Liability insurance

Aircraft Liability Insurance

The aircraft liability insurance covers the insured for sums which the insured shall become legally liable to pay as compensatory damages for bodily injury and/or property damage caused by an occurrence arising from the use of the aircraft by the Insured.

The aircraft liability insurance consists of Third Party Legal Liability coverage and, depending on the type of aircraft, Passenger Legal Liability coverage.

Third Party Legal Liability

This type of liability coverage includes damages for bodily injury and/or property damage to persons or property outside of the aircraft.

Passenger Legal Liability

This type of liability coverage involves damages for bodily injury to passengers whilst entering, on board, or alighting from the aircraft, as well as property damage to baggage and personal effects of passengers whilst in the care, custody or control of the insured for the purpose of carriage by air.

Onboard pilots and crew are not covered under the Passenger Legal Liability insurance. However, the insurance can be extended to include them at an additional premium.

Minimum Liability Insurance Requirements

In April 2004, the European Union instituted a set of minimum liability insurance requirements for all air carriers and aircraft operators, named Regulation (EC) No 785/2004 (revised for inflation in 285/2010). This regulation has been widely adopted by non-EU member states as well and is now the standard in most European countries.

The limits in the above regulation are stated in SDR (Special Drawing Rights). The SDR is essentially an artificial currency used by the International Monetary Fund (IMF) and is based on a basket of key international currencies reviewed by IMF every five years.

Aircraft operators can freely choose  a different currency as long as as the limit remains equal to or exceeds the SDR limit, using the rate of exchange at the inception of the insurance.

Combined Single Limit

Whereas the minimum limits for Third Party Legal Liability and Passenger Legal Liability are stated as separate limits in the above regulation, aircraft operators may choose a combined single limit for both.

The combined single limit simply states a single limit that applies to any combination of bodily injury and property damage for third party and passenger. This type of coverage provides more flexibility in paying claims for liability, especially if passengers are injured, but little damage is done to third party property on the ground.

Extended Coverage

All of the above types of liability insurance are automatically extended to include coverage for claims caused by war, hi-jacking and other perils (other than any hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter).

Exclusions

Certain types of losses, or losses that relates to a specific nature or situation, are not covered under the aircraft liability insurance. We refer to the policy wording for a comprehensive list of covered losses and exclusions.

Additional Coverage

Aircraft owners and operators may require additional liability coverage. This can include:

• Cargo liability insurance
• Passenger and baggage delay insurance
• Airside liability insurance