Fast Facts
- Hull Insurance: Covers repair or replacement of the insured aircraft, including tools and equipment, due to covered physical damage.
- Three Types of Hull Coverage (Open Perils Basis):
- Ground and Flight (broadest coverage)
- Not in Motion
- Not in Flight
- Cargo and Freight Insurance: Protects cargo and shipping costs from loss during air transport.
- Aircraft Liability Insurance: Covers legal liability for bodily injury or property damage caused to others.
Focus: This lesson covers noncommercial aviation, including light passenger aircraft, helicopters, experimental aircraft, ultralights, gliders, hot-air balloons, and hang gliders.
Aircraft Hull Insurance
Covers repair or replacement of the insured aircraft due to physical damage, including tools and equipment. Written on an open perils basis.
Types of Coverage
- Ground and Flight: Broadest coverage, includes all activities.
- Not in Motion: Covers aircraft when stationary.
- Not in Flight: Covers aircraft when not airborne.
Insured Parties
Includes owners, operators, lienholders, and lessors. A loss payable clause protects lienholders/lessors even if the insured breaches policy conditions.
Key Point: Hull coverage does not protect permissive users (e.g., renters, maintenance organizations), and insurers may subrogate against them for negligence.
Excluded Perils
- Damage to tires (unless caused by theft, vandalism, or covered loss)
- Wear and tear, deterioration, freezing, mechanical/electrical breakdown
- Embezzlement or conversion by someone in lawful possession
- War confiscation, seizure, or detention
- Change of ownership status
- Depreciation or loss of use
Deductibles and Valuation
Deductibles may be a dollar amount or percentage of hull value. Coverage is written on:
- Actual Cash Value (ACV): Pays aircraft’s value at the time of loss or policy limit, whichever is smaller.
- Agreed Value: Pays a pre-agreed amount for total loss, avoiding disputes.
Test Your Knowledge: Aviation policies do not have deductibles due to large loss sums.
True or False?
False
Deductibles are used but are less significant due to the focus on catastrophic losses.
Cargo and Freight Insurance
Protects cargo and shipping costs from loss during air transport. Covers theft, handling damage, and perils affecting the aircraft.
Types of Losses
- Total Loss: Complete loss or damage rendering cargo worthless.
- Constructive Total Loss: Salvage costs exceed cargo value.
- Particular Average: Loss of one party’s cargo, borne by that party.
- General Average: Loss shared by all parties when cargo is sacrificed for the common good (e.g., jettisoned to save the aircraft).
Aircraft Liability Insurance
Pays for bodily injury or property damage for which the insured is legally liable. Covers named insureds, passengers, and those responsible for the aircraft.
Exclusions
- Bodily injury to named insureds
- Loss when the certificate of airworthiness is not in effect
- Loss during unlawful use of the aircraft
- Loss when flown by an unqualified pilot
- Loss from nuclear events
- Loss exceeding passenger limits
- Loss from violating specific FARs
Medical Payments Coverage
Covers reasonable medical expenses for injuries sustained in the insured aircraft, regardless of liability. Includes pilot/crew if specified.
Key Point: Noncommercial policies exclude coverage for flights where a charge is made. Discuss reimbursements with the insurer.