5/F - Aviation Insurance Flashcards
Aviation Insurance
Involves:
- Huge potential for losses
- Key differences from other types of insurance
Aviation Risk Pool
- Insurance pool is small: potential risk is huge
- Insurers and re-insurers often pool risk with underwriting groups specializing in aviation
Aviation Insurance Policies
- No standard policies
- In general, all policies contain Hull coverage and Liability coverage
Coverage Options
Hull Coverage: insurance for the aircraft itself
All Risks - Ground and Flight: this is the broadest aircraft coverage
All Risks - Not in Motion: covers physical damage to the aircraft while the aircraft is not moving by its own power
Definitions
In Flight:
- An airplane is “in flight” from the time it begins to accelerate until it finishes its landing roll
- A helicopter is “in flight” from the time its rotors being to revolve, until they have stopped revolving, after landing
In Motion: When an aircraft is moving by its own volition
Not in Motion: When an aircraft is not being moved by its own force, or by momentum generated by that force
Valuation & Deductibles
Deductibles:
- Usually percentage or fixed deductible
- Separate deductibles for “in motion” and “not in motion”
- Deductible does not apply to losses from:
a. fire
b. lightning
c. explosion
d. theft
e. robbery
f. vandalism
g. transportation of aircraft
Valuation:
- Usually Valued Policy
- Replacement Cost & ACV also available
Hull Policy Conditions
- Insured’s Duties in the event of a loss
- Appraisal
- Salvage
- Subrogation
- Legal Action Against Insurer
Exclusions
Exclusions generally include:
- Wear and Tear
- Freezing
- Mechanical or Electrical Breakdown
- War Risks
- Embezzlement by someone who is legally in possession of the aircraft
- Losses to tires, unless caused by theft, vandalism, or malicious mischief
Aircraft Liability Coverage
There are 3 types of Aircraft Liability Coverage:
- Bodily Injury Excluding Passengers
- Passenger Bodily Injury Liability
- Property Damage Liability
Bodily Injury Excluding Passengers
- Covers anyone injured by the use, maintenance, or ownership of the aircraft who is not a passenger on the plane
- Includes bodily injury, sickness, disease, mental anguish, death
Passenger Bodily Injury
- Applies only to passengers
Passenger: anyone who is in, on, or boarding the aircraft, intending to fly in the aircraft, or getting off the aircraft after flight
Property Damage Liability
- Covers damage to property (or loss of us of property) caused by the use, ownership, or maintenance of the aircraft
- Has a single, per occurrence limit
Limits of Liability
Passenger Bodily Injury Liability & Bodily Injury Excluding Passengers are subject to per person and per accident liability limits.
Property Damage Liability has a single, per occurrence limit
Or, an insured could choose a single limit liability policy
Medical Payments Coverage
- No-fault coverage
- Covers injuries that occur on, or while boarding or exiting, aircraft
- Pays for medical and even funeral costs
Exclusions Applicable to Liability Coverages
- Liability assumed by the insured
- Intentional injury
- Injuries covered by workers compensation insurance
- War risks, including hi-jacking, strikes, riots & civil commotion
- Property owned or under the control of the insured
- Flights for unlawful purposes
- Flights that require a special permit or waiver from the FAA
- Any instance in which the aircraft is flown by an unqualified pilot
- Any flight that takes place while the aircraft’s Certificate of Airworthiness is not in effect
