Aviation Insurance Coverage for Non-Airline Related Aircraft and Pilots
Aviation Insurance is necessary for every aircraft owner and pilot due to the high value of most aircraft and the risks associated with flying. Additionally, any craft owner who uses the plane to transport passengers or cargo must have additional Aviation Insurance liability coverage. The type of coverage is variable since each aviation contract or agreement has the can limit or even void coverage due to standard hold harmless clauses. Purchase Agreements, Bank Loan Agreements, Maintenance/FBO contracts, Hangar Agreements, Charter Agreements may all contain a hold harmless clause, and by signing them, the individual becomes bound to the agreement's provisions. If the hold harmless stipulations that protect the other party are not covered by your policy, the potential risk becomes yours.
The amount of liability insurance that is deemed to be sufficient is determined by a loosely knit formula. One component is the individual's exposure to risk, which varies with the intended use of the aircraft. For example, a plane that is reserved entirely for the private use of the pilot will have less risk exposure that one that is used to transport other passengers.
In this case, the number of passenger seats determines a higher exposure and the craft requires more liability coverage. This is further defined by the average number of passengers transported during each flight, and their status. This means whether they are guests or employees. In the latter case, a lower liability amount may be allowed due to the employee coverage extended by Worker's Compensation Plans.
Additional elements in determining the extent of liability coverage in Aviation Insurance is the value of company assets that need to be protected from claims made by passengers, their relatives, or on the ground injured parties. One complicating variable to the determination of the adequate amount of aviation insurance is the value of the airplane, which is usually defined by an agreed on basis rather than a market figure. If an individual over insures the plane, the insurance company will nearly always pay the less expensive option of repairing the plane even in the case major damage rather than replace it. In cases of underinsured claims, the insurers may pay the total loss, which may not be enough for replacement. Therefore, it is recommended that the insurance value should be equal to the replacement cost of the exact same model.
There are steps that can be taken to reduce the cost of aviation insurance. The primary way is to institute and document a flight safety program and to get annual retraining on operating all models of airplanes used.
by Sally.Anderson 19 years ago