Aviation Insurance

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The Aviation insurance Sector was first launched in the early years of 20th century and its policies were laid down in the year 1911 by Lloyd's of London. The main target of this sector are the people victim to accidents or loss of life due to air crash or similar to any such calamity. In the year 1929, the Warsaw convention was signed keeping in mind the plights of the people flying by air. The convention had some particular terms and conditions along with some restrictions to stand by and was the first acknowledgement for the airline sector identified till date.

Considering the fact that there should be a specialist sector, an aviation committee was formed by the International Union of Marine Insurance (IUMI) in the year 1933. By the following year International Union of Aviation Insurers was established with eight European aviation insurance organizations resolving to figure out the concept of Aviation insurance. Throughout the world, there are a number of insurance markets depending on the aviation activity, providing aviation insurance to the people of which the largest market is in London. The US also has a major share in the world's general aviation fleet and is a established market in this sector.

Associated Risks of Aviation Insurance

Hull "ALL Risks"
The hull "All Risks" policy usually pertains to chances of physical loss or damage to the aircraft. These policies are subjected to a standard level of deductible (uninsured amount borne by the Insured) applicable in case of partial loss. This deductible presently ranges from US $ 50,000 (in case of Twin Otter) to US $ 1,000,000 (in case of Boeing 747). The term "all risks" can be misguiding and it should be cleared that the term is not subjected to any kind of consequential loss, or loss of use and delay. The term addresses to the restoration of the aircraft to its previous condition before the loss. Presently the bulk of airline hull "all risks" policies are formed on the basis of agreement between the insurers and the insured covering the policy period, the value of the aircraft and in any case of total loss the agreed value should be payable in full. There is no option for replacement under such an agreement.

Exceptions to such risks are:

  • Wear and tear of the aviation craft are not to be included in the aviation insurance.
  • Mechanical breakdown are usually compensated by this type of insurance.
  • Ingestion damage - caused by stones, grit, dust, sand, ice, is also excluded.
  • The hull "All Risks" policy will pertain to the exclusion of war damages. War here means any kind if civil war, strikes, riots, disturbances, confiscations, hi- jacking or any kind of political or terrorist attacks.
Liability Insurance
Liability is basically categorized in two aspects
  • In regard of passengers, baggage and cargoes carried on the aircraft.
  • Aircraft Third Party Liability - the liability for any sort of property damage or to the people outside the aircraft
The exceptions of Liability insurance are:

  • Any kind of loss incurred by the own property of the insured.
  • War and allied risks associated with it.
  • Noise and pollution unless resulted from crash, fire or any kind of explosions registered inside the air plane,
Hull Total Loss Only Cover
Hull total loss only cover is subjected solely to total loss of the aircraft and is particularly formed for the old aircrafts as the condition of such are very poor and are insured for low amount the premium of which would also be very low. The proportion of partial losses to total losses in case of such aircraft is very inadequate.

Last Updated on 15-06-2011

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