Aircraft Insurance: What it is, Coverage Level, Types

Aircraft insurance provides liability and property coverage for the aircraft. Aircraft insurance, often known as aviation insurance, is available for a wide range of aircraft types, including normal, experimental, and historic aircraft, as well as seaplanes.

While aircraft insurance normally covers the repair or replacement of damaged aircraft and parts, aviation accident insurance covers liability claims resulting from injury or loss of life.

Understanding Aircraft Insurance

Boat owners can acquire boat owner insurance to safeguard their boat or watercraft from harm, and airplane owners can do the same. Aircraft insurance is required since claims or actions arising from the ownership, maintenance, or usage of aircraft are often excluded under normal commercial general liability (CGL) policies. 

Businesses that choose to employ private aircraft in their activities must obtain airplane insurance to cover their liability loss exposure. This can include aircraft liability coverage, stand-alone non-owned aircraft liability, and possibly excess aircraft liability coverage as well. Third-party aircraft liability coverage is frequently provided, along with hull (physical damage) and medical costs coverage. Aircraft policies are not standardized and vary greatly. Some insurers provide plans that combine aircraft liability and hull with other aviation coverages such as aircraft products liability, airport liability, land-based general liability, and hangar keepers liability.

The policy may also include coverage for passengers' personal things as well as liability indemnity for the hangar where the aircraft is parked. Insurance coverage may cover injuries received while operating the aircraft, the cost of emergency landings, and the expenses involved with search and rescue activities.

The policy's kind of coverage and premium amount are determined by the type of aircraft covered. Insurers may find that airplanes produced at home (referred to as home built aircraft) pose a higher risk than aircraft purchased completely assembled. Some policies include first flight coverage for aircraft made at home.

Coverage Levels and Types of Aircraft Insurance

Insurance companies may offer varying levels of coverage based on whether the aircraft is operated for recreational or business purposes. If an aviation company offers flight training, it may require insurance coverage. A financial institution may get airplane insurance for its fleet of corporate jets.

Some insurance firms will also give insurance coverage for aircraft that the operator rents rather than owns, as the operator may be liable for thousands of dollars in damage if something happens to the aircraft. Organizations that allow members to share the use of one or more aircraft, such as flying clubs, can also purchase aircraft insurance.