Section
The company’s bank, which has no prior aircraft financing experience, is willing to finance a portion of the purchase of the aircraft if (and only if) you can ensure that even if the aircraft is destroyed in an accident, any unpaid balance on the loan will be paid in full. Can you accomplish that through your aircraft insurance even if the circumstances of the accident were such that the insurance company would not have to pay the aircraft owner (such as if the aircraft was being flown by an unqualified pilot at the time of the accident)? If so, describe.
Yes. Such can be included in an insurance policy. However, if it is found that the aircraft owner increased risk, such that it allowed unqualified pilot to fly, then it can be made liable to the insurance provider. The insurance firm will pay the bank while the insurance provider will require the aircraft owner to pay.
For each of the following events, indicate whether the event triggers considerations relating to your aircraft insurance policy, and explain why.
Yes. Such risk cannot be assumed to have been foreseen by the provider.
A different pilot will be flying the aircraft.
No, provided the pilot is licensed and properly trained, and no pilot requirement was breached.
The aircraft is going to be flown outside of the contiguous (lower 48) United States.
No. Such is standard practice for an aircraft to be flown on different routes unless the policy specifically stated a route. Such are called geographic considerations.
You have upgraded the aircraft’s avionics, adding significantly to its value.
No. The insurance policy still is liable for the amount stated. The owner however may choose to reassess the policy for the valuation and likewise the premiums involved to be higher.
You are going to fly the aircraft to Santa Fe, New Mexico.
No, unless such route was excluded from the coverage of the insurance
You have finally paid off the loan you took to purchase the aircraft.
Yes. The insurance policy need not involved unpaid creditors
You sell the aircraft.
Yes. The owner is not anymore covered and not the beneficiary of the contract. The new buyer will be the beneficiary.
What is subrogation, and how can renter pilots be protected against it?
Subrogation exists when an entity pays an amount in behalf of another and steps into the shoes of such. He will then be the one who will go after the original creditor. In this case, the insurer will first pay the damages in your behalf. If it has been found that the owner has been deliberately negligent, he can come after the
While filling out your application for aircraft insurance, you round off your total flight time to the next higher 100 hours. You are issued an aircraft insurance policy based on that application but have an accident that causes extensive damage to the aircraft before you actually accumulate the total number of hours you reported on your application for that insurance policy. Is the insurance company obligated to pay for repairs of the aircraft? Explain.
No. If it has been expressly stated that the insurance will cover flight for 100 hours or more, the owner cannot claim for flight below such.
While you believe that you have now accumulated over 10,000 hours of flight time, it has been your habit to record in your pilot logbook only time required by FAR to be logged to show proficiency, so you have logged only 3,000 hours of flight time. Which figure should you use in your application for the aircraft insurance? Why?
The 3,000 hours of flight time as it was the one logged
No. The insurance company shall pay automatically for any liability arising from injury or death.
You are opening an aircraft repair station that will inspect, repair, and modify customer’s aircraft, providing necessary parts in the process. The business has its own hangar, where the work will be performed, and offices including a reception area and pilot lounge for customers along one side of the hangar. The business will not own or operate any aircraft. What insurance coverages will the business need?
A hangarkeeper’s liability should be obtained. This includes liability for damage to other people’s aircraft when in their care, custody or control.
A flight school
Limited commercial
An air charter company
commercial
An air cargo company
commercial
Forest fire fighting
Special uses
A full-service FBO
commercial
A corporate jet
Limited commercial
A sport plane for personal recreational acrobatic flying
Pleasure and business
A sport plane for commercial dual acrobatic instruction
Pleasure and business
A hot-air balloon for personal recreational flying
Pleasure and business
A hot-air balloon for hire for rides
Aircraft title and product liability and excess liability
A hot-air balloon for commercial bungee jumping
Special uses
Crop spraying
Special uses
A commercial civilian “Introduction to air combat maneuvering” school, using former military aircraft.
Special uses
When you receive your aircraft insurance policy, what should you do with it?
It should be registered with the FAA.
Such is called excess liability insurance. It covers the worst case scenario of the business.
What is your aviation insurance company likely to do as a result of receiving this information?
Would this action y your insurance company have any effect on your future ability to purchase aircraft insurance?
Yes. The insurers upon learning that not all risks have been disclosed or that there has been a deliberate intent to hide the risks which are apparent and existent, they may refuse to provide insurance, or that premiums which are prohibitive will be imposed.
What effect has the General Aviation Revitalization Act (GARA) has on products liability for aircraft manufacturers, repair stations, and mechanics?
They have been hard hit due to the GARA.
You manage the flight department that operates a dozen multimillion-dollar jets transporting executives, guests and customers for a corporation that does business internationally. One of the nations where the corporation does very lucrative business is experiencing a civil unrest characterized by increasingly violent anti-government and anti-western demonstrations. The corporation’s legal department is concerned that the corporation’s present aircraft insurance policy might not cover the kid of risk that are developing in that nation, since the policy includes Lloyd’s form AVN 48B, captioned “War, Hi-jacking, and Other Perils Exclusion Clause.” S there a way to insure this risk? If so, describe.
The only way to insure this risk is thru excess liability. However, sometimes, the cost is prohibitive.
