Unit 13 - Aviation

What are the territorial limits of the aircraft liability policy? True or False: The territory usually includes the United States, Canada and Mexico. Often coverage in Mexico is limited to within 100 miles of the United States border. In Florida, it's not uncommon to have the Bahamas Islands included by an amendment.

True

What is "admitted liability"? True or False: A coverage written as an adjunct to passenger liability, not applicable to passengers carried for hire. It provides for principal sum payments for death or dismemberment if (1) the named insured requests it and (2) the company is released from further liability. It is a means by which an insured may save a guest from the necessity of bringing a legal action for injuries.

True

Several important exclusions applicable to hull and liability coverage are found in all aircraft insurance policies:

1. There is no coverage for aircraft not registered under a standard category airworthiness certificate in full force and effect by the Federal Aviation Administration (FAA); 2. An aircraft is not covered while being maintained for any purpose other than the use classification in the policy declarations; 3. In aircraft is not covered while "in-flight" if operated by: a. Other than the pilot named or described in the declarations (or pilot endorsement); or b. By a declared pilot operating outside the limitations imposed in the declarations; or c. In-flight under any conditions requiring special permit or waiver from the FAA even if such permit or waiver has been granted. In addition the following exclusions apply to hull insurance: 1. There is no coverage for loss caused by conversion, embezzlement or secretion by any lessee or any other person in possession of the aircraft under a bailment lease, conditional sale, mortgage, or other encumbrances; and 2. "All risk" coverage exclusions common to other physical damage insurance apply: wear and tear, deterioration, freezing, mechanical or electrical breakdown. All forms of liability coverage usually exclude injury to the named insured or an employee, liability assumed under contract, and damage to property in the insured's care, custody or control.

13.2b Aircraft Liability Coverages:

The limits of liability are usually applied in the same manner as in automobile liability policies. For example, bodily injury limits might be $100,000 per person, $300,000 each occurrence and $50,000 each occurrence for property damage liability. Single limit coverage is commonly written. For example, $300,000 bodily injury and property damage per occurrence. The usual territorial limits include the United States, Canada and Mexico. Many times coverage in Mexico is limited to 100 miles of the U.S. border. In Florida, it's not uncommon to have the Bahamas Islands included by an amendment. Coverage normally includes temporary substitute aircraft and, for private business and pleasure craft operators, and the use of any non-owned aircraft by or for the named insured.

13.7 Underwriting Considerations:

When underwriting and aircraft policy, basic questions on the use of the aircraft as well as the following questions are asked: (1) Pilots - qualifications and experience; (2) Size - light or heavy aircraft; (3) Type of aircraft - land plane, seaplane or helicopter; and (4) The age and condition of the aircraft.

Essentially what does the policy agreement state in an aircraft liability policy? The company will pay on behalf of the insured all sums which the insured becomes l____ o____ to pay as damages because of bodily injury, sickness or disease, including death at any time, or injury to or destruction of property, arising out of ownership, maintenance, or use of the aircraft.

legally obligated

Explain what is meant by an aircraft "in motion" and when "not in motion." The most common definition of "in motion" is while the aircraft is m____ under its own p____ or m____ generated therefrom including in flight. In all other situations the aircraft is considered "not in motion."

moving, power, momentum

13.1a Aircraft Hull Policies:

Hull coverage is provided to protect against the risk of loss or damage to an insured aircraft. Two options are generally available for hull insurance coverage: "all risk" of physical damage on the aircraft while "not in flight;" and named peril coverage while "in-flight;" or an "all risk" policy whether "in-flight" or not. Coverage on the hull can be written for "in-flight" or "not in-flight," or "in motion" or "not in motion."

13.5 Special Aviation Insurance Coverages:

Miscellaneous other coverages are available: Hangar Keeper's Liability Coverage - This is a form of bailee's insurance, which covers the insured's liability for damage to aircraft stored for safekeeping or repair. This coverage protects the insured against legal obligations for injury to or destruction of aircraft belonging to others in the custody of the insured for storage, repair or safekeeping. This coverage is normally written on an "all risk" basis. Coverage is typically written by attachment to the airport liability policy. Airport and Air Meet Liability - This coverage provides protection for the premises for bodily injury liability and property damage liability. Product Liability - This form provides coverage for manufacturers and sale or repair organizations against liability claims, which are attributable to defective products or work. Cargo Liability - This coverage protects against legal liability for loss or damage to cargo or baggage.

13.1b Aircraft Hull Policies:

The most common definition for "in motion" is that the aircraft is moving under its own power or momentum; this includes an aircraft "in-flight." In all other situations the aircraft is "not in motion." The "not in motion" basis may not require a deductible, but a deductible normally applies for "in motion" coverage. The deductible is normally expressed as a percentage of the value; 2-1/2 percent, 5 percent and 10 percent are the most common deductibles. Most aircraft hull policies are "value" policies, but some are written on an actual cash value or replacement cost basis. Named peril policies included any or all of the following coverages: fire, stationary land damage, windstorms, crash insurance and theft. Essentially, these coverages are the same as other property insurance contracts. The term "crash insurance" is comparable to automobile collision coverage.

13.4 Medical Payments Coverage:

This coverage provides medical expenses for bodily injury by accident without regard to legal liability. The coverage is similar to automobile medical payments insurance in that it provides coverage for medical, surgical, ambulance, hospital, etc. while in, entering into, or alighting from an aircraft.

Describe aircraft hull coverage. True or False: The hull policy is provided to protect from the risk of loss or damage to an insured aircraft itself, generally available in two options-all risks of physical damage on the aircraft "not in flight," and named peril coverage while "in flight." Coverage on the hull can be written for "in-flight" or "not in-flight," or "in motion" or "not in motion."

True

Describe aircraft liability coverage. True or False: Covers public and passenger liability and property damage liability. Bodily injury and property damage under the aircraft liability policy is very similar to the automobile liability insurance policy with one exception. In aircraft liability coverage, liability to passengers is treated as a separate exposure, totally apart from the liability to others.

True

Describe hangar keeper's liability Coverage? True or False: This is a form of bailee's insurance, which covers the insured's liability for damage to aircraft stored for safekeeping or repair. This coverage protects the insured against legal obligations for injury to or destruction of aircraft belonging to others in the custody of the insured for storage, repair or safekeeping. This coverage is normally written on an "all risk" basis. Coverage is typically written by attachment to the airport liability policy.

True

Describe the medical payments coverage in an aircraft insurance policy? True or False: Provides medical expenses for bodily injuries by accident, without regard to legal liability. Coverage is similar to automobile medical payments insurance in that it provides coverage for medical, surgical, ambulance, hospital, etc., while in, entering into, or alighting from the aircraft.

True

In addition to general policy exclusions are there any specific exclusions, which apply to hull insurance? True or False: 1) There is no coverage for loss caused by conversion, embezzlement or secretion by any lessee or any other person in possession of the aircraft under a bailment lease, conditional sale, mortgage, or other encumbrance. 2) "All risks" coverage exclusions common to other physical damage insurance apply: wear and tear, deterioration, freezing, mechanical or electrical breakdown.

True

Is there a difference in the insurance coverage of an aircraft when it is "in motion" or "not in motion"? True or False: The "not in motion" basis may not require a deductible, but a deductible normally applies for "in motion" coverage, normally expressed as a percentage of the value; 2-1/2%, 5% and 10% are the most common. Most aircraft hill policies are "valued" policies, but some are written on an actual cash value or replacement cost basis.

True

What are some underwriting considerations when writing an aircraft insurance policy? True or False: Under an aircraft hull policy, basic questions on usage as well as the following questions are asked; 1) Pilots- qualifications and experience, 2) Size- light or heavy aircraft, 3) Type- land plane, seaplane or helicopter. 4) Age and condition.

True

What are the limits of liability in an aircraft liability policy? True or False: Typically they are applied in the same manner as automobile liability insurance policies. Bodily injury limits might be for example $100,000 per person, $300,000 per occurrence and $50,000 each occurrence for property damage liability. Alternatively, "single limit" coverage is commonly written; for example, $300,000 bodily injury and property damage per occurrence.

True

What do named peril policies include in aircraft hull policies? True or False: Any or all of the following coverages: fire, stationary land damage, windstorms, crash insurance and theft. These coverages are essentially the same as other property insurance contracts. "Crash Insurance" is comparable to the protection afforded by automobile collision coverage.

True

What does a typical aircraft liability policy include? True or False: Bodily injury liability (excluding passenger liability), passenger liability and property damage liability insurance. Single limit bodily injury and property damage liability (excluding passenger liability) and single limit bodily injury and property damage liability insurance (including passenger liability insurance) are also available.

True

What important exclusions are found in all aircraft insurance policies? True or False: Coverage is denied for aircraft not registered under a standard category airworthiness certificate, in full force and effect, by the Federal Aviation Administration; maintained for any purpose other than the use classification permitted in policy declarations; operated in flight by (a) other than the pilot named in the declarations, (b) by a declared pilot operating outside the limitations imposed in the declarations, (c) in flight under any conditions requiring special permit or waiver from the FAA even if such permit or waiver has been granted.

True

13.3 Admitted Aircraft Liability Coverage:

Admitted liability is coverage written with passenger liability. Admitted liability may not be written for passengers carried for hire. Coverage is provided for a principal sum payment for death or dismemberment if (1) the named insured requests it, and (2) the insurer is released from further liability. It is a means by which an insured may save a guest from the necessity of bringing a legal action for injuries.

13.2a Aircraft Liability Coverages:

Aircraft liability coverage is written to cover public liability, passenger liability and property damage liability. Bodily injury and property damage coverage is very similar to the automobile liability insurance policy with one exception. In aircraft liability coverage, liability to passengers is treated as a separate exposure. Separate limits are written for passenger liability. A typical aircraft liability policy includes bodily injury liability, passenger liability and property damage liability insurance. Single limit bodily injury and property damage liability is available. Essentially, the policy insuring agreement states the insurer will pay on behalf of the insured all sums which the insured becomes legally obligated to pay as damages because of bodily injury, or sickness or disease, including death, or injury to or destruction of property, arising out of ownership, maintenance, or use of the aircraft.