Aviation Insurance - Commonly Used Terms

Liability

A legal duty you owe to another party for damages due to the ownership, maintenance, or operation of a covered aircraft. For Personal & Business aircraft policies, this coverage typically covers bodily injury to passengers, bodily injury to persons other than passengers, and liability for destruction or damage to the property of others.

Occurrence

A sudden and unforeseen accident or incident that causes damage. Typically this includes repeated or continuous exposure to the same generally harmful conditions. Some policies use the term “accident” instead, which may be narrower in scope.

Single Limit Each Occurrence

The maximum amount the insurer will pay for liability damages for a single claim or any combination of claims, arising out of any one covered occurrence.

Passenger Sublimit

The maximum amount the insurer will pay for covered damages to any one passenger, regardless of the Single Limit Each Occurrence.

Medical Payments

Offers reimbursement for reasonable medical expenses incurred by others for injury due to an incident, regardless of fault. This may include or exclude the pilot and passengers. Medical payments are subject to a per person limit, and often an aggregate limit for each occurrence.

Individuals that have their medical bills paid in full are less likely to sue, which helps to avoid going to court, and costly legal fees for the insurance company.

Hull Coverage

For physical damage to the covered aircraft.  The term “hull” comes from marine insurance. The first aviation insurance policies were written in the early 1900’s by Lloyds of London, the world’s first and largest marine insurer.

Insured Value

The stated value of the aircraft which will be paid in the event of a total loss, minus any deductibles. This can cover the aircraft owner, or others with a direct financial interest such as a bank or lienholder.

It is important that you properly assess your plane’s value! If this value is too low, in the event of an accident there is a greater likelihood of the insurance company declaring your plane a total loss. Rather than repairing it, the company can take possession of your aircraft as salvage, and you will be reimbursed the too-low stated value

Ground & Flight

Physical damage coverage for the aircraft that applies whether it is in flight or not in motion at the time of loss. For fixed-wing aircraft, "flight" is from the time the plane begins its take-off run, to when it is no longer in motion after landing.

Ground Not In-motion

Physical damage coverage for the aircraft while it is on the ground, and not in motion under its own power or resulting momentum. Commonly thought of as “storage coverage”.

Ground In-motion

Physical damage coverage for the aircraft while it is on the ground or in motion under its own power. This coverage is not as commonly available.

Deductibles

Must be paid by the insured in the event of any physical damage claim under Hull Coverage.

Deductibles are intended to reduce low value “nuisance claims”, and give you an added incentive to avoid accidents. Higher deductibles can reduce your insurance premium. To make their coverage more attractive, some carriers only offer coverage without deductibles.

Expanded Coverage Endorsement

Lists many additional coverages offered by the carrier, which add significant value to your policy. Many additional expenses can be incurred in an accident, which aren’t covered by the basic liability and hull coverages.