Aviation Risks Insurance FAQ

• At the minimum, aviation businesses need general liability insurance.
• If they have employees they will need workers compensation in most states.
• If they have vehicles registered to the business, or use vehicles for the business purposes, they will also need commercial auto.
• There are also other specialty coverages and endorsements that might be needed based on their operations.

Package policies are the most convenient way to combine coverages. Even if an aviation risk is not able to package its liability exposures, its property, crime and inland marine forms can often be packaged together.

Aviation operations do not normally qualify for businessowners policy coverage because general liability aviation exposures are not eligible, but locations containing only offices and located away from an airport may be eligible for coverage.

Types Of Aviation Risks Package Policies:

• Businessowners Policy (BOP)
• Commercial Package Policy (CPP)

A thorough property inventory is needed to determine the items to be covered under the aircraft hull policy, the inland marine scheduled property floater, and those that should be insured under property coverage forms. The aircraft itself is not eligible for coverage under most property coverage forms but other types of property are. Most airborne property is excluded. Business personal property transported by air should be covered on an inland marine policy.

The building and personal property coverage form is the most widely used property form, but output policies are gaining popularity because of their pricing and coverage flexibility.

Air transportation operations are often required to continue following a loss, regardless of the situation. As a result, extra expense coverage becomes the primary time element coverage with business income coverage considered an option. Leasehold coverage should be considered if the operation has an advantageous long-term lease.

Types Of Property Coverages:

• Building
• Business Personal Property
• Personal Property of Others
• Improvements and Betterments

Aviation-related property is often fairly mobile. The property inventory listing should be thoroughly reviewed and any mobile property or property that regularly moves between locations should be covered under the appropriate inland marine coverage form. Computer and camera exposures are part of most aviation risks.

The perils insured or covered causes of loss in most inland marine coverage forms are generally equal to or better than the special causes of loss form that applies to property coverage. As an example, many inland marine forms include earthquake and flood coverage.

Types Of Inland Marine Coverages:

• Accounts Receivable Coverage
• Commercial Articles Floaters
• Contractors Equipment Coverage
• Difference in Conditions (DIC) Coverage
• Electronic Data Processing Equipment Coverage
• Fine Arts Coverage
• Scheduled Property Coverage
• Signs Coverage
• Transportation Coverage
• Valuable Papers and Records Coverage

The commercial crime coverage includes a number of coverages. While many of the coverages may be appropriate for a given aviation risk, often the most important is the employee theft coverage because of the value of property that can be stolen by trusted employees.

The manner in which operations are conducted dictates the coverage that should be written. Some of the more limited crime coverage options listed below may be more appropriate in a specific risk than broader coverages available.

Types Of Crime Coverages:

• Computer and Funds Transfer Fraud Coverage
• Employee Theft Coverage
• Forgery or Alteration Coverage
• Inside The Premises-Theft of Money and Securities Coverage
• Inside The Premises-Robbery or Safe Burglary of Other Property Coverage
• Money Orders and Counterfeit Money Coverage
• Outside The Premises Coverage

Aviation operations are required to have a license or permit in order to conduct operations. Government entities that issue the licenses and permits require a bond to guarantee that the insured will comply with all applicable rules and regulations.

If an aviation operation has a contract with a government entity to supply services, it must supply a bond to guarantee performance as contracted for or payment of a previous mutually agreed-to penalty.

Types Of Surety Coverages:

• Contract-Performance of Service or Supply Bonds
• License and Permit Bonds

Liability exposures for aviation risks are normally insured by an aviation general liability policy. However, operations conducted away from an airport or airfield may be insured by a standard general liability policy for the specific type of operation involved.

Restaurant and bar operations are not unusual so liquor liability coverage should be considered.

Types Of Liability Coverages:

• Commercial General Liability (CGL) Coverage
• Employee Benefits Liability Coverage
• Employment-Related Practices Coverage
• Liquor Liability Coverage
• Owners and Contractors Protective (OCP) Liability Coverage
• Special Events Liability Coverage

Aviation risks may employ individuals who provide services that require errors or omissions coverage. In addition, these facilities routinely employ security forces at the air facility who should be covered by law enforcement professional liability coverage.

Professional and errors and omissions claims are based on malpractice, error or mistake made in the performance of professional duties. Since these actions or inactions are excluded in the general liability policy, separate professional liability coverage must be purchased.

Types Of Errors And Omissions (E&O) Coverages:

• Errors and Omissions Insurance-Miscellaneous Coverage
• Law Enforcement Liability Coverage

Aviation operations often have a substantial number of vehicles on the premises that may or may not be eligible for coverage under a business auto policy. In addition, vehicles must frequently go off premises to run errands, make deliveries and generally assist in other aspects of the operations. Garagekeepers insurance coverage may also be needed to cover customers' vehicles left in the care of the insured on its premises.

Types Of Business Auto Coverages:

• Auto Medical Payments
• Business Auto Coverage
• Collision Coverage
• Comprehensive Coverage
• Garagekeepers Coverage
• Hired & Non-owned Auto Coverage (HNOA)
• Uninsured/Underinsured Motorists Coverage

Most employers are required by state statute to provide coverage through a workers compensation policy for on-the-job injuries sustained by their employees. Special rating methods apply when aircraft exposures are involved.

If the air facility makes extensive use of independent contractors or subcontractors, certificates of workers compensation coverage from each one should be obtained. This assists in eliminating gaps in coverage when such contractors are injured and then claim to be employees.

Types Of Workers Comp Coverages:

• Federal Employers' Liability Act (FELA)
• Stop-Gap or Employers Liability Coverage
• Workers Compensation and Employers Liability Coverage

Typical underlying policy limits are never sufficient to respond to most air-related damages. Appropriate excess limits must be purchased. An excess liability insurance policy may be more effective than an umbrella policy because the excess coverage exactly follows the coverage of the underlying policies.

Types Of Excess Liability Coverages:

• Excess Liability Coverage
• Umbrella Coverage

The coverages described in this area are specific to the aviation needs of classifications.

Types Of Aviation Coverages:

• Air Cargo Coverage
• Aircraft Liability Coverage
• Aircraft Passenger Liability Coverage
• Aircraft Physical Damage (Hull) Coverage
• Aviation General Liability Coverage
• Civil Air Patrol Coverage
• Hangarkeepers Liability Coverage

Aviation operations have specialty exposures similar to other operations but also have unique exposures related to flight. The potential for aircraft to be used in terrorist activities has added to the underwriting concerns.

An inventory of activities and exposures should be compiled to determine if coverage under any of the following policies should be considered. Flight schools may especially want to consider student-related coverages and privacy concerns.

Types Of Specialty Coverages:

• Business Legal Expense Coverage
• Cyberliability Coverage
• Directors and Officers Liability Coverage
• Environmental Impairment Liability Coverage
• Identity Theft Insurance Coverage
• International Insurance Coverage
• Risk Retention Group Liability Coverage
• Solar Energy System Coverage
• Tax Liability Coverage
• Terrorism Insurance Coverage
• Transportation Brokers Contingent Cargo Coverage
• Underground Storage Tank (UST) Liability Coverage
• Unmanned Aerial Vehicles (UAV) (Drones)
• Weather Coverage