an acknowledgement that there is no insurance?
Limited Liability Insurance for the Owner/Operator
Alaska law provides that an owner/operator of an aircraft or watercraft will only be liable to passengers to the extent of the insurance that they have purchased. In other words, assume that the owner/operator of a boat purchases insurance that covers passengers up to a maximum of $25,000 per passenger. If there is an accident where passengers are injured or killed, the maximum recovery available is $25,000. The boat owner/operator is not personally liable for damages in excess of $25,000.
This is a very powerful law because it allows the owner/operator of an aircraft or water-craft to choose how much (or how little) liability insurance that they want to buy, and all passengers are thereby limited to what they can recover in damages and the owner/operator is protected from further liability. In addition, by purchasing minimal liability insurance the owner/operator does not have to tell the passengers that there is limited insurance or otherwise have them sign any written disclosures regarding limited insurance.
Limited Liability for the Owner and no Insurance for the Operator
In the prior examples the owner and operator were the same person. But sometimes, the owner allows someone else to operate the craft (usually a boat, which does not require any special operation permits).
Assume that the owner has limited liability insurance but turns over controls of the vessel to someone else for part of the voyage. Assume that the operator (who is not insured) puts the boat on the rocks and the vessel sinks with injury and loss of life to passengers. In this scenario, the vessel owner is personally protected from liability above the insurance limits, but the operator—who was not insured—could be liable to the passengers.
In order for owners and operators to take advantage of these protections, there are three conditions that must be met:
The actions of the owner or operator cannot be considered gross negligence, reckless misconduct, or intentional misconduct;
The aircraft or watercraft is not being used as a common carrier or for commercial purposes; and
The aircraft or watercraft was not being demonstrated to a prospective buyer.
In other words, accidents where alcohol or extreme behavior are involved, where passengers are paying to be aboard the craft, or where the trip is a demonstration for a potential buyer may not be protected.
For most recreational aircraft and watercraft owners in Alaska, it would seem that purchasing even a small amount of liability insurance would be a prudent choice. This option provides unlimited protection from potential liability to friends, family, and neighbors who are along for a weekend trip.