The instructor in the skid-equipped helicopter reported that during hover practice he transferred the flight controls to the student while the helicopter was hovering about 3-feet AGL, instead of a normal 5-foot AGL hover. After a short time, the hover became unstable and he took the flight controls. However, the instructor was not able to regain control of the helicopter. The left skid contacted the ground and the helicopter rolled onto its side.

The helicopter sustained substantial damage to the tailboom and vertical stabilizer.

The pilot reported that there were no mechanical malfunctions or failures with the helicopter that would have precluded normal operation.