IMPORTANT ASPECTS TO CONSIDER
IN REVIEWING YOUR INSURANCE

HOW TO READ YOUR POLICY:

Many people do not read their policy as they feel this is a responsibility or job of their Broker. The Broker however does not have a crystal ball, and often is not aware of activities or uses you may think you are covered for but in all events may well not be. Further negativity arises from the fact that many aircraft owners don’t know what their policies say, and assume that they are ‘covered’ for anything that may happen.

The Basics:

Each section (or coverage part) of the policy provisions typically begins with a fairly short statement of what the section does for you and then proceeds to list what it doesn’t do for you. In addition, in the general exclusion section, there may be exclusions in each section of a policy which apply only to that part. It is therefore important to review the contract as a whole. Cover that may appear to be provided in one section may be an exclusion under a subsequent section by way of endorsement or exclusion.

Policy Review/Checklist

Check the policy schedule for accuracy

  1. Policy effectives dates (same as previous policy?)
  2. Purposes of use
  3. Lienholder information (if any or any changes?)
  4. Aircraft information – correct?

    (Year/Make/Model/Reg)

  5. Verify liability limits (Hull Value, Premiums and Deductibles – are they the same as you were quoted?)
  6. Approved Pilot Provisions – this is probably the most misinterpreted area of a policy.
    • Are the pilots listed correctly?
    • Do they have the licenses and ratings as required and stated in the policy?
    • Is there a provision for pilots other than named pilots to fly your aircraft?
    • Is there an hourly limitation or provision on pilots that fly the aircraft?

Policy Provisions

The aircraft policy is generally split into three sections; ie.

  1. Section One – Material or Loss or damage to the actual aircraft or hull as it is called.
  2. Section Two – Legal Liability to Third Parties (other than passengers).
  3. Section Three – Legal Liability to Passengers.

Section 1) Loss of or Damage to Aircraft

    1. What the Insurers are liable for
    2. What is not covered?
    3. How is a loss adjusted?
    4. What are your duties in the event of a loss?

Section 2) Legal Liability to Third Parties (other than passengers)

This section covers third party "Property" Damage. It is not an automatic payout. The policy holder or insured, as the name implies, has to be legally "liable" before this section of the policy becomes effective.

General Terms and Conditions and Exclusions

What are Geographical Limits of your policy?

Premium payment conditions

Policy cancellation provisions

Various agreements between you and the Insurer?

Which uses are approved and which are not?

The loaning of your aircraft for remuneration is interpreted as Private Hire or Rental.

Does your policy provide for such uses?

Pilot Warranties

We cannot over stress the importance of complying with any pilot restrictions or limitations. Underwriters offer quite good premium concessions if pilots are restricted to named pilots or subject pilots to minimum flying experience. This may appear an attractive alternative but be warned that if there is a slip up and someone flies the insured aircraft outside the parameters, it is a sure way to have a claim denied. Some Underwriters are ruthless about this.

Uses

Be sure to fully understand the popular express in aircraft policies "Private Business and Pleasure".

It is really quite straight forward but it does not allow use for hire or reward or the carriage of revenue passengers, but more importantly it does not include RENTAL which is defined as:-

"Rental means rental, lease, charter or hire by the Insured to any person, company or organization for Private Pleasure and Business uses only, where the operation of the aircraft is not under the control of the Insured. Rental for any other purpose is NOT insured under this policy unless specifically declared to the Company under SPECIAL RENTAL USES in the Schedule."

Special Uses

Also be advised that the ‘standard industry uses’ including Private Business Commercial and Rental does not automatically extend to include:-

Instruction, Aerobatics, Hunting, Patrol, Firefighting, and the intentional dropping, spraying, or release of anything, any form of experimental or competition flying and any other use involving abnormal hazards.

Be aware that in particular parachuting should be specifically included if your aircraft or helicopter is even occasionally used in this role.

 

NOW IS THE TIME TO CHECK THAT YOU ARE FULLY IN COMPLIANCE WITH YOUR POLICY TERMS, PARTICULARLY IN RESPECT TO USES AND PILOTS.

 

To Conclude…

If you are sure you understand the application and answers to all these questions and feel comfortable with your understanding of these issues, then you are well on your way to effectively gauging the adequacy of your insurance policy. This has just been a quick look at the general structure of the typical aviation insurance policy. Understanding how competitors policies differ from each other and meeting the requirements of your policy can be the difference between a satisfactory claim settlement or a disaster.