Aircraft Insurance is purchased by a broad spectrum of insureds, ranging from the individuals who own and operate small planes for pleasure to the major airline companies that own and operate large fleets of aircraft. Following are the purpose of use categories that the Insurance Companies use to classify aircraft risks -
Why is Aircraft Insurance Comparable to Auto Insurance?
Aircraft Insurance in many ways resembles auto insurance. Like auto insurance, aircraft insurance policies are divided into physical damage and liability coverage. Aircraft Physical damage insurance is also referred to as "hull insurance", reflecting the marine insurance origin of aircraft insurance.
A fundamental difference between auto and aircraft insurance is that pilots of insured aircraft must meet strict qualifications. In addition to holding both the appropriate license and current medical certification from the Federal Aviation Authority (FAA), the pilot is often required to have at least qualified number of hours of experience flying the type of aircraft insured.
In addition, except for policies covering airlines, aircraft policies cover only the plane or planes specifically described in the policy.
What are the two most common Aircraft Hull Coverages?
(1) "all-risk-ground and flight" and
(2) "all risks - not in motion".
"All-risks-ground and flight", the broader of the two, covers most causes of loss whether the plane is in flight or on the ground at the time of the loss.
"all-risks-not in motion", covers the plane only when it is on the ground and not moving under its own power. Thus, coverage applies while the plane is being towed, because it is not moving under its own power.
What are some of the principal exclusions that apply to Aircraft Hull coverage?
The principal exclusions that apply to "all-risks" aircraft hull coverage are the following.
Wear and Tear
Tire Damage unless caused by theft, vandalism, or other physical damage covered by the policy
Embezzlement or conversion by someone legally in possession of the aircraft (a lessee, for example)
Some Aircraft policies exclude losses on any aircraft whose FAA Airworthiness Certificate has become void or has been restricted.
What are the Deductibles on Aircraft Hull coverage?
Hull coverage on smaller aircraft is usually subject to a dollar deductible, either for a flat amount or a percentage of the plane's value. Some policies are written with a specified dollar deductible for ground coverage and a percentage deductible when the aircraft is in flight. Larger multi-engine aircraft are sometimes insured with no deductible since a deductible would not eliminate many claims; the cost to repair even a minor damage to such planes can be thousands of Dollars.
What does the Aircraft Liability Insurance cover?
Aircraft Liability Insurance protects the insured against third party claims for bodily injury and property damage resulting from the ownership, maintenance, or use of Insured Aircraft. Separate limits of Insurance usually apply to:
(1) Bodily Injury excluding passengers
(2) Passenger bodily injury, and
(3) Property damage
Most insured purchase all these coverages, but some insureds, such as cargo carriers, may not need passenger bodily injury coverage. Aircraft liability coverage can also be written with a single limit applying to all coverages.
What are typical exclusions in an Aircraft Liability coverage?
Intentional Injury, except to prevent interference with safe operations
Liability assumed under contract. However, some policies cover liability assumed under incidental contracts, such as a contract for use of an airport
Bodily injury to an employee of the insured
Obligations under workers compensation or similar laws
Damage to property owned, leased, occupied, controlled, or under the care of the insured. However, some policies provide basic limits of coverage for passengers' luggage or for damage to hangers leased by the insured.
What are some other types of Aircraft Coverages?
Aircraft Liability Insurance is often supplemented by medical payments coverage and passenger voluntary settlement coverage. These coverages provide a way to make prompt payments to injured persons and perhaps avoid liability claims that could be more costly.
Aircraft Medical Payments coverage is similar to medical payments coverage available in auto policies. The coverage pays, regardless of the insured's legal liability, for reasonable medical or funeral expenses incurred by occupants of the insured aircraft.
Passenger voluntary settlement coverage, also commonly known as admitted liability coverage, is unique to aircraft insurance. It is usually available to industrial aid aircraft. The coverage provides scheduled benefits if a passenger suffers death, dismemberment, or loss of sight. In order for benefits to become payable, both of the following actions must be taken.
(1) The Insured must ask the insurer to pay
(2) The claimant must release the insured from liability for all bodily injury caused by the accident.