Frequently Asked Questions
How much should I insure my aircraft for?
Aircraft are insured on an agreed value basis; this amount should be equal to what it would cost you to replace your aircraft with an identical aircraft of same condition (e.g. airframe, engine, propeller time, paint and interior condition). If your insured aircraft is damaged the insurer will either repair the aircraft up to the agreed value or cash settle the full agreed amount.
Issues occur when an aircraft is under or over insured. Damage to an over insured aircraft may see the insurer elect to repair the aircraft resulting in it being grounded for an extended period of time. Alternatively, underinsuring will result in a prematurely written off aircraft with the insurer retaining the salvage leaving you with inadequate funds to source a similar aircraft.
What liability limit do I require?
A number of factors need to be considered when purchasing liability coverage such as the number of passenger seats, bank requirements, where the aircraft will be operated and policy uses (e.g. Charter and minimum requires set out under the Civil Aviation Carriers Liability Act.)
There is no mandatory liability limit required in Australia for aircraft operating outside of charter/RPT operations. It is best to consider the above criteria and your exposure while operating the aircraft which can be discussed with your broker.
What is the difference between Third Party Liability (TPL) and a Combined Single Limit (CSL) Liability?
Third Party Liability covers you for the damage caused to third parties; bodily injury and/or property damage (everything outside of the aircraft) that you may be held liable for.
Passenger liability covers you for injury and / or death caused to passengers and their baggage in the event of an accident which you are deemed liable.
A Combine Single Liability limit covers both third party and passengers for anyone accident or occurrence up to the limit specified in your policy.
Who can fly my aircraft?
Any pilot who is named on your policy schedule is approved by your insurer to fly your aircraft. Policies maybe amended with the appropriate notice and agreement throughout the policy period to include additional pilots. To add a pilot, basic information about the pilot must be submitted to the insurer including total time, time on type and any claim history. Depending on a pilot’s experience additional premium may be required.
In most cases, the policy will be automatically extended to cover any duly licensed instructor suitably qualified to fly the aircraft type for any licence renewals.
What is an Open Pilot Warranty (OPW)?
When it is known that there will be multiple pilots flying the aircraft an Open Pilot Warranty can be added to the policy. An OPW outlines the minimum requirements that a pilot is required to have to be approved to fly the aircraft. Pilots who do not meet the minimum requirement outlined within the OPW are still able to fly the aircraft but must first be named on the policy (process outlined in Who can fly my aircraft).
OPW’s may incur a higher premium (than if each pilot was individually named), dependent on the agreed minimum hours experience, Therefore it is important to consider if an OPW is for you; they are best used for aircraft available for rent, charter or online with a flying school / aero club.
What is Breach of Warranty?
How does the insurance company determine my insurance premium?
Some of the key influences that can affect the insurers quoted premium are the aircraft type, value, what the aircraft will be used for, your total flying experience, experience on the aircraft to be insured, claim history, deductible and how long you have owned and insured the aircraft.
Your premium is also made up of relevant local state and territory government stamp duties and levies, as well as GST.
Can you issue me a cover note?
What happens in the event of a claim?
Is there a return premium if I make a claim?
What is covered under policy uses?
Rental covers the aircraft being leased or hired to an individual or company for private, pleasure, business purposes.
Charter or Commercial cover is defined as the aircraft being hired or leased by an operator and used under their AOC to transport passengers or cargo for hire or reward.
If the aircraft is being used for any other purpose it must be listed specifically on the policy, this may include but is not limited to: mustering, baiting, feral animal control, agricultural spraying, powerline inspection, or firefighting. If you have any doubts as to whether a use should be listed consult your broker.
Why use an insurance broker?
When arranging insurance, many people don’t seek out advice or fully understand the details of their policy which can unfortunately lead to them being exposed in their time of need. While no-one expects to have a claim ensuring you are correctly and comprehensively insured will reduce any hardship when a claim is made against the policy.
At Aviation Insurance Brokers of Australia we specialise in aviation insurance. Not only are we experienced brokers but pilots ourselves allowing us to negotiate the right and most comprehensive cover for you.
Do I have any liability if I sell my aircraft?
Over the years we have sighted many Aircraft Sale Agreements that in most cases contain a “Disclaimer”. Below is an example of one:
“The aircraft is sold “AS IS”. This means that no warranty of any type, whether of merchantability, fitness for the purpose or otherwise, expressed or implied in fact, or by law, is or shall be, applicable to the aircraft product sold hereunder. The Seller shall have no other or further liability by reason of the manufacture or sale of the aircraft sold hereunder, or of its use, whether on the basis of breach of warranty, strict liability, negligence or otherwise. In no event shall the Seller be liable for general, special, consequential or incidental damages relating to property damage or economical loss (including, without limitation, damages for loss of use or loss of profits).”
The above example may mitigate any post sale liability however you should always seek independent legal advice before you agree to any contract condition. In absence of such a disclaimer then you may require Run Off Products Liability insurance and therefore please contact your broker to discuss further.