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Aviation Insurance: All You Need to Know

Aviation Insurance | Evergreen AviationWhen flying your own plane, whether for personal or business reasons, you always have to be prepared for “just-in-case” situations. That is where aviation insurance comes along, which can help manage any aviation risk that may come as you fly. After all, there are a few risks that can impact various factors of your aircraft, may it be the ground crew, passengers, the cars on the tarmac, among others.

It’s important to learn all about aviation insurance, especially when you’re an aircraft owner, manager, or operator in the aviation industry, so you know what kind of insurance needs to get to minimize expenses from any damage caused. You may learn more from the Aviation Insurance Association, as well as get vital information from this article to find out different kinds of insurances you can avail. So read on!

What Is Aviation Insurance?

Before anything else, what is aviation insurance?

This is also known as aircraft insurance, offering aircraft liability coverage and property insurance coverage to your aircraft. Depending on the aviation insurance policy you invest in, it will cover various losses that result from aviation risk, which includes cargo loss, bodily injury to people, or property damage.

You can avail of aviation insurance from a reputable insurance company, which is designed to help protect not only aircraft owners and operators, but their passengers as well. It is different from marine insurance, which covers ships, terminals, cargos, among other marine services. Furthermore, there are different types of insurances and coverages to invest in, depending on one’s insurance needs.

What Does an Aviation Coverage Policy Cover?

As mentioned, there are different types of aviation insurance you can get, with different aviation insurance needs. Your aviation insurance company and underwriter can advise you in getting the correct one, depending on what you need. 

Here are the different types of aviation insurance, depending on your nature of work, the aircraft’s use, and the type of aircraft flown.

1.    Aerospace Insurance

Aerospace insurance is made for airports, airfields, manufacturers, suppliers, corporate aircraft, among other business and service providers. Aerospace insurance includes general and product or airport liability coverage. 

2.    Airlines Insurance 

Airlines insurance is made for private or government-owned airlines, including coverage for physical damage to the aircraft, liabilities to the passengers, third-party, or baggage and cargo, worker’s compensation, as well as general and employers’ liability to cover the full range of operations, whether single aircraft or as a major international carrier.

3.    General Aviation Insurance

General aviation insurance is made for privately-owned aircraft, as well as base operators, flight school, and flight clubs. This type of aviation insurance provides coverage for physical damage and liabilities for smaller aircraft. 

4.    Drones Insurance 

Drones insurance is for both commercial and recreational unmanned aerial vehicles, providing coverage for physical damage and protection from liabilities against damage to equipment, flight accidents, and theft.

Types of Insurance Offered by Aviation Insurance Companies

This article will tackle general aviation insurance and airline insurance. Here are the different levels of insurance offered by aviation insurance companies and an aviation insurance specialist.

Aviation Hull Insurance (in Motion or Not in Motion)

This coverage will protect aircraft carriers against any physical loss or damage to aircraft that are currently being operated under one’s control during the loss.

The policy covers the aircraft for a specifically agreed value, which is stipulated in the contract and policy. Note that unless there is a loss adjusted as “Total Loss”, there is a self-insured deductible that applies to subsequent hull claims, subtracted from the agreed value.

Under this insurance are two types: 

Aviation Spares All Risks Insurance

This is an aviation coverage similar to Hull All Risks Insurance, though this would cover spare parts that are carried on the aircraft or stored separately to use for the insured aircraft. When purchasing this insurance, the insurer will submit an inventory of spare parts before agreeing to the “Average Value at Risk”, or the pre-set value the Insurer will pay in case of losing the spare item. 

Aircraft Unavailability Insurance

This aviation insurance covers the lease cost of replacement aircraft in case the insured aircraft suffers from damage or cannot fly due to technical reasons. The aviation insurance policy usually has a waiting period of seven days before the daily protection is applied to the insurance claim. 

Aviation Hull War Risk Insurance

Under the Hull All Risks Insurance mentioned above, there’s actually a specific exclusion clause for certain risks, including war perils, hence the war risk insurance. What aviation risk is excluded?

For premium considerations, aircraft owners or operators may invest in Hull War Insurance, also known as war risk insurance, covering risks excluded under Hull All Risks Insurance policies. 

Hull Deductible Insurance 

As mentioned earlier, there is a “self-insured” hull deductible. Aircraft owners or operators can reduce this exposure with the Hull Deductible Insurance. This reduces the amount of self-retention from the insured aircraft.

Public Liability Insurance

This insurance type offers aviation coverage for expenses resulting from damage that occurred to third-party property and entities, including crops, houses, cars, other aircraft, or the airport facilities that were caused by the insured aircraft.

Also known as third-party liability, this type of insurance doesn’t provide coverage for the insured aircraft and its passengers traveling in it. In most countries, this is mandatory aviation insurance the aviation insurance market provides, as this also offers airport liability for corporate aircraft and the like.

Passenger Liability Insurance

This type provides insurance coverage for payments regarding any injuries and/or final expenses in case of death of passenger/s who travel in the insured aircraft. This is the mandatory insurance for commercial or large aircraft.

In the case of aircraft accidents that cause bodily injury to the passengers who boarded the aircraft, the aircraft owner/operator has a legal liability to the temporary or permanent bodily injuries sustained by passengers.

Aircraft owners and/or operators are also liable for any compensation rewards given to relatives of deceased passengers and/or third parties that arise from the aircraft accident. The compensation amount is given by a court of law in the area where the insureds reside in.

Combined Single Limit

Known as CSL, this insurance combines public liability and passenger liability insurance. There is a liability limit per payout for every accident, and because it is combined insurance, there is more flexibility in terms of paying liabilities, based on the liability limit set. 

In-Flight Insurance

In-flight insurance offers insurance coverage for the damages aircraft may sustain while in motion. This is actually the priciest aviation insurance to avail, as accidents are most likely to happen while the aircraft’s in motion.

What is Not Covered by Aviation Physical Damage Insurance?

Now that this article tackles the different types of aviation insurance and coverages one can invest in, the next question is: What is NOT covered by aviation physical or property damage insurance?

Three specific risks aren’t included:

This is important to know before selecting coverage from the aviation insurance market. An aviation insurance specialist or aviation insurer can work with you in finding the most suitable policy needed. 

Do You Have to Have Insurance on a Plane?

Some people or vehicle owners have ignored investing in insurance carriers, may it be for themselves or the vehicles they operate. But in various countries, the law would provide them to avail insurance. Do these laws apply for airplanes and other aircraft?

YES, aircraft owners need to have insurance from reputable insurance carriers or from an aviation insurance specialist. In fact, aviation insurance is the most comprehensive among various insurance options. Depending on the country the aircraft is from (and plans to travel to), it requires coverage for the aircraft in the hangar, ground, and air, as well as passenger liability.

Even if you are a part-owner, you will need to have similar aviation insurance as full owners. What makes it different is the insurance rates, which may differ for a group of aircraft owners or operators compared to just one aircraft owner.

As for pilots, you don’t need to invest in insurance for the airplane, but they need to carry their own aircraft insurance, as aviation insurance does not cover the pilot. Pilots need to have coverage for medical payments and aircraft physical damage coverage, as well as aircraft liability coverage. 

If the aircraft is uninsured, there is a chance the owner will be barred from using Fixed-Based Operators, as they require insurance on aircraft. Furthermore, the aircraft will be denied any landing permits. That is why investing in the aviation insurance market and finding a good aviation insurance underwriter is crucial in the aviation industry.

How Much Does Airplane Renter’s Insurance Cost?

If you are renting an aircraft for personal use, flight school, or business, you may need to invest in airplane renter’s insurance. But how much does this cost and is non owned aircraft insurance necessary?

Those who rent airplanes for flight school, corporate aircraft, or for other purposes, one is required to carry non – owned aircraft liability coverage, which will protect you and the insured from legal fees in case of accidents. Other than protection from liabilities, this insurance covers physical damage and injuries, whether airport liability or third-party coverage.

On average, depending on the aviation underwriter or aviation insurer one transacts with, airplane renter’s insurance (or non owned aircraft insurance) costs $80 a year for basic liability coverage, or $175 a year for comprehensive coverage, which includes property damage, claims for damage to the rented aircraft, as well as bodily injury to any passengers on board. The total price depends on different factors, such as the agreed value, liability limit (if any), the aviation insurance policy chosen, the type of plane used, the insurance company one works with, the insured included in the policy, and several other factors.

Wrapping It Up

I hope that all this information helped you become well-equipped with aviation insurance, its difference between marine insurance, the aviation insurance requirements, and what to expect when availing it as you enter the aviation industry. Begin your search for reputable aviation insurance companies and insurance carriers now and request for quotations. Stay safe flying after working with an excellent aviation insurer!

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