Archive for Aviation
Air carrier movement of freight in interstate andinternational commerce is growing in volume and importance. The Civil Aeronautics Board (CAB) regulates air cargo carriers’ operations. These carriers usually purchase air cargo legal liability coverage (similar to motor truck cargo legal liability coverage) to protect against their liability that arises from the shipping document (the air waybill). The air carrier may also need shipper’s interest coverage if it provides cargo insurance to the shipper.
Aircraft Products Liability
Products liability coverage for aircraft manufacturers, aircraft products dealers, and fixed base operators that repair and maintain aircraft is difficult to place. Loss potential is significant because of the catastrophic consequences when a product used in an aircraft fails in flight.
Aircraft Spare Parts
Aircraft hull policies exclude aircraft spare parts. If a part, such as an engine, is removed from the aircraft to be repaired, and in order for the aircraft to be used, a “loaner” is attached to the aircraft, the part removed is not covered. Coverage for that spare part must be purchased separately from the aircraft hull policy. Insurance purchased covers aircraft engines, spare parts, and equipment that are on the ground, or that are being carried as cargo by air, land, or water conveyances. Coverage ends when the equipment is fitted to the aircraft. It excludes engine loss or damage while the part is running or being tested. It also excludes mechanical or electrical failure loss, or damage to detached property once it is refitted to the aircraft or property carried on the aircraft as a spare parts kit. Each loss that results from one event is adjusted separately.
Airplane/Aircraft Hull and Liability
Aviation insurance is usually written by carrier pools or individual companies that specialize in this business. Most coverage is written for general aviation, a diverse industry that includes all forms of flying except commercial airlines and military operations. The four major classes of aircraft owners/operators are industrial aid, business and pleasure, flying clubs, and fixed base operators. Aircraft hull and liability coverage is similar to the coverage an automobile policy provides because it includes physical damage, liability, and medical payments coverages. Under hull insurance, the two types of coverage available are physical damage coverage when the aircraft is not in flight and physical damage coverage when it is. Liability coverage is similar to automobile liability, except that it is divided into two separate insuring agreements, one for bodily injury excluding passenger liability, and the other for passenger bodily injury liability. Medical payments coverage may be added if passenger liability coverage is provided.
Airport Owners and Operators
Airport operators or fixed base operators need airport liability coverage and hangarkeepers legal liability coverage on their operations. Commercial general liability coverage forms provide this coverage. Aircraft hull and liability coverage is also needed when the operations include ownership and rental of planes to individual pilots or student pilots.
Airport Property and Aviation-Related Risks
Airport property and aviation-related risks coverage forms and policies have been developed to cover the full spectrum of airport and aviation ground exposures. The major coverage areas are buildings, business personal property, and transit, loss of business income, extra expense, inland marine, and auto. Coverage can also be provided for owned hangars, terminal buildings, towers, fuel farms, manufacturers, fixed based operators, tour services, maintenance facilities, and modification centers. Off-airport aviation- related risks such as avionics repair shops and component manufacturers can also be covered.
It is difficult to place hull and liability insurance for aircraft that are no longer produced. A damaged antique aircraft is expensive to repair because original replacement parts may no longer be available. As a result, individually fabricated parts are required. Underwriting concentrates on the pilot’s qualifications and experience in flying the particular type of aircraft because each has its own unique handling characteristics.
Crop Dusting and Spraying
This coverage is properly classified as a specialty aviation insurance coverage. It applies to insureds that use aircraft to dust or spray insecticides or herbicides on crops or other vegetation. The hazards for these operations are greater than those associated with normal aircraft operations because the chemicals the aircraft applies may be dangerous to animal life or neighboring crops and aircraft operations must be performed at low altitudes. The three types of liability coverage available are third-party liability coverage without chemical damage coverage, third-party liability coverage including protection for damage caused by using insecticides only, and liability protection for damage from all but a few chemicals. Coverage applies to both bodily injury and property damage. Prior loss experience, the operator’s financial condition, the number of pilots and their experience, and the types of chemicals sprayed are key factors in underwriting this business.
Drones (Unmanned Aerial Vehicle)
Unmanned Aerial Vehicles are becoming essential tools for many industries such as real estate, photo journalism, and property claims adjusting. They are growing in popularity in other industries as the technology improves and applications are developed. Physical damage coverage and bodily injury, property damage, and personal and advertising injury liability are needed.
Ferry Flight Insurance
A ferry flight (or delivery flight) occurs when an independent contractor flies an aircraft from a seller to a buyer. Ferry flight insurance provides hull coverage for physical damage to the aircraft and liability coverage for damage the aircraft causes during the transport. This coverage can be purchased by the buyer, the seller, or the independent contractor. Key considerations in underwriting are the pilot’s experience with the specific type of aircraft and the pilot’s knowledge of the flight route. Coverage is available worldwide. The physical damage limit is based on the aircraft’s value. Liability limits are generally capped at $1,000,000 for general aviation aircraft but higher limits are available for commercial airliners.
Flight schools instruct individuals and prepare them to fly. They can work with novices or with experienced pilots who train for more advanced types of aircraft. The primary exposure is physical damage to the owned or rented aircraft. Other property exposures include maintenance equipment, flight simulators, and other equipment the operation uses. Liability exposures are for damage that the students may cause and injuries to the students. Workers compensation is also a significant exposure.
Only a few large domestic aviation insurance carriers write insurance on helicopters. This class of business is more properly classified as special risk aviation insurance, and Lloyd’s of London has traditionally written the coverage. However, a few domestic markets have facilities for helicopters for physical damage, liability, and passenger coverage. Helicopters are probably the least desirable class of aviation business from the underwriting standpoint because they are very fragile and highly susceptible to damage. Pilots must be highly skilled in operating them and be extremely aware of and sensitive to wind conditions. Domestic markets offer limited hull and liability coverage for various classes of commercial use, forest fire patrol, traffic patrol, air ambulance service, and industrial aid uses.
Hot Air Balloons (Liability and Physical Damage)
Recreational enthusiasts and companies use hot air balloons to provide rides for their customers. Some hot air balloons are used for advertising. Coverage is available for physical damage to the balloon and liability for damage to the property of others.
Space Industry Insurance
This coverage is primarily about satellites. As a rocket has multiple stages, so does the insurance. There is pre-launch, launch, and in-orbit coverage for physical damage to the satellite. There is also third party and re-launch guarantee coverage. Pre-launch insurance covers the satellite until it is launched. This includes transporting it from the manufacturer plus any storage or assembly at the launch site. Launch insurance covers the satellite for physical loss or damage during the launch sequence and also for the satellite failing to achieve its designated orbit. The launch stage also covers the satellite failing to perform as specified once it reaches orbit. In-orbit insurance is protection against the satellite failing to operate successfully when it achieves its required orbit. Third-party insurance protects the insured against third-party claims that arise from an occurrence associated with the mission including damage to various earth stations and transmission towers and equipment. Re-launch guarantee coverage provides a free re-launch to a customer when an error by the insured causes a launch failure.