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Aviation Insurance Policy Information

Aviation Insurance

Aviation Insurance. A highly specialized coverage, aviation insurance, is written by a relatively small group of insurers.

General aviation is the largest segment of the aviation industry. It is also the primary segment from which a request for coverage arises.

The general aviation segment is diverse, including all types of flight activity except those involving commercial airlines and the military.

Personal aviation has consistently been the most active category with regard to both the number of hours flown and primary use, followed by business. Since 2010, the number of active pilots in the US. has been declining.

As of 2016, there were roughly 584,000 active pilots in the United States. Of that total, there were 162,000 private pilots who owned, rented, or leased small aircraft for business and pleasure use.

As of 2018 there were more than 167,000 active aircraft in the United States. About 62% of these are single engine models, about 10% are multi-engine, and about 7% are turbo props or turbo jets. The remainder consists of other types of aircraft, such as gliders and helicopters.

The various categories of general aviation - business flying include:

  • Aerial (other)
  • Aerial application
  • Aerial observation
  • Air medical
  • Business
  • Corporations
  • External load
  • Instructional
  • Other work
  • Personal
  • Public
  • Sightseeing
  • Sport (autogyros, ultralights, hang gliders)

These categories are identified by the Office of Airline Information in the FAA Statistical Handbook. The FAA is still collecting information on the impact and categorization of unmanned aircraft systems (UAS) and registered operators/pilots.

This discussion concerns the need, the market, and the available coverage for aviation insurance risks.

Aviation insurance helps protect businesses, pilots and aircraft against hull damage and liability for passenger injuries and third-party damage caused by aircraft accidents.

Below are some answers to commonly asked Aviation insurance questions:

What Is Aviation Insurance?

Aviation insurance is a type of insurance that covers various types of aircraft and aviation-related risks, such as damage to the aircraft, liability for injury or death of passengers or third parties, and loss of cargo.

It also covers risks associated with flight operations, such as pilot error, mechanical failure, and weather-related incidents. The types of aircraft that can be covered under aviation insurance include commercial airliners, private planes, helicopters, and drones.

However, aviation insurance policies also cover the legal liability of mainly airport owners, which arises from operating hangers or from selling a myriad of aviation-related products. You can consider the latter types of aviation insurance policies as more liability contracts.

The most significant problem related to underwriting an aviation policy is the exposure to a so-called 'catastrophic' loss. For instance, a passenger aircraft can easily incur losses in excess of $300,000,000, which includes both physical damages and liability. The overall number of aircraft in the world or under a given aviation authority isn't substantial enough to accurately predict losses.

You also need to consider that each type of aircraft has its own set of special characteristics and related equipment. That's why aviation insurance providers need to put in the time and effort to ensure independent individual underwriting.

The task of assigning rates is also highly complex and is specialized for the aviation industry. However, things are further complicated as there are rapid technological changes, which bring with it a steady flow of new, often unforeseen, hazards.

In short, aviation insurance provides liability and property damage coverage for aircraft, and any third-party or passenger bodily injury or 3rd party property damage.

How Much Does Aviation Insurance Cost?

Aviation insurance costs vary widely and range from under $47 into the thousands per month - based on the type of business, location, operations, size and more.

What Are The Types Of Aircraft Owners And Operators That Need Aviation Insurance?

There are four major types of :

  1. Business And Pleasure Operators - This category consists of individuals, businesses or corporations that own and operate aircraft for both business and pleasure. However, they usually do not employ professional, full-time pilots. In many cases, the president or a chief executive officer is the principal pilot.
  2. Fixed Base Operators - Commonly called FBOs, these are airport-based businesses which own, operate, buy, sell, rent, and lease aircraft. They also provide a variety of aviation-related services including fueling, repairs, flight instruction, etc.
  3. Flying Clubs - These are non-profit organizations composed of at least three individuals who jointly own and operate all aircraft, but strictly for pleasure use.
  4. Industrial Aid Operators - Refers typically to corporations which own aircraft and employ full time, highly skilled professional pilots to fly them.

Who Is Eligible For Aircraft And Aviation Insurance?


The aviation industry consists of a limited number of carriers, but they cover a large variety of individuals and businesses. There is almost no coverage for aircraft property and liability exposures outside of an aviation insurance policy.

Therefore, the eligibility rule is if it flies (and if there is documentation that it is airworthy), it can be covered.

Aircraft Type

Typical crafts that are eligible for coverage under an aviation program include:


Any lighter-than-air aircraft will need to purchase insurance coverage from the aviation marketplace due to exclusions in all other policies.

  • Airships or dirigibles
    • Blimps (non-rigid)
    • Zeppelins (rigid frame)
  • Gas Balloons
  • Hot Air Balloons


A much larger category that includes all propulsion aircraft such as:

  • Autogyros
  • Helicopters
  • Rotary Wing
  • Tilt rotors

Fixed Wing
  • Airliners
  • Amphibious Aircraft
  • Cargo Planes
  • Flying Boats
  • Gliders
  • Jets
  • Microlights
  • Research Aircraft
  • Sailplanes
  • Ultralights

  • Certain experimental craft
  • Hovercraft
  • Satellites
  • Unmanned Aerial Vehicle (UAV) also known as drones

Aircraft Purpose

Aircraft purpose is broadly classified as military or civil aviation. Insurance concerns itself with civil aviation that contains the following use classes:

  • Business
  • Commercial
  • Pleasure

Business and pleasure are often combined while commercial is kept separate. Commercial normally includes leasing, renting, servicing or some other activity that involves making an income from the use of an aircraft.

Business and pleasure use involves using an aircraft as a mode of transportation or entertainment for the owner.


A pilot can be the owner of the aircraft or can be an employee of the person or organization that owns the insured aircraft. The pilot must meet the Federal Aviation Administration (FAA) criteria for operating the type of aircraft being insured.

Generally, a pilot must have a regular physical, have completed flight instruction, and must pass licensing exams. Insurance can be purchased when a pilot is still considered a student pilot, but the student pilot criteria must be followed.

Afterwards, pilots must maintain their proficiency through regular training and maintain their status by regular testing and recertification.

Non-Owned Aircraft Liability

Coverage can be purchased even when no aircraft is owned. Aircraft can be rented with and without pilots under long and short-term arrangements. Non-owned liability coverage is critical for persons who operate aircraft that they rent or borrow from others since most base aircraft liability policies exclude coverage for such pilots.

Aviation-Related Exposures

Any commercial ventures with premises and/or product-completed operations that are directly related to the aircraft industry are eligible for aviation insurance coverage. Eligible operations include (but are not limited to):

  • Airports
  • Fixed Base Operators
  • Flying Clubs
  • Flying Schools
  • Hangars for Rent
  • Manufacturers
  • Repair and Maintenance Facilities

It is not required that the commercial venture own or operate an aircraft, only that aircraft is present on the premises.

What Type Of Pilot Certificates Are Eligible For Aviation Insurance?

Here are the types of active pilot certificates:

  • Airline Transport
  • Commercial drone
  • Commercial
  • Glider Only
  • Private
  • Recreational
  • Rotorcraft Only
  • Sport Pilot
  • Students

What Type Of Aviation Insurance Coverages Are Typically Needed?

Aviation loss exposures demand a great deal of personal attention from an insurance professional. Although the frequency of aircraft-related accidents doesn't compare with the level that occurs with automobiles, death and serious injury are more often the result.

This fact emphasizes the need for extremely high liability limits. Besides a primary level of aircraft coverage, additional (umbrella or excess) liability might be needed.

Each classification of aircraft owner/operator requires varying types and levels of aviation insurance coverage, including:

  • Aircraft hull and liability
  • Airport liability
  • Aviation products liability
  • Hangarkeepers liability
  • Medical payments
  • Voluntary settlements
  • Workers compensation


Pleasure, business, and commercial aircraft policies are constructed in the same manner. All consist of the following coverages:

  • Physical damage to the aircraft
  • Bodily injury (to passengers and others)
  • Property damage (to property of passengers and others)
  • Medical payments (for the insured and passengers)

The policy resembles an automobile policy. Since there is no standard aircraft policy, it is important that any given policy be carefully reviewed.

Aircraft Insurance

Airports, Fixed Base Operators and Flight Schools are examples of businesses that cannot be adequately covered by a standard CGL policy. Their main loss exposure involves injury to or by aircraft.

Since a CGL excludes aircraft damage, these businesses must look beyond that type of policy. The aviation policy is the response to the absence of coverage. It is similar to the old garage policy, combining the aircraft exposure with the general liability exposure.

In addition, there is hangarkeepers coverage that is similar to garagekeepers (currently called auto dealers) coverage.

Other Aviation Exposures

Airport operations or fixed base operators need airport liability and hangarkeepers legal liability coverage. Contractual and products liability coverage can be included in such a policy.

If the airport operator owns and rents planes to pilots (including student pilots), an aircraft hull and liability policy is needed. In most instances, financial institutions finance the sales of aircraft. Banks and other lenders need physical damage coverage in order to protect their insurable interest in aircrafts covered by their loans.

Non-Owned Liability

In many instances, pilots need renter's policies or non-owner coverage. Pilots who operate aircraft that they rent or borrow have a serious liability exposure that is excluded by the typical aviation policy.

A non-owned aircraft policy covers liability for bodily injury or damage to property caused by the insured pilot. However, the policy does not cover damage to the aircraft being operated by the insured since that coverage should be handled by the owner's policy.

Passenger Injury Exposure

There are many other types of coverages available to respond to different aviation needs, including separate, aviation products liability and separate, excess layer policies. The agent or broker should carefully survey all of a prospect's exposures before submitting an application.

The aviation exposure to liability for injuries to passengers is created by statutes in some states. It also exists internationally. Originally, such liability was controlled by the Warsaw Convention. The Warsaw Convention, adhered to by most nations since it took effect in 1929, was superseded by the Montreal Convention. In 2003, the United States was the thirtieth country to sign the convention.

It substantially liberalized the limitations of the Warsaw Convention which was criticized as being too restrictive to respond to modern losses. The Montreal Convention established two tiers of coverage. The first operates under strict liability and is capped according to the value of the special (monetary) drawing rights specified in the agreement.

The second tier depends upon the circumstances of a given loss, specifically regarding an allegation that negligence may be involved. Air carriers may be obligated to pay damages injured passengers may seek in excess of a particular agreement's initial tier, unless the carrier can prove that it was not negligible for a given accident.

The changes created by the Montreal Convention increases the per passenger liability and lift many of the restrictions on lawsuits that may be brought against aircraft owners.

Note: Aircraft liability is a global exposure that has a substantial impact on commercial ventures. Since conventions are international and subject to adoption by individual countries, significant changes are rare and occur at a glacial pace.

However, rules are constantly reviewed and critiqued, particularly after high-profile incidents. For instance, some regulatory and safety changes may arise from the highly publicized 2014 loss of Malaysia Airlines Flight 370.

How Do Regulations Effect Aviation Insurance?

Federal Aviation Administration

Another aspect of aviation insurance and loss exposures is the high level of regulation. Any number of federal agencies may have oversight of a given activity.

Typically, several federal agencies influence every aviation operation - including aircraft insurance. Depending upon a given operator's activities, regulatory oversight may involve any of the following agencies:

Animal Plant and Health Inspection Service (APHIS)

Formerly a standalone agency which is currently a department of Homeland Security, it affects aviation operators via its duty to protect the U.S. from the entry of foreign (agricultural) pests and diseases. It inspects plants and pets that passengers attempt to bring into the U.S.

Department of Homeland Security (DHS)

The main impact of this, still relatively new, major agency is via its anti-terrorism and protection of U.S. borders and transportation security.

Department of Transportation (DOT)

DOT's impact on aviation operations is due to its oversight over all modes of transportation in the U.S. and the FAA is a department of DOT.

Environmental Protection Agency (EPA)

This agency affects aviation operations due to its oversight of the handling, storage and use of fuels and chemicals. Besides fueling activity, EPA regulations affect aircraft maintenance, cleaning, repair, painting, etc.

Federal Aviation Administration (FAA)

The FAA's role is to make sure that air transportation in the U.S. is safe. It is the chief regulator of the nation's aircraft operation and maintenance activities. It employs the nation's air traffic controllers and it supervises the air traffic control system as well as oversees federal grants for national airport development.

Internal Revenue Service (IRS)

The IRS affects aviation operations due to its oversight of excise taxes on fuel sales. It also requires all air charter services to collect and turn in passenger and cargo taxes.

National Labor Relations Board (NLRB)

This board controls labor relations with regard to commercial airlines via the Railway Labor Act.

National Transportation Safety Board (NTSB)

This critical agency investigates all civil aviation accidents in the United States. It also investigates major accidents involving other modes of transportation, especially those that include the escape of hazardous materials. It also maintains an accident database and, due to its investigation activity, it makes thousands of safety and rule recommendations to other regulatory agencies which are, largely, adopted.

Occupational Safety and Health Administration (OSHA)

OSHA has a major impact on aviation operations due to its main task of overseeing worker safety. It performs its duties via inspections and regulations. Worker complaints are handled by this agency and it has the authority to fine and sue employers.

Small Business Administration (SBA)

The SBA's impact is via its efforts in assisting the creation and operations of small business and that includes smaller aviation operations.

State Authorities

Individual states do have limited authority with regard to oversight/protection of its airspace and operational safety regarding airport site locations and safety. However, state actions and regulations are largely pre-empted by federal regulations.

Transportation Security Administration (TSA)

The TSA was created in response to the infamous U.S. terrorist attacks of 9/11.This department creates, implements, and maintains security measures that protect passengers and cargo that are moved via air and surface transportation. Major TSA responsibilities are airport passenger and baggage screening and no-fly zone determinations.

United States Citizenship and Immigration Services (USCIS)

This agency once went by the name of the Immigration and Naturalization Service. Its impact on aviation operation is due to its oversight of non-citizens and non-residents of the U.S.

United States Customs and Border Protection (CBP)

This agency used to be named the U.S. Customs Service. It is currently operated under the Department of Homeland Security. It affects aviation operations because it regulates all businesses that bring cargo or people into the United States. It is also responsible for handling all fees and tariffs on imported goods.

What Are Aviation Insurance Endorsements?


Aviation insurance is written by a small group of specialty insurance carriers, so the basic coverage forms are not standardized. Naturally, no standardization exists for the supplemental forms that are used to modify aircraft and aviation policies.

While we are unable to supply standard form number references, we can offer some information on typical situations that are the basis of coverage modification in this line of business.

Airline Finance/Lease Contract Endorsement

Optional coverage which adds protection to parties who have extended loans that financed the purchase of the insured aircraft or parties from whom the aircraft is leased. It protects the listed party up to that party's financial interest that exists at the time of a loss.

Aviation Products Contractual Liability Endorsement

A coverage option which protects an insured against loss involving obligations to handle losses that are assumed under a written agreement. The insurer must be provided with full details of such agreements. However, it does not cover agreements made prior to the applicable policy effective date, nor does it act as a warranty for the insured's products or services. The form also obligates the insured to agree to report as requested.

Breach of Warranty Endorsement

A coverage option which protects a lienholder's financial interest in an insured aircraft in instances where the policyholder has had a loss during a breach of a policy provision.

Note: This form usually gives the insurer the right to then subrogate against the policyholder.

Cargo Legal Liability Endorsement

Optional coverage that protects insureds against legal liability for damage or loss involving cargo that is handled and transported by the insured via covered aircraft.

Note: The insured's level of responsibility for cargo is, typically, defined contractually.

Civil Air Patrol (CAP) Endorsement

Optional coverage that protects insured against legal liability for certain activities connected with membership in the CAP, such as piloting emergency transport, search and rescue, or disaster relief missions.

Drone Endorsement

Adds property and liability protection against loss involving damaging property of others or injuring other persons while operating a drone.

Employer's Additional Insured Endorsement

Adds an insured pilot's employer as an additional insured under the aircraft policy.

Fellow Employee Coverage

In those instances where an aviation policy excludes coverage involving loss caused to an employee by another employee, this option adds that coverage back.

Note: The availability of this buyback protection varies significantly by carrier.

Flight Instructor's Liability Coverage

Liability coverage for loss arising from a pilot's teaching activities.

Guest Voluntary Settlement

Provides a pre-set payment for loss or injury to specified body parts/limbs that occur due to an aviation-related accident. However, the coverage is available only in exchange when the injured party waives any right to file a lawsuit for their injuries.

Loss of License Coverage

Protection against loss of earnings caused by an insured's inability to pilot a covered aircraft due to losing pilot license after failing a medical examination.

Loss of Use Coverage

Business interruption coverage that reimburses insured for earnings loss due to aircraft's unavailability during time needed to repair or replace it after a covered accident occurs.

Non-Owned Aircraft Liability

Liability coverage against loss involving the insured's operation of an aircraft owned by another entity.

Note: It is generally best to handle this significant exposure under a separate, non-owned aircraft liability policy.

Non-Owned Hull Liability

Covers an insured for his or her negligence in causing damage to a non-owned aircraft while he or she is operating that aircraft.

Pollution Liability Coverage

Liability coverage against certain incidents of cost or expense caused by accidental release of pollutants.

Property Damage To Spacecraft

This products hazard form pays for a legal obligation to respond to damage or destruction of a third party's spacecraft products that have been finished by or are being worked upon by an insured. Coverage also extends to loss of use of such property.

Renter's Liability Coverage

Liability coverage against loss involving the insured's operation of an aircraft he or she rents/leases from another entity.

Right to Purchase The Salvage

In instances where a loss to an aircraft is settled as, essentially, a total loss. This option gives the insured the right to buy the aircraft back as salvage property.

Road Traffic Accident Liability Coverage

Liability coverage against loss caused to others (and others' property) arising out of an accident occurring on public/private roadways.

Territorial Extensions

Applies to policies with operating territory limitations. Such endorsements temporarily expand the permitted territory to provide coverage for a given use of the insured aircraft.

Terrorism Coverage

Applies to liability and/or physical damage arising out of aircraft's exposure to acts of terrorism. Typically, such coverage is available as part of a war risk endorsement.

War Risks Coverage

A package that combines war risk hull and war risk liability protection.

War Risk Hull Insurance

Physical damage coverage to an owned aircraft for loss to that craft when the loss involves acts of war, terrorism, and similar causes (such as hijacking).

War Risk Liability Insurance

Third party liability coverage for operating an owned aircraft for losses caused by that craft's operation which also involves acts of war, terrorism, and similar causes (such as hijacking).

What Insurers Offer Aviation Insurance?

The aviation insurance market consists of a handful of carriers. This line of business is extremely difficult for new entrants. The current markets offering aviation coverage are, primarily, pools of companies. The markets that write aviation exposures in the United States are:

  • Allianz Aviation
  • American International Group
  • Berkley Aviation
  • CV Starr Aviation
  • Global Aerospace U.S.
  • Houston Casualty Company (HCC) Insurance Holdings
  • International Aerospace Insurance Services
  • Lloyds of London and other European Underwriters
  • Munich-American Holding Corp.
  • Phoenix Aviation
  • United States Aviation Underwriters
  • W. Brown & Associates
  • XL Caitlin U.S.

Most of the above insurance companies work with wholesalers to place their coverage. The wholesalers operate within their underwriting authority and place business in accordance with their level of experience, book of business and expertise.

What Does Aviation Insurance Cover & Pay For?

Aviation Insurance Claim Form

There are several reasons why aviation entities may face lawsuits. Some common reasons include:

Accidents: Aviation accidents, such as crashes, collisions, or malfunctions, can result in lawsuits filed by passengers, their families, or bystanders who were injured or killed.

Negligence: Aviation entities may be sued for negligence, such as failing to properly maintain or repair their aircraft, failing to properly train their staff, or failing to follow proper safety protocols.

Breach of contract: Aviation entities may be sued for breach of contract, such as failing to provide the agreed-upon services or violating the terms of a charter agreement.

Property damage: Aviation entities may be sued for property damage caused by their aircraft, such as a plane crashing into a building or damaging crops.

Insurance can protect aviation entities from the financial impact of lawsuits by providing coverage for legal expenses and damages awarded in a lawsuit. For example:

  • In the case of an accident, an aviation entity's liability insurance can help cover the cost of legal fees, settlements, or judgments awarded to passengers or their families.
  • If an aviation entity is sued for negligence, their liability insurance can cover legal expenses and damages awarded in a lawsuit.
  • If an aviation entity is sued for breach of contract, their insurance may provide coverage for legal fees and damages awarded to the plaintiff.
  • If an aviation entity causes property damage, their insurance may cover the cost of repairs or replacement.

In general, aviation insurance can provide comprehensive protection for a wide range of risks faced by aviation entities, including liability, property damage, and other perils. This can help protect the financial health of aviation businesses and ensure that they can continue to operate despite the risks they face.

Aviation Insurance - The Bottom Line

In order to find out more about aviation insurance and how much coverage you should carry, speak to a broker that specializes in aircraft insurance.

Additional Resources For Aviation Insurance

Learn about aircraft and aviation liability insurance - a specialized form insurance that provides coverage for hull losses as well as liability for passenger injuries, environmental damage and third-party damage caused by aircraft accidents.

Aircraft And Aviation Insurance

The aviation industry requires insurance for a number of reasons

Firstly, it is a highly regulated industry with strict safety standards that must be met. Accidents or incidents can occur despite these measures, and insurance helps to cover any resulting damages or liability.

Secondly, the cost of repairing or replacing aircraft and associated equipment can be extremely high. Insurance helps to mitigate these costs in the event of an accident or damage.

Thirdly, the aviation industry operates on a global scale, with aircraft and personnel often crossing international borders. Insurance helps to protect against any legal issues that may arise in different countries.

Finally, the aviation industry is constantly evolving and facing new risks and challenges. Insurance helps to provide a safety net in the face of these unknown risks.

In summary, insurance is an essential component of the aviation industry as it helps to cover potential damages, liability, and new risks. It allows the industry to operate smoothly and safely, ensuring the safety and well-being of both passengers and crew.

Minimum recommended coverage: Building, Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivable, Communication Equipment Floater, Computers, Contractors’ Equipment, Valuable Papers and Records, General Liability, Employee Benefits, Environmental Impairment, Umbrella, Hired and Non-Owned Auto, Workers Compensation, Aircraft Hull, Aircraft Liability & Hangarkeepers Legal Liability.

Other coverages to consider: Earthquake, Equipment Breakdown, Flood, Cyber Liability, Employment-related Practices, Underground Storage Tank, Business Automobile Liability and Physical Damage and Stop Gap Liability.

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