As a commercial pilot, I personally get to enjoy flying a Cherokee six to client meetings in other states. Having the airport adjacent to our office gives me the flexibility to see clients in the Delmarva or New England without excess travel and hotel stays. If you decide to fly your own plane or a charter one for business, there are liability exposures you should consider.
Most commercial general liability policies exclude claims related to the use or operation of aircraft. What’s more, businesses may still be considered at fault, regardless of whether or not they own the aircraft involved in a claim.
To protect themselves and to fill any gaps in coverages, businesses can turn to non-owned aircraft liability insurance.
What Is Non-owned Aircraft Liability Insurance?
Non-owned aircraft liability insurance provides coverage to businesses in the event that they become liable for claims related to third-party injuries and property damage resulting from the use of aircraft not owned by the business itself.
This type of coverage is particularly useful for a business that does the following:
- Utilizes a charter aircraft to transport senior executives. Many companies charter flights through third-parties to shuttle their leaders to and from important meetings. However, in the event of an accident, claimants may target a business for damages, regardless of whether or not they own the aircraft or employ the pilot.
- Allows its employees to charter flights during normal business activities. This exposure is similar to the one above. However, in some cases, companies may not be aware that their employees are chartering flights during off-site business activities until it’s too late—which could further complicate the claims process.
- Utilizes aircraft for research or other business-related activities. Common activities include utilizing aircraft for the exploration of resources, aerial photography and aerial advertising. In cases like these, even if an employee is not on board during an incident that initiated a claim, companies could still be exposed to potential losses.
- Has an employee with a pilot licence. These employees may fly aircraft during normal business activities. When this happens, there’s a potential for an incident to occur in which the employer would be at fault.
What to Consider When Choosing a Policy
Like most policies, there is no “one-size-fits-all” approach to non-owned aircraft liability insurance. That said, there are a number of policy details to consider when weighing your options:
- Limits of liability. In most cases, policy limits range from $5 to $100 million.
- Aircraft restrictions. Certain aircraft may be restricted from coverage, typically based on its seating capacity. The general rule is that the lower the seating capacity, the lower the premium.
- Aircraft damages. Standard non-owned aircraft liability insurance typically excludes coverage for any damage to the aircraft.
- Areas of flight. Most policies consider the United States, Canada and Mexico the standard territories. If you plan to charter or utilize aircraft outside of those regions, it may be difficult to secure adequate coverage. While it is possible to find non-owned aircraft liability coverage for non-standard territories, premiums are often more costly than traditional policies.
- War, terrorism and hijacking. Standard non-owned aircraft liability policies typically exclude acts of war, terrorism or hijacking. Businesses concerned about this exposure would have to seek out other policies to address any gaps in coverage.
Managing Your Exposures
In addition to purchasing non-owned aircraft liability insurance, there are a number of strategies businesses can utilize to limit their exposures—allowing organizations to prevent claims before they occur. Above all, it’s important for businesses to communicate their policies regarding chartered flights and the use of non-owned aircraft to employees and leadership.
The following are three other important considerations:
- Log any aircraft usage within your business. This will ensure that you are aware of all potential exposures.
- Examine the qualifications of employee pilots thoroughly, if applicable. Take care to assess the number of hours they have logged in the air and what types of aircraft they are comfortable utilizing.
- Businesses should always request a certificate of insurance from the aircraft operators they employ. Certificates of insurance should be include a cross-liability clause, a waiver of subrogation and sufficient levels of liability coverage to reduce potential exposures.
Whether you’re concerned about your coverage exposures when chartering flights or utilizing employee pilots, I can assist you. Purchasing non-owned aircraft liability insurance is complex, and the policies may differ depending on the type and severity of exposures.
Have a safe trip.