What is Aviation Insurance and What are Its Types?


Also known as aircraft insurance, aviation insurance typically offers both property and liability coverage to aircraft. So, it covers losses that can result from aviation risks such as damage to property, loss of cargo, or injury to people. In many countries, aircraft owners and operators are required by law to purchase insurance for third party liability.

In the aviation industry, third party liability usually includes the payment that aircraft owners and operators have to pay for the medical expenses of the people injured in an aircraft accident. This insurance may also include the expenses of search and rescue operation missions, costs incurred on emergency landings, and injuries received while operating the aircraft.

There are several types of aviation insurance that aircraft owners and operators can opt for. The insurance covers several different types of aircraft such as standard, vintage, experimental, and even seaplanes. The premium to be paid depends on the type of aircraft being covered. Further, the levels of coverage may differ depending on whether the aircraft is for personal use or for commercial purposes.

The aviation business, as well as businesses that use private aircraft in their business operations can opt for aircraft insurance. The insurance is available for even flying clubs and for those aircraft which are rented.  

The following are the major types of aviation insurance offered by the insurance companies –

Public Liability Insurance

This insurance covers the expenses that can result from damage occurring to the third party entities and property, like houses, crops, other aircraft, cars, and airport facilities caused by the insured aircraft. This insurance is also known as third party liability. The insurance does not offer coverage to the insured aircraft or the injured passenger travelling in that aircraft. In most countries, this insurance is mandatory.

Passenger Liability Insurance

As the name suggests, this insurance provides payments for injuries and final expenses in the event of death of a passenger travelling in the aircraft. This insurance is usually mandatory by law for commercial or large aircraft.

Combined Single Limit (CSL)

CSL insurance clubs the coverage provided by the public liability and passenger liability insurance into a single coverage. It sets an overall limit per payout per accident. By combining both public liability and passenger liability insurance into a single package, CSL offers more flexibility to the insurance holders in making payments for their liability.

Ground Risk Hull Insurance Not in Motion

This type of aviation insurance provides coverage for damages sustained by the aircraft when it is on the ground and not in motion. So, the insurance provides coverage for damages that can be caused by fire, theft, flood, wind or hailstorms, animals, hangar collapse, and uninsured vehicles or aircraft colliding against the insured aircraft. The amount of payment to be made is usually decided at the time of purchasing the insurance.

Ground Risk Hull Insurance in Motion

This aviation insurance provides coverage for damages that the aircraft may sustain while in motion. However, it excludes any damage that might occur while landing and taking off. This issue led to a lot of disputes between the aircraft owners and insurance companies, which eventually led many insurance companies to discontinue this type of coverage.

In-flight Insurance

In-flight insurance provides coverage for damages that an aircraft may sustain when it is in motion. This is the most expensive aviation insurance as most accidents are likely to occur when the aircraft is in motion.

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