Exclusions to The All Risks Coverage of Aviation Insurance
There are many exclusions to the all risks type of Aviation Insurance coverage that airlines buy to protect their aircraft. Although an all risks policy will cover damage to the plane, it will not be responsible in the case of damage done by wear and tear. This deterioration of condition is defined as a maintenance issue and not as a threat to the aircraft owner. Also defined as wear and tear is the ingestion damage done to an aircraft engine due to the taking in a stones, dust and small debris. However, the case where several birds or a flock is ingested in a one episode and the incident is severe enough to cause the engine to stop functioning is not defined as wear and tear and will be covered. In this instance, payments to repair the damage will be made in an amount that exceeds the deductible.
Aviation Insurance underwriters define mechanical breakdown in terms of an operating expense and eliminate it from the all risks coverage. They do offer separate policy coverage for mechanical breakdown, but it is expensive, even by the industry standards, and many airlines choose not to purchase a policy of this sort.
An Interesting element regarding coverage included in all risks Aviation Insurance is the concept of "spares" which is a fundamental aircraft element that is not physically attached to the hull of the aircraft. Any part that is attached, either when the aircraft is built or subsequently, is considered to be part of the aircraft and covered by this policy. Parts that are removed become uninsured under this policy, rendering most spare parts, even though valuable and possibly useful, unprotected against damage. A separate policy must be bought if the airline feels that they are worth covering against damage. A "spares" portion may be bought and written into the hull all risks policy or a separate "spares" policy can be written.
The Airlines can also obtain Aviation Insurance that will protect against damage resulting from employee strikes, riots or civil disruptions, including war. The definition of war, as made by Aviation Insurance underwriters, includes all hostile acts, such as highjacking and terrorist activities, making this an essential form of coverage.
Therefore, in 1988, when Pan Am Flight 103 exploded over Lockerbie, Scotland, and crashed, killing over two hundred people, the airline and its insurance carrier were flooded with claims. Subsequently, the Libyan government accepted responsibility for the bombing of and offered compensation to the survivors of the passengers and general reparation. However, this did not aid the now bankrupt airline, and certainly did little to assuage the suffering of those people affected by the disaster.
by Sally.Anderson 19 years ago