Aviation Insurance and Risk Management

In 1985 how many private suits were tried in state courts?

16.6 million

The Barber and Baldwin Agency remained in business until what year?

1948

When did the first combined aircraft hull and liability policies appear?

1950s

How many general aviation aircraft were delivered in 1994?

928

Which major aviation insurer's policies are issued through American Home Assurance Company, National Union Fire Insurance Company of Pittsburgh, The Insurance Company of the State of Pennsylvania, and the New Hampshire Insurance Company?

AIG Aviation, Inc

What is the more common name for guest voluntary settlement?

Admitted liability

What type of aviation includes those activities that involve the discharge of materials from aircraft in flight for food and fiber production and health control?

Aerial application

Who joined the aviation industry as successors to the original firm of Barber & Baldwin, Inc?

Aero Insurance Underwriters

Which of the following had 96 regular and 182 associate member companies at the beginning of 2005?

Aerospace Industries Association

What type of contract establishes that the values exchanged by the contracting parties are not necessarily equal?

Aleatory contract

What type of hull coverage is applicable to physical loss or damage while the aircraft is on the ground and not moving under its power or resulting momentum?

All risks-not in motion

What type of hull coverage is the broadest aircraft hull coverage?

All-risks ground and flight

What is the name of the only direct writing company?

Avemco Insurance Company

Which of the following delineates the responsibilities of the NTSB, other governmental agencies, and the airlines in the event of an aircraft accident resulting in major loss of life?

Aviation Disaster Family Assistance Act

Who formed the group approach to underwriting and the United States Aviation Underwriters, Inc?

Beebe and Chambers

In single limit legal liability, liability coverage provides one limit for which of the following?

Bodily injury excluding passengers Property damage

Which of the following are legal liability coverages available for aircraft liability insurance?

Bodily injury excluding passengers Property damage Passenger bodily injury

What takes place when one party to a contract refuses to fulfill his part of the bargain?

Breach of contract

What is the long-run relative frequency of a loss?

Chance of loss

Which category of use includes leasing aircraft to renter pilots and giving flight instruction to student pilots and others?

Commercial use

What are the damages that represent the combined total of monetary losses that can be inferred from the facts and circumstances of the case?

Compensatory damages

Which endorsement related to hull coverage limits the amount that will be paid for repairs to or replacement of certain important parts of the aircraft to specified percentages of the amount of insurance?

Component parts schedule

Mike has heard the word subrogation being thrown around the flight school lately. He wants to know what this means with respect to his policy. Where would he find out about subrogation?

Conditions

Which of the following are factors that can affect an aircraft's susceptibility to loss?

Configuration Construction Age

Which characteristic of the insurance contract contains legal importance because the applicant for insurance has no part in preparing the policy language and any ambiguities in the contract will be resolved more strongly against the insurance company?

Contract of adhesion

Most jurisdictions have adopted which of the following when breach of warranty issues are the basis for the law suit?

Contribute-to-loss standard

Which of the following makes up the first part of the insurance policy and includes the descriptive material relating to the risk?

Declaration

An oil gauge that is inadequate to warn of a dangerously low oil level is an example of what?

Design deficiency

Which of the following are channels through which insurance policies are distributed?

Direct writing system American Agency system

Mike's aircraft is being repaired by the FBO's maintenance facility. Upon completion, one of the employees of the maintenance facility is going to take the plane up for a test flight to ensure everything is working properly. Mike can check which part of his policy to determine if this test flight is covered? Select all that apply.

Endorsements Declaration

Which of the following is the prohibition against asserting a right because of inconsistent action or conduct?

Estoppel

Which of the following only offers aircraft liability coverages for the agricultural aircraft?

Excluding chemical drift (XC)

Which of the following are types of special damages?

Family services Funeral expenses Financial support Loss of inheritance

Which of the following defines the operation of aircraft to include those persons who authorize operation by others?

Federal Aviation Act

What are the airport-based, commercial operations which provide line services, aircraft and engine maintenance, sale of parts and accessories, aircraft sales, charter and rental of aircraft, corporate flight services, and flight training?

Fixed based operators

Which of the following limited manufacturers' liability by placing a time limit of 18 years on civil actions against a manufacturer?

General Aviation Revitalization Act of 1994

Which of the following prohibits lawsuits against aircraft manufacturers when the aircraft involved in more than 18 years old?

General Aviation Revitalization Act of 1994

Who acquired Cessna in 1985?

General Dynamics

Which major aviation insurer was formerly Aviation & Marine Insurance Group?

HCC Aviation Insurance Group

Which of the following is information needed by underwriters to assess the risk of airports?

Height of airport about sea level Type and description of runways List of all airport vehicles, aircraft, and helicopters

What type of coverage provides protection against loss of or damage to their owned or leased aircraft?

Hull coverage

If an airplane is damaged by a windstorm, the time and effort required to arrange for the repairs, the loss of use of the aircraft while repairs are being made, and the additional cost of renting a substitute airplane are called what?

Indirect losses

Average load factors, percentage of passengers who are company guests, geographical area or operations and formal initial and recurrent training programs undertaken by the pilots are key underwriting considerations for which purpose of use category?

Industrial aid

What are the corporate operated aircraft flown by professional pilots employed exclusively for the purpose of operating and managing the aircraft?

Industrial aid

What has the function of substituting certainty for uncertainty in one's personal or business activities?

Insurance

One of Mike's aerial photography clients would like to have some pictures of Mexico City at night. Mike has decided he would like to take the long flight instead of renting a plane in Mexico. Where would Mike find out if his flight to Mexico City will be covered?

Insuring Agreements

What type of property is the most difficult to value?

Intangible property

Under which of the following does one company lease its airplane to another company in exchange for equal time, when needed, on the other company's airplane, and no charge, assessment, or fee is made, except that a charge may be made not to exceed the difference between the cost of owning, operating, and maintaining the two airplanes?

Interchange agreement

Insurance agency relationships are based upon and governed by what?

Law of Agency

Who is one who enters upon the premises of another, with the owners express or implied consent, principally for his own benefit?

Licensee

Who is a world leader insuring approximately 20 percent of the world's aviation business and war risks?

Lloyd's of London

What is the term used to identify the possibility that a particular property or person may suffer loss from a specific peril?

Loss exposure

What policy will usually pay the pilot a predetermined amount per month after a waiting period, which services as a deductible, until the pilot recovers and is able to resume flight duties?

Loss of license insurance

Which method of risk control has the objective of reducing the severity of losses once they have occurred?

Loss reduction

Which of the following are ways the risk management process can be viewed?

Management process Decision-making process

Which choice for arriving at an insurable value includes actual cash value?

Market value

Which of the following is a supporting coverage normally available to noncommercial insureds where passenger bodily injury liability is written, and provides for all reasonable expense of medical, surgical, ambulance, hospital, nursing, and related services?

Medical payments

Which of the following acquisitions or mergers occured in the aviation insurance business in the early 1980s?

National Aviation Underwriters was merged into AVEMCO Southeastern Aviation Underwriters was acquired by the American International Group

Torts are based on which of the following?

Negligence Strict liability Intentional acts

Which of the following are prerequisites to an enforceable contract?

Offer and acceptance Competent parties Legal purpose Consideration

Mike's longtime friend is visiting for the weekend. He also is interested in aviation and is just about to take his checkride to obtain his CFI rating. He wants to borrow your plane to practice for his upcoming test. Where would Mike check his policy to see if his friend is covered? Select all that apply.

Open Pilot Warranty Declarations

Which of the following bundles multiple coverages into a single policy to specifically meet the needs of various industries and business operations?

Package policy

Which of the following are factors that work together to causes losses?

Perils Hazards

Which of the following are exposures that may be caused by pure risks?

Personal Liability Property

Which of the following are principal areas with which underwriters are concerned when making their evaluations?

Pilot qualifications Geographical considerations Type of aircraft to be insured Purpose for which the aircraft will be used

What exposure area for fixed based operators consists primarily of office, ramp, and ongoing operations exposures?

Premises

What is the process of deciding whether to accept or reject an application for insurance?

Preselection

What type of airports are generally located on the outskirts of a metropolitan area and serve as the general aviation airport for the community?

Public-use privately owned

What is the common denominator that permits the insurer to classify risks and make comparisons?

Purpose for which the aircraft will be used

Which of the following are underwriters concerned with when evaluating helicopter risks?

Purpose of use Pilot qualifications

Which of the following occurred as a result of 9-11?

Rate increases Cancellation of terrorism coverage

What is the term for the pricing of insurance?

Ratemaking

What is an agreement between the ceding company and the reinsurer, where the reinsurer agrees to accept that portion of the risk that is beyond the ceding company's desired retention?

Reinsurance

Which of the following are basic approaches to handling risks?

Risk finance Risk control

What deals with the systematic identification of a company's exposures to the risk of loss, and with decisions on the best methods for handling these exposures in relation to corporate profitability?

Risk management

Which method of risk control focuses on reducing an organization's dependence on a single asset by making individual losses smaller and perhaps more predictable?

Segregation

What step of the risk management process follows reviewing techniques for handling loss exposures?

Select specific techniques to use

Which of the following are standpoints from which insurance can be defined?

Social Legal Accounting

Which risk classification is caused by the normal perils of nature and the dishonesty of other individuals, and involves either the damage or destruction of the asset or a change in its possession as a result of dishonesty or human failure?

Static risk

What is the right of the insurance company, after paying the insured for a covered loss, to take over all the insured's legal rights against negligent third parties?

Subrogation

Which of the following states that a cause of action for personal or other injury shall not abate because of the death of a party?

Survival statute

Which of the following are segments of coverage of aerial application aircraft?

Third-party liability coverage excluding chemical liability insurance Chemical liability coverage Hull coverage

What is the primary responsibility of the pilot?

To operate the aircraft in a safe manner

Who was the first company to write aviation insurance in the post-World War I period?

Travelers Insurance Company

Which miscellaneous coverage provides reimbursement of expenses incurred for food, lodging, and travel of passengers to complete a given flight to its destination or original departure point if the trip is interrupted or discontinued due to loss covered under the policy?

Trip Interruption

The majority of aircraft accidents are attributed to pilot error.

True

Which major aviation insurer focuses primarily on pleasure and business aircraft, industrial aid, and commercial accounts, and is augmented by the Special Risk Department?

U.S. Specialty Insurance Company

Which of the following is designed to fill the gaps in liability protection associated with basic coverages or self-insured retentions?

Umbrella liability insurance

Which domestic aviation underwriter includes 34 of the world's major insurance companies?

United States Aircraft Insurance Group

Under which of the following may a plaintiff recover for emotional distress if the plaintiff was in personal danger of impact due to the defendant's negligence?

Zone of danger rule

In the property and casualty field, who is a representative of an insurer who is delegated authority through an agency contract to act on behalf of the insurer?

agent

What is the temporary contract, pending the issuance of the actual policy?

binder

Which of the following is free to do business with any company that will write the business?

broker

Unfortunately, Mike's landing gear did not extend on his last flight. Everyone is safe, but the aircraft has sustained considerable damage. Where does Mike find out what he needs to in the event of a covered loss?

conditions

A wrongful death statute permits recovery of damages to the decedent's estate rather than damages incurred by the survivors.

false

What is the deliberate attempt to mislead or cheat a third party?

fraud

What is the unintentional parting with something of value?

loss

In the case of which of the following is recovery based on the amount of insurance purchased (insured value), regardless of market value at the time of loss?

total loss

The National Air Transportation Association has the most successful workers' compensation group program in the general aviation industry.

true

The growth of aviation insurance has paralleled the growth of the aviation industry itself.

true