It becomes very important for all the owners and operators of aircraft to have aircraft insurance. It guards against all kinds of risks, and shields the investor in case of a loss. This article brings you a detailed guide on all the aviation insurance options ranging from compulsory insurance to the recommended additional covers for aircraft damage and loss of use.
Covers can be categorized in to different types and this article outlines the various types of covers and the process of creating them.
Civil Liability Insurance
It is mandatory for all the aircrafts to have liability insurance. In general, it shields the owner from any legal claims from a third party in cases of accidents. This coverage applies to the damage done to other people’s property and physical harm to people by the airplane.
Why is it Mandatory?
From the perspective of third party risks, there is legal requirement to obtain aircraft liability insurance. As to the identities of the victims of an accident they may be those on the ground, passengers, or property that has no or negligible association with the airplane. Without such insurance, the expenditure on the repairs or even compensation of the losses may become very unmanageable for several aircraft owners.
What’s Covered
Liability insurance entails; Though there are several categories that liability insurance covers. It compensates for loss of property on third parties, including the damage of property or structures. It also refers to bodily injury which offers compensation for the costs of treatment, the rehabilitation and loss of wages if injured becomes disabled. Besides, it shields the owner from legal suits , which guarantee the owner’s defense ought legal proceedings found himself legally afloat.
Limits and Exceptions
There is a need therefore, to demystify some of the limitation of this specific insurance. This does mean that if it is done on purpose the loss is not recovered. Further, the coverage could also be restricted based on the type of aircraft and the purpose it will be put into. For instance, an aircraft that will be used for commercial purposes or for aerobatic will call for some specific insurance.
Aircraft Damage Insurance
This coverage insures damage to the aircraft itself This coverage is identical to that of the physical damage to the aircraft itself. It’s for accidents on the ground as well as those that occur while in the air. Other occurrences including collisions, fires and storms are usually included in losses.
Physical Damage Coverage
The ‘hull’ classification of aviation insurance policies addresses destruction of the planes. This includes cases of crash during take off, in mid-air or while landing. Accidents with birds, with objects on the ground and structures on the runway, and mid-air are not exempted. This insurance is required to fix or replace clients’ damaged components of an aircraft.
Protection against natural disasters
Besides, one can name accidents and damage due to natural disasters as the types of losses insured by insurance. Havoc from storms, hurricanes, and even more conditions such as earthquakes are very lethal to an aircraft. This coverage makes it possible for the owner to be able to repair or purchase another aircraft without digging deep into his or her pocket.
Coverage of Malicious Acts
Protection against malicious acts may may also be provided in property and casualty insurance. Accidental damages, the attempt of vandals or saboteurs or even thieves to invade the aircraft are all availed for insurance. This protection is necessary in order to prevent the owner’s investment from being targeted by intentional threats.
Loss of Use Insurance
Anti- immobilization insurance pays the owner when the planes are rendered non-operational. This assists in cushioning the financial losses since aerobatics cannot fly and make their income.
This subheading deals with what will happen in the event that the vehicle will become immobilized.
Loss of use insurance comes in whenever the aircraft is taken off the air because of mechanical malfunction, defect or damage. This assists to meet the lost income for owners since they use the aircraft to conduct their business. For instance, a private airline could be paid on daily basis for the days that the aircraft is not in operation.
Reimbursement of Unforeseen Expenses
Apart from the above-shown revenue loss, this insurance also extends to risks related to grounding of the aircraft. This entails costs of obtaining a substitute aircraft, expenses on movement as well as costs of canceling or rescheduling other flights.
Importance for Commercial Operators
Theorem III: It can be concluded that loss of use insurance is helpful for business operators. It enables one to avoid waking up to business collapses and other Types of losses due to interruption of services. In essence this insurance ensures that fixed costs and contraction of revenues is catered for in order to sustain operations in the face of a disaster.
As earlier stated, there are various factors that has an influence or an impact on insurance cost and these includes the following;
Aircraft Type and Model
This is always based on type, kind of and the model of the aircraft which is always standardized from manufacturers. It is for this reason that the insurance cost of private jets is higher than light aircraft due to the value and complication that is associated with them.
Pilot Experience
Age, pilot experience and hours played significant in explaining variable costs especially premiums. A pilot with many flight hours, who has never been involved in an accident, is bound to enjoy low insurance premium rates.
Use of the Aircraft
The utilization of the aircraft also affects the insurance cost. There will be a big difference in premium for an aircraft used for commercial flight or aerobatics compared to an aircraft used purely for private charter. The framework under which one is to choose the right insurance is made of the following elements:
Assess Your Needs
In buying insurance, it is very important also that you evaluate your requirements well. The type of aircraft, purpose of usage, and risk tolerability level should be weighted.
Compare Offers
It is wise to compare quotes offered by different insurance companies so as to find what suits you best. It is advisable to haggle, do not be afraid to ask for precise quotes.
Consult a Broker
But with the help of an insurance broker, this can be of great help. These people know their market very well, and they will definitely guide you to the most appropriate products you can get. They can also bargain for better conditions that are suitable for your organization.
Aviation Insurance: Our advice on how to correctly insure your aircraft
It is our pleasure to present you with this continuation of the aviation insurance blog. Below is our aviation insurance guide:
Aviation Insurance: Historical Reminder
Insurance of private aircraft has been compulsory when operating under Regulation (EC) Number (785-2004) of the European Parliament and the Council of 21/04/2004. This regulation sets the mandatory amount of civil liability insurance for every European aircraft. Starting from 2004, aircraft owners and operators are required to ensure passengers, baggage, cargo, and third-party risks pertaining to aviation activity.
What guarantees are provided by law and are mandatory in their nature?
Aviation insurance is mandatory to have civil liability coverage at the very least. This guarantee pays for harm done to passengers and third parties who are not being transported. The amount of the aircraft civil liability guarantee is calculated based on two criteria: the permissible Maximum Take-Off Weight (MMD or MTOW) and the number of passenger seats on the aircraft. This is an irresistible point: none of the Aircraft’s Civil Liability protects the pilot in case of death or permanent disability.
Aircraft Hull Insurance: Here we present a guarantee that is highly recommended.
Why Should One Go for Aircraft Hull Insurance?
It is, however, important to note that aircraft body insurance, also known as aircraft breakage, is not mandatory but almost systematically taken by owners of such aircraft. It includes damages and losses to the body and interior of the aircraft, and compensations are calculated according to a value mentioned by the owner while entering the contract.
What is the Insured Value of an Aircraft?
Aircraft are normally insured at insured value which implies that the limit of the policy is vested in the policyholder. This value should be close to the market value of the aircraft I have assumed to be $ 40million. In the case of a total loss, the insurance expert feels that the value of the aircraft is overrated and thus the compensation will not be what the policyholder claimed to deserve.
Definition of Agreed Value in the case of an Aircraft
In the few occurrences to where the warranty is given on the aircraft body, it may be provided in the form of an agreed value. This value is attached on supporting documents or on a simple purchase invoice for the aircraft. In case of total loss, compensation must in any way correspond to this indicator.
Aircraft Body Insurance Deductibles
Specifically, insurance is calculated correspondingly with some portions which are dependent on the value of the aircraft, its utilization, and pilots. Some insurers allow deductibles that apply in the case of a total loss and others will not apply the deductible if the plane is destroyed. For instance in a single-engine piston airplane; the portion that the policyholder must pay or contribute amounts to €1,500 to €2,500 and in a single-turbine airplane; the amount can be anywhere between €5,000 to €15,000.
Individual Pilot Accident: Why it is Necessary?
It is however evident that Aircraft Civil Liability does not offer cover in the case of death or permanent disablement of the pilot. That is why it is possible to emphasize the need to purchase individual pilot accident insurance. To date, the commissioner can opt for death or permanent disability benefit of his preference ranging from € 15000 to € 150000.
Private Aircraft Insurance: What are the Basic Uses?
Any use can be insured, but some are irritating to the insurers and they affect the insurance premium. The schools’ use or bareboat rentals are costlier in the following ways.