CHAPTER 2 - B Flashcards
What types of aircraft can be insured under physical damage insurance?
- Commercial fixed wing aircraft
- Commercial rotary aircraft
- Private aircraft
- Microlights
- Hot air balloons
These aircraft types include both powered and non-powered flying machines.
What does physical damage insurance cover?
Accidental damage to the aircraft while in flight, on the ground, or taxiing
Insurers typically cover repair or replacement of parts or the whole aircraft.
What happens if an aircraft is missing for a set number of days?
It is treated as a total loss by many aviation policies
If the aircraft is subsequently found, it belongs to the insurer if they have already paid the total loss.
What are some exclusions from physical damage insurance policies?
- Wear and tear
- Breakdown
- Foreign object damage unless proven from a single incident
- Gradual damage from airborne debris
Specific exclusions can affect claims processing.
What is required of insurers during claims for aircraft repairs?
Insurers usually require presence during dismantling or repairs
This ensures repairs are made only to damaged material and prevents additional charges.
What is the concept of betterment in aviation insurance?
Claims will be reduced if the insured receives a newer replacement part
This ensures that the insured does not profit from upgrades.
What type of insurance covers airport buildings?
Standard property insurance policies
Insurers consider specific risk exposures such as terrorism.
What does drone/unmanned aerial vehicle insurance cover?
- Physical damage including theft
- Cyber risks
- Liabilities for bodily injury or property damage
Insurance is required by aviation regulators for commercial drone operations.
What does airline liability insurance indemnify against?
Damages for property damage or personal injury caused by aircraft
This includes injuries to ground crew or collisions between aircraft.
What are some exclusions from airline liability insurance?
- Employees
- Operational crew
- Passengers
- Owned property
- Noise/pollution
Exclusions are designed to ensure coverage is not duplicated elsewhere.
What governs an airline’s liability to passengers?
International laws called conventions
These conventions dictate compensation for passenger injuries or fatalities.
What are the three main categories of airport operator liabilities?
- Premises
- Hangar-keepers’
- Products
Each category has specific coverage and exclusions.
What does hangar-keepers’ liability insurance cover?
Liability for loss or damage to non-owned aircraft while in the insured’s care
This coverage applies even if the insured does not own a hangar.
What is wholesale grounding in aviation insurance?
An order to ground all aircraft of a certain type due to a discovered problem
This can lead to significant financial losses for airlines.
What does aviation war insurance cover?
- Loss or damage to aircraft
- Extortion or hijack
This insurance is freely obtainable and has specific exclusions.
What is loss of licence insurance?
Covers income replacement for aircrew who lose their flying licence due to injury or illness
It does not cover loss due to misconduct.
What does loss of use insurance provide coverage for?
Income lost while an aircraft is being repaired
Similar to business interruption insurance.
What does aviation repossession insurance cover?
Costs of repossessing an aircraft and reconstructing technical records
This is important if lease payments are not met.
What is contingent hull insurance?
Insurance that pays claims to banks if the main policy does not
This protects the bank’s interests when lending for aircraft purchases.
What does space insurance cover?
- Launch vehicles
- Satellites from manufacture to end of life
It is relevant to both aviation and marine insurance markets.
What is the primary risk associated with the ignition of rocket engines?
The risk when the rocket engines intentionally ignite
This relates to the moment when liability shifts from pre-launch to launch insurers.
At what point does the satellite operator take over the risk?
At the point of launch
The satellite operator, often a global telecommunications company, has an insurable interest only after launch.
What are the two main categories of risks covered for satellites and launch vehicles?
Property damage and liability
These categories are similar to other classes of insurance.
What constitutes a ‘total loss’ in satellite insurance?
Usually obvious through something like a catastrophic explosion or a failure of a vital part
Total loss is clear and significant, impacting the satellite’s operation.
What is a ‘partial loss’ in the context of satellite insurance?
Loss of one communication channel, one solar panel, or one fuel cell
The key factor is the financial value and impact on expected performance.
How is partial loss typically defined?
Degradation or reduction in the satellite’s expected performance and/or life expectancy
Claims adjusters consider the reduction from specifications and possible repairs.
What are the risks associated with launch vehicles like Sea Launch?
Loss or damage in terms of physical damage and liability
Both floating platforms and land-based alternatives are subject to these risks.
What happens if a satellite is damaged while being loaded onto the launch vehicle?
The pre-launch insurer is still on risk and will seek subrogation
This may involve the launch vehicle owner or other responsible parties.
What liability do satellite owners have after launch?
They cannot forget about it; liability continues
Owners remain responsible for any injury or damage caused by the satellite.
According to international law, who is responsible for damage caused by a launched object?
The state that launches the object into space
This includes responsibility for injury or damage to third parties or property.
