Aviation Insurance Glossary
There are various terms and definitions used in aviation insurance that you should familiarise yourself with. Most of these terms and phrases are contained in the definitions section of your policy wording however, there are some terms and phrases that are not always defined in your policy wording but are a part of the common insurance language.
This glossary lists key common terms used in Aviation Insurance
The actual policy holder who is specifically named on the policy. Named insureds are responsible for premium payment, have the authority to cancel or make changes to a policy, will have a say in the claims process, and are included on any claim payments that are issued.
A person or persons who are protected under the terms of a policy but who is not the original named insured.
Aircraft Hull and Liability Insurance
Aircraft Insurance policies are made up of two parts, Hull cover and Liability cover as defined below. These covers are generally issued in the same policy for comprehensive coverage.
Aviation Hull Insurance
Covers the insured for physical damage to the aircraft due to an accident or incident. It is not liability coverage and is therefore triggered by a covered event, regardless of the reason for the damage or loss. This does not provide cover for loss of use or wear and tear to the aircraft.
Aircraft Liability Insurance
Protects the insured from claims by other parties ("third parties") for bodily injury, death and/or property damage. The claim must result from an occurrence related to the operation of the aircraft.
Combined Single Limit
A combined dollar limit of liability applying to bodily injury and property damage. Usually stated as a limit per occurrence.
Breach of Warranty
If a Named Insured violates the terms of the insurance policy, thus invalidating the policy, a breach of warranty endorsement guarantees the insurance company will make payment to the financier for any damage to the aircraft up to the outstanding balance of the loan or a percentage of the agreed value whichever is less.
Open Pilot Warranty
A clause in the policy that will state the minimum qualifications for a pilot to meet who has not been specifically approved by the insurance company or previously listed by name on the policy as a pilot. A pilot who is named on the policy or who "meets the open" simply affirms to the named insured that the pilot's legal and proper use of the aircraft will not void the named insured's coverage.
Private, Business and Pleasure
Non-commercial use of the aircraft for personal or business travel where no charge is made for such use.
Commercial use of an aircraft for which a charge or compensation is received by the insured, while either carrying passengers and/or cargo, or performing some other service under a written or oral agreement (contract).
Gives the insurance company (instead 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. Waiver of subrogation only applies to physical damage to the aircraft.
When the cost of repairing the aircraft, added to its salvage value before repairs equal or exceed its agreed value. Disappearance, or theft of the entire aircraft, is a total loss.