Section 24: Aviation Insurance

Aircraft Liability Insurance Includes:

Legal liability to 3rd parties other than passengers in the aircraft Bodily injury to passengers Property damage

Aircraft Hull Coverage The limit of insurance can be provided on an insured value bases, meaning..

a value is attributed to the aircraft at the policy's inception, the depreciated value of the aircraft at the time of loss is the value that would be used to settle the claim in the event of a total loss. The loss settlement provision in case of a total loss can be amended to an agreed value basis at the policy inception. All losses are subject to the applicable deductible.

Air Meet Liability Most airport liability policies exclude liability for accidents occurring during...

air meets or aerial exhibitions (air shows) for which an admission charge is made. In addition, it is not uncommon to find exclusions for injuries arising out of grandstands or bleachers that are not permanent parts of the airport premises.

Introduction to Aviation Insurance Aviation insurance policies uses two types of coverage generally. The policy can provide:

aircraft hull coverage to cover physical damage to the aircraft itself. aircraft liability to cover public and passenger liability and property damage liability

Hangarkeepers Liability Coverage Other exclusions may be found in typical airport liability policies for

airports liability policies for airports that would create the need for an airshow or air meet event liability policy. Air meet coverage provides protection very similar to premises and operations liability under a commercial general liability policy. It covers for bodily injury liability and property damage liability.

War Risk Coverage Endorsement International travel in a corporate aircraft almost always requires that specific war risk coverage be in effect

before an operator travels to, within or over the airspace of foreign countries.

Airport Liability Coverages These policies are usually written on a ...

comprehensive basis and can include any or all of the following coverages. 1. premises, products/completed operations 2. contractual 3. personal injury 4. premises medical payments Additional coverages, unique to the insured's operational needs, can be added by endorsement.

Air Hull Deductible The deductible does not apply to losses from...

fire, lightening, explosion, transportation, theft, robbery, or pilferage. HOWEVER the in motion deductible does apply to losses from fire or explosion that occurs as a result of the collision of the aircraft. The deductible applies separately, based on the actual loss to each aircraft. The deductible applies separately, based on the actual loss to each aircraft insured on the policy.

Aircraft Hull Coverage Aviation physical damage, known as Hull coverage, covers the complete aircraft including the:

fugelage wings

Aircraft Hull Exclusion Exclusions, although none are standard, include:

illegal use of aircraft using an aircraft for purposes other than that described in the policy wear and tear piloting the aircraft by someone not named in the policy operating an aircraft outside geographical boundaries damage or destruction of an aircraft resulting from, war, riots, strikes, civil commotions, mechanical breakdown loss, structural failure loss, and conversion.

Aircraft Hull Exclusion The hull value includes...

instruments, radios, autopilots, wings, engines, and other equipment attached to, or carried on the plane, as described in the policy.

Product & Cargo Liability Product liability coverage for manufacturers and sales or repair organizations against...

liability claims that are attributable to defective products or work.

Aircraft Liability Insurance Aircraft liability insurance is similar to the liability section of an automobile policy, except that...

liability to passengers is treated as a separate exposure, totally apart from the liablity to others.

Substitute, Replacement and Newly Acquired Aircraft If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is...

notified within 30 days of the purchase and premium payment is made. The coverage is the same as the scheduled aircraft.

Air Hull Deductible The deductible is normally expressed as a...

percentage value. Most aircraft hull policies are value policies which provides that, in the event of a total loss, the company will pay the insured value stated in the policy, regardless of the aircraft's market value. Some policies are written on an actual cash value or replacement cost basis.

War Risk Coverage Endorsement The war risk endorsement provides coverage for...

physical loss or damage to the aircraft caused by an act of war. This endorsement also provides coverage for confiscation, seizure, arrest and detention.

Airport Liability Coverages Airport liability policies are designed to protect owners and operators of...

private, municipal or commercial, as well as fixed base operators, against claims resulting from bodily injuries to members of the general public or damage to their property while they are on the airport premises or its related facilities.

Substitute, Replacement and Newly Acquired Aircraft If the insured uses a substitute aircraft for an insured aircraft that is out of commission, the policy provides...

protection. The insured has liability and medical expense coverage while using the substitute, but the maximum payout for any occurrence cannot exceed what would have been paid if the primary aircraft was in operation. This is a critical consideration if the substitute craft has a significantly higher value than the insured craft.

Product & Cargo Liability Cargo liability

protects against legal liability for loss or damage to cargo or baggage.

Introduction to Aviation Insurance Aviation insurance policies are not standardized and many insurance companies write their own contracts. Because losses under aviation policies can be substantial and because of the specialized underwriting involved, most insurance companies prefer to...

spread their risk of loss by purchasing coverage through one of several aviation pools or underwriting groups.

Specialized "Other Coverages" Like aircraft physical damage (hull) coverage, aircraft liability policies are not...

standardized. This allows for several specialized "other coverages" to be added to broaden the coverage. We will review four of the most common other coverages that can be added to an aviation policy, on the next several screens.

Specialized "Other Coverages" Aircraft liability policies usually include coverage while the insured is operating a...

temporarily substitute aircraft. Liability coverage is also included for private business and pleasure craft operators (even drowns) and the use of any non-owned aircraft by, or for, the named insured.

Hangarkeepers Liability Coverage Hangarkeepers Liability is written on an open peril basis, meaning

that all damage is covered unless it is excluded. This coverage is typically written by attaching the hangerkeeper's liability endorsement to the airport liability policy.

Air Hull Deductible Three different deductibles

the in motion deductible the not-in motion deductible the in flight deductible (typically the largest amount)

Substitute, Replacement and Newly Acquired Aircraft If the insured purchases an additional aircraft, there is automatic coverage provided

the insurance company currently insures all of the insured's owned aircraft. The insured must notify the insurance company within 30 days of the acquisition. The coverage is the same as another aircraft with similar passenger capacity. The physical damage limit is the actual amount the insured paid for the aircraft.

Hangarkeepers Liability Coverage This is a form of bailee insurance that covers...

the insured's liability for damage to aircraft stored for safekeeping or repair. The hangarkeeper's liability coverage protects the insured against legal obligations for injury to destruction of the aircraft of others in the custody of the insured for storage, repair, or safe keeping.

Aircraft Hull Insurance Aviation Hull insurance (aircraft physical damage coverage) is more often written on an open peril peril basis. There are three sub-categories of open peril aviation insurance:

when the aircraft is parked and not in motion when the aircraft is taxiing and in motion the most common definition for in motion is while the aircraft is moving under its own power or momentum generated within the aircraft. when the aircraft is inflight (defined in case law to include the beginning of the take off to the end of the landing).