What does an aircraft Insurance policy do?
A question customers sometimes wonder is, "What does an aircraft Insurance policy do?"
In simplistic terms, the policy consists of three basic types of coverage:
Liability – This section pays on your behalf for third party claims that are your responsibility. These claims include bodily injury to passengers and people on the ground, but not bodily injury to the pilot. These claims also include those for damage to other people’s property such as another aircraft, a taxi light, or a house. In rare situations, such as long term storage situations, a policy will exclude passenger coverage.
Many policies limit the passengers to $100,000 or $200,000. This amount is called a sub-limit. Some combinations of pilots and aircraft qualify for a Combined Single Limit, which has no passenger sub-limit. A Combined Single Limit is sometimes referred to as a “Smooth” Limit.
Medical Payments – This limit is typically about $5,000, although some companies allow higher limits. These payments are for the immediate medical costs incurred after a covered accident. They are for the passengers and pilot. Liability does not have to be established for these payments to be made. They will also cover funeral expenses in the event of a fatality.
Physical damage (or Hull) – This covers the aircraft itself including avionics. In determining the insured value for your policy, take into consideration the age of the plane, the engine hours, the interior and paint, equipment and the average retail value for the last quarter. Do not take labor costs into consideration.
There are three levels of physical damage coverage:
Ground and Flight (sometimes called Full Flight) – The plane is covered regardless of whether it is in flight, assuming other conditions are met.
Ground and Taxi – (Sometimes called Not in Flight) – The plane is covered while it’s moving on its own power on the ground, but not if it is in flight.
Ground Not In Motion (Sometimes called Storage) – The plane is only covered while it is stationary.
Both the liability and the hull sections of the policy can have extended coverages such as non-owned aircraft liability or loss of use. A policy can have liability without hull, but not hull without liability. Other conditions such as territory and currency must be met for a claim to be covered.
Visit aopaia.org for more information.
September 1, 2011