Aviation Insurance - Commonly Used Terms
Liability
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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.
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Occurrence
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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.
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Single Limit Each Occurrence
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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.
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Passenger Sublimit
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The
maximum amount the insurer will pay for covered damages to any one passenger,
regardless of the Single Limit Each Occurrence.
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Medical Payments
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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.
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Hull Coverage
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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.
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Insured Value
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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
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Ground & Flight
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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.
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Ground Not In-motion
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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”.
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Ground In-motion
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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.
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Deductibles
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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.
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Expanded Coverage Endorsement
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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.
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