Many nations require aircraft owners and operators to carry insurance that covers their planes and activities. States typically demand third-party liability coverage as a bare minimum. This includes injuries to third parties caused by your aircraft’s operation.
Furthermore, if your aircraft is used as collateral for a loan, the lender will want aircraft hull insurance and/or replacement value insurance to safeguard the asset’s value.
Obtaining the Insurance Policy
So, how do you go about getting plane insurance? Typically, you apply for aircraft insurance through an insurance agent or broker who works for an insurance firm or companies that specialize in aircraft insurance. The insurance provider then assesses its risk in providing you with insurance for your aircraft or activities by reviewing the application and conducting any extra research necessary. Its risk is the possibility of having to pay out on a claim under your policy.
The insurance company costs you a premium in return for accepting risk. The premium is proportional to the risk that the insurance provider bears by protecting your aircraft or business. The bigger the danger, the more expensive insurance coverage becomes. An insurance company may, in rare occasions, refuse to take a specific risk at any cost.
Examining the Policies
When you get an aviation insurance coverage, you’re signing a contract with your insurance company. Your insurance provider will supply you with coverage as long as you follow all of the policy’s terms and conditions. If you don’t follow the rules and a claim occurs, you might be left without coverage.
But what exactly does the airplane insurance policy state? In reality, it is fairly typical for pilots and operators to fail to read their policies. Sure, they might check through the declaration page to make sure the proper parties are listed, and the necessary coverage limitations are in place, but that’s usually all. An owner or operator may even request that his or her agent clarify some of the policy’s provisions to him or her.
Unfortunately, the policy contains a lot more material that the pilot or operator must be aware of in order to guarantee that he or she follows the policy’s requirements. It is wise and suggested to do a comprehensive evaluation of the policy.
Coverage for Aircraft Liability
Aircraft liability insurance shields you against liability or obligation to third parties for losses incurred as a result of your aircraft’s operation. The insurance provider must both indemnify and defend you against such claims, according to the policy. If you cause harm to a third party, indemnification means that the insurance company will pay the third party directly, up to the policy limitations, the amount for which you are responsible.
The insurance company will engage an attorney to represent you and defend you against the claims, generally one with competence in aviation law. Given the complexities and costs of aviation litigation, this advantage alone can be worth a lot of money, and it may even outweigh the amount of money the insurance company pays to indemnify you.