Legislature(2003 - 2004)
04/08/2003 01:34 PM Senate TRA
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ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
April 8, 2003
1:34 p.m.
MEMBERS PRESENT
Senator John Cowdery, Chair
Senator Thomas Wagoner, Vice Chair
Senator Gene Therriault
Senator Georgianna Lincoln
Senator Donny Olson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 140
"An Act relating to directional signs to places of public
assembly."
SCHEDULED BUT NOT HEARD
SENATE BILL NO. 98
"An Act relating to civil liability for guest passengers on an
aircraft or watercraft; and providing for an effective date."
MOVED CSSB 98(TRA) OUT OF COMMITTEE
PREVIOUS ACTION
SB 98 - No previous action to record.
WITNESS REGISTER
Senator Con Bunde
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 98
Ms. Marsha Davis
ERA Aviation
POSITION STATEMENT: Testified on SB 98
Mr. Tom George
Aircraft Owners & Pilots Association
PO Box 83750
Fairbanks, AK 99708
POSITION STATEMENT: Supports SB 98
Mr. Felix McGuire
President
Alaska Airmen's' Association
PO Box 241185
Anchorage, AK
POSITION STATEMENT: Supports SB 98
Mr. John George
Juneau, AK
POSITION STATEMENT: Testified on SB 98
ACTION NARRATIVE
TAPE 03-13, SIDE A
CHAIR JOHN COWDERY called the Senate Transportation Standing
Committee meeting to order at 1:34 p.m. Senators Wagoner, Olson
and Chair Cowdery were present. Senators Therriault and Lincoln
arrived momentarily. He announced that the sponsor of SB 140
requested that it not be heard that day and that SB 98 was
before the committee.
SB 98-LIABILITY: PLANE AND BOAT PASSENGERS
SENATOR CON BUNDE, sponsor of SB 98, told members the nickname
of this bill is the "Good Neighbor Bill." Right now, boat and
airplane owners cannot afford to be a good neighbor and offer to
take a friend for a boat or plane ride because, if an
unforeseeable accident occurs that does not involve negligence
or illegal activities, the "good neighbor" could lose his or her
estate. Some people have suggested that a guest could sign a
waiver accepting some of the liability but, it is a proven legal
fact that another person's interest cannot be suborned. A guest
could sign away his right to sue but not his family's or
employer's right to sue. The purpose of SB 98 is to clarify that
the people who accept an opportunity to travel as a passenger on
a non-commercial outing accept some of the inherent risks.
SENATOR BUNDE noted that common law recognizes that certain
activities involve inherent risks and that participants should
take some of the responsibility for injuries sustained while
participating in those activities. He stressed that he is
referring to an inherent risk that does not involve negligence,
intentional misconduct or illegal activities. SB 98 will not
absolve owners of their responsibility to maintain their
equipment in a safe and prudent manner. SB 98 only applies to
privately owned planes and boats, not to commercial activities.
In his opinion, SB 98 will discourage frivolous, expensive
lawsuits and help contain rising insurance costs.
SENATOR BUNDE pointed out that SB 98 does provide that if an
owner has insurance, the owner cannot be sued beyond the limits
of that policy. If the owner does not obtain insurance, the
owner must notify the passengers of that lack of insurance and
that the passengers must assume some of the risk. He informed
members that a proposed committee substitute (CS) was in
members' packets. It contains an additional section that applies
to the Alaska Boating Safety Act, which is necessary to clarify
that SB 98 only applies to non-commercial aircraft and boats. He
offered to answer questions.
CHAIR COWDERY then pointed out that this same issue was
contemplated by the Thirteenth Legislature to address the
lawsuit problem. He asked what would happen if a pilot in a
privately owned airplane landed to assist someone in distress
and was not able to inform that person of the liability issue.
SENATOR BUNDE said if the pilot has insurance, nothing is
required. Unfortunately, the pilot would have to inform the
passenger that he or she would have to assume some of the risk.
CHAIR COWDERY asked if Senator Bunde expects owners to use a
standard form to inform passengers.
SENATOR BUNDE said he was unsure of that then stated:
As an individual, you might want to check with what
you're comfortable with. I don't think the state
necessarily should come up with a standard form. And,
when you're talking about written, as I read - as this
is - the [legislation] is proposed, verbal
notification is adequate. If I might ask - use - an
example that Senator Olson pointed out to me, he's out
doing something in rural Alaska, somebody needs to get
to town or the doctor, and he, as a non-commercial
operator, could give them a ride to town. Without this
legislation in effect, however, he puts his equipment
and himself in great jeopardy even though he's just
trying to be a Good Samaritan.
CHAIR COWDERY said he believes SB 98 is very much needed. He
told members that he intended to put defibrillator machines on
every floor of the Capitol Building until he found out there
could be a liability issue involved with their use.
SENATOR THERRIAULT referred to language on page 2, line 16-26,
and asked if a person with insurance is only liable up to the
policy limit.
SENATOR BUNDE said that is correct.
SENATOR THERRIAULT asked why a boat owner wouldn't just buy the
cheapest policy with the lowest limits. He expressed concern
that section encourages people to carry a minimum amount of
insurance.
SENATOR BUNDE said that is what the situation is now, if one can
even get insurance. It is very difficult to get and very
expensive. He has learned from his past experience in commercial
aviation that most people feel they are underinsured if they do
not have at least $1 million of coverage for each seat. The
other option is to have no insurance at all.
SENATOR LINCOLN referred to language on page 2, line 10, and
asked the difference between the terms "gross negligence" and
"negligence."
SENATOR BUNDE explained that gross negligence, reckless or
intentional misconduct are synonymous.
MS. KAREN McCARTHY, staff to Senator Bunde, added the bill
drafter said that the terms "gross negligence, recklessness, or
intentional misconduct" are commonly used in civil liability
statutes in Alaska law and are commonly recognized by the
courts.
SENATOR LINCOLN asked if there is any difference between
negligence and gross negligence.
MS. MARSHA DAVIS, General Counsel for ERA Aviation, explained
that negligence is a much lower standard. Innocent mistakes or
simple negligence will be immune from liability under SB 98.
Gross negligence is the next step up and will be excluded from
immunity. The next levels are reckless or outrageous behavior
and intentional misconduct. She said that Ms. McCarthy is
correct in that gross negligence or reckless or intentional
misconduct is the general standard [applied when considering]
the liability of people who render assistance. She noted the
same phrase is used in AS 09.65.090, which is the Good Samaritan
law.
1:47 p.m.
SENATOR LINCOLN asked Senator Bunde what the Alaska Boating
Association meant by the sentence in its letter of support that
reads:
Alaskans are involved in a high rate of boating
accidents with personal injury and death to both
operators and passengers - one of the results is high
insurance rates.
She said that insurance rates and accidents do not correlate.
SENATOR BUNDE agreed that insurance coverage is not causing
accidents, but the more claims filed, the higher the rates.
Accordingly, the more accidents, the more claims filed.
SENATOR LINCOLN said if that statement is, in fact, true, the
Legislature should look at the cause of the accidents.
SENATOR BUNDE recalled the Legislature worked on boating safety
legislation last year because of the high number of accidents.
Unfortunately, a lot of accidents involve alcohol. He pointed
out a drunk person who has a boat accident would be charged with
gross negligence and would not be absolved from liability.
CHAIR COWDERY commented that he is a boat owner and gives all of
his passengers a card when they come on board that lists his
safety rules and procedures.
SENATOR OLSON asked Senator Bunde to repeat what effect this
bill will have on someone with no insurance.
SENATOR BUNDE explained that a person without insurance must
notify the potential passenger of that fact and that the
passenger is assuming some of the risks of participating in the
activity and would not be able to recover should there be an
accident.
SENATOR OLSON asked if there is any civil recourse for the
passenger.
SENATOR BUNDE said there would be if the boat or plane owner
were grossly negligent, reckless or involved in intentional
misconduct.
SENATOR OLSON asked:
What happens if you have a problem and you - there's a
personal injury with somebody outside the craft -
coming in for a landing you overshoot and hit somebody
on the side of the road or the side of the airport or
if you're on a boat? I'm mainly looking at boats
because up where I come from I can almost guarantee
you that somebody out in Elim does not have any boat
insurance on his boat.
SENATOR BUNDE maintained that SB 98 covers only passengers.
Regarding Senator Therriault's earlier question, if a person has
some liability insurance, that insurance would not only cover
passengers but damage done to others. Therefore, the incentive
to continue to have insurance coverage for those who can afford
to remains because SB 98 does not cover all instances.
SENATOR LINCOLN asked SB 98 places a limit on what the passenger
can collect if a private plane is landing and injures a
passenger because of wind shear.
SENATOR BUNDE said the passenger would be limited to the amount
of insurance coverage or, if the owner has no coverage, the
passenger could not collect anything. However, the pilot is
liable for anyone external to the aircraft or the boat that was
injured. He said the likelihood of injury to the passenger is
much higher.
CHAIR COWDERY called for public testimony.
MR. TOM GEORGE, representing the 4,000 Alaska members of the
Aircraft Owners and Pilots Association, stated support for SB
98. He said it goes a long way toward clarifying and defining
the responsibilities of pilots and owners of aircraft and their
guests. SB 98 should increase the number of people who insure
their aircraft because one of the insurance companies he spoke
with estimated that as high as 80 to 90 percent of non-
commercial operators in Alaska do not carry any insurance. Part
of their rationale is this [guest liability issue] is a magnet
to attract a lawsuit that will go way beyond the limits of the
insurance. He said this is a well-intended effort to find a
reasonable balance to that problem. He urged members to support
the legislation.
MR. FELIX McGUIRE, President of the Alaska Airmen's Association,
stated wholehearted support for SB 98. He offered a minor
clarification and asked that the phrase "minor contribution from
the passenger" be changed to "minor compensation from the
passenger" so that it is the same as FAA language.
MR. GEORGE noted the terminology was already corrected in the
CS.
CHAIR COWDERY noted the committee was working on a work draft
dated 4/02/03 and labeled version D.
MR. McGUIRE urged members to pass the bill.
SENATOR BUNDE pointed out the CS is intended to mirror what the
FAA allows regarding the reimbursement paid by a passenger.
MS. DAVIS stated support for the CS because ERA Aviation is
clearly a common carrier in the aircraft aviation industry. ERA
owns a boat located in Seward that it uses for internal team
building for employees and for occasional business
entertainment. ERA does not operate the boat in common carriage.
The original version of the bill purported to include such
boats, as though ERA was operating the boat in common carriage.
The CS clarifies that.
MS. DAVIS also suggested, in response to concerns expressed that
SB 98 might encourage people to buy less insurance,
incorporating the policy limits for automobiles in AS
28.20.440(b)(2). Those are very minimal and amount to $50,000
for an individual, $100,000 for more than one person and $25,000
for property damage. Doing so would not require recreational
users to have that insurance but, if they do not, that is the
threshold at which they would advise the passenger they have
limits below and need to assume the risk. She said the concern
is that if a person has a limited amount of insurance, for
example $5,000 coverage, according to the way subsection (a) and
(b) are written, the boat owner would not have to make any
disclosure to the passenger. She said if the Senate wants to
establish a reasonable benchmark for policy limits, it could use
the minimal motor vehicle liability coverage.
SENATOR BUNDE said he would rather leave that to the discretion
of the person who is purchasing the insurance because a minimum
tends to also become a maximum. He then said regarding Ms.
Davis's previous statement about common carriers, a proposed
amendment to address that concern was distributed to members. He
said he has no objection to that amendment.
SENATOR WAGONER moved to adopt the amendment, which reads:
TO: CSSB 98( ), Draft Version "D"
Page 2, line 12:
Delete "who is a common carrier"
Insert "if the aircraft or watercraft is being
operated as a common carrier"
CHAIR COWDERY noted without objection, the amendment was
adopted.
MR. JOHN GEORGE told members he was representing himself and was
there because Senator Bunde asked him to provide some background
on aviation insurance. He said aviation insurance is much
different than auto and homeowner's insurance. For example, a
plane owner buys hull coverage and liability coverage for
incidents that occur outside of the airplane and then buys seat
liability to cover passengers. A plane owner could have a six-
seat plane but buy seat liability coverage for only one
passenger. That coverage can be purchased at different limits
and is extremely expensive. Plane owners who opt not to purchase
that insurance often do not carry passengers. He pointed out
that many small boats, less than 16 feet, are automatically
covered under homeowner policies. Personal umbrella policies
also cover them. He said that a lot of aircraft insurance
policies have exclusions. For example, one requirement for
passenger liability coverage is that the plane land only on a
paved airstrip so a pilot could not land on a gravel spit to
fish with a passenger on board. SB 98 would allow plane owners a
little more freedom.
SENATOR OLSON asked if Alaskans could expect lower insurance
premiums if the bill is enacted.
MR. GEORGE said most people are not currently buying seat
liability so it would probably cost the same. This legislation
won't prevent accidents; it would protect one's uninsured family
assets more than anything.
SENATOR WAGONER moved to adopt CSSB 98(TRA) [version D as
amended].
CHAIR COWDERY announced without objection, the motion carried.
SENATOR WAGONER moved CSSB 98(TRA) from committee with the zero
fiscal note and individual recommendations. There being no
objection, the motion carried.
CHAIR COWDERY adjourned the meeting at 2:08 p.m.
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