"Jim’s background as an Air Force pilot, Airline pilot, and aircraft owner allows him to see things not just as an insurance broker but also as a colleague. Having a broker of his character and professionalism gives me the peace of mind to know that my broker is on my side, making my interests his interests."
Director of Aviation, VQBGS, Ltd.
President of Fast Aircraft, Inc.
Jim Gardner, President The James A Gardner Company PO Box 680905Marietta, GA 30068 Phone: 678-278-2100Fax: 678-398-7038
There are many terms and definitions used in aviation insurance which you need to know in order to read and understand your insurance policy. Many of these terms and phrases are contained in the definitions section of your policy in which the insurance company defines the terms as they relate to that specific policy. These definitions vary from policy to policy.
Declaration Page - The first page of the insurance policy which “declares” pertinent information describing pertinent information about the Risk such as the Named Insured, the policy period, aircraft number and description, limits of liability and hull value, territory, pilot clause. Sometime the declaration page is accepted as proof of insurance rather than getting a specific Certificate of Insurance.
Aircraft Hull and Liability Insurance – Aircraft Insurance in the US comes in two parts, Hull and Liability as defined below, issued in the same policy. In other parts of the world they are issued as two separate policies for the same aircraft.
Aircraft Hull Insurance - Reimburses the insured for physical damage to the aircraft due to an accident or incident. Typically does not cover loss of use, diminished value, or wear and tear.
Aircraft Liability Insurance - Protects the insured against claims for bodily injury and property damage caused by or arising out of the ownership, maintenance, or use of the aircraft.
Medical Payments – (Med Pay) Voluntary payments to passengers for direct medical expenses as a result of an accident or incident. Paid without regard to legal liability.
Purpose of Use - Defined in each policy, this spells out the approved uses of the aircraft under the policy. Some common uses are:
OPW OR OPC - The open pilot warranty or open pilot clause sets forth the minimum requirements for a pilot to fly the aircraft under a policy without specific approval of the insurance company. Usually found on the page following the declaration page. This page will usually include the Named Pilots and the training requirements of all pilots whether named or under the OPW.
Named Insured - The policy owner. The person or entity whose name appears on the Declaration Page of the policy and who has the authority to change or cancel the policy.
Insured – The party in the insuring agreement the insurance company agrees to indemnify. For example, an employee of the Named Insured.
Additional Insured - A person or entity with an interest to be protected but who is not a named insured.
Breach of Warranty – An endorsement provided for the lien holder which guarantees the insurance company will pay for any damage to the hull even though the Named Insured may have done something to invalidate the insuring agreement such as violating the open pilot warranty.
Subrogation – Gives the insurance company (in lieu of the Named Insured) the right to pursue a third party for recovery of damages paid that they feel is responsible for the loss.
Waiver of Subrogation – The insurance company agrees to give up the right to pursue recovery from a third party, usually in conjunction with granting Additional Insured status. For example, it is common for a contract pilot to be asked to be named as an Additional Insured with a Waiver of Subrogation to defend him against third party liability and to protect him from being sued by the insurance company for mistakes he might make in the operation of the aircraft which may have contributed to the damage.
Combined Single Limit - A combined limit of liability applying to both bodily injury and property damage. Usually stated as a limit per occurrence.
Smooth Limit – Insurance jargon meaning a single limit as above with no internal per person limits. The entire limit is available to satisfy a claim by one individual. I.E. “$1 Million Smooth.”
Sub-limit - A single limit of liability for bodily injury and property damage per occurrence which is further limited to a smaller maximum amount payable to one person or passenger. Usually stated “1 Million sub 100” meaning $1 Million with a bodily injury sublimit of $100,000 per person or passenger.
Premises Liability Insurance – Part of a General Liability policy that insures the policy holder against any third party damage or injury arising out of a faulty premises.
Products/Completed Operations Liability Insurance – Part of a General Liability policy that insures the policy holder from third party liability arising out of the use of the product they manufacture and/or install on the airplane. This is not warranty insurance.
Hangarkeepers Legal Liability Insurance – A form of bailment and part of a General Liability policy that insures the policy holder against damage the policy holder does to a third party’s aircraft while in their care, custody, and control. This cannot take the place of the aircraft owner’s aircraft insurance. Hangarkeepers Liability pays only for the policy holder’s (FBO’s) mistakes. It does not cover the policy holder’s aircraft, pay for damage caused by the owner of the aircraft, or acts of god like the aircraft being destroyed by a tornado while in the policy holder’s hangar.
There are many more common terms and phrases which you may come across that are unfamiliar to you. If they are not defined within the policy itself, call your agent and broker and ask for an explanation.
Call or email Jim Gardner with your questions. Part of the service we provide our clients is to make ourselves available to answer any questions you have. We work for you, earning your trust every day.