Major commercial airlines own fleets of expensive jets, and the liability exposure is enormous. Occasionally, a commercial jet will crash killing hundreds of passengers and causing extensive property damage to surrounding buildings. Legal liability arising out of the crash of a fully loaded jet airliner can be catastrophic. In addition, some firms may own aircraft used on company business. Company planes may crash, resulting in death or bodily injury to the passengers, as well as death or injury to people on the ground and substantial property damage to surrounding buildings where the crash occurs.
Like automobile insurance, aviation insurance includes both property insurance on the planes and liability insurance. Aviation insurance policy provides physical damage coverage for damage to the aircraft, liability coverage for injury to passengers and people on the ground, and medical expense coverage for passengers.
1. Physical Damage Coverage: A plane on the ground can be damaged from fire, collapse, theft, vandalism, or other perils. While taxiing, the plane can collide with vehicles, building, or other aircraft. But the most severe exposure is present when the plane is in flight. A plane can collide with another aircraft; it can be struck by lighting or be damaged by turbulent winds; it can also experience mechanical difficulties from a fire or explosion.
An aircraft hull policy provides protection, either for damage caused by specified perils or on an open-perils basis. Although aircraft can be covered on an ―all-risks‖ or open- perils basis, certain exclusions apply, excluded losses include damage to tires (unless caused by fire, theft, or vandalism), wear and tear, deterioration, mechanical or electrical breakdown, and failure of installed equipment. However, these exclusions do not apply if a covered loss occurs.
2. Liability Coverage: Liability coverage pays for bodily injury or property damage arising
out of the insured‘s ownership, maintenance, or use of the insured aircraft.
3. Admitted Liability Coverage: also known as voluntary settlement coverage, is issued only whit passenger legal liability. It is written on a per set basis and provides specified sum for loss of life, limb, or site by passenger.
4. Medical Payment to Passengers: the policy also provides medical payments coverage to passengers which includes hospital, ambulance, nursing, and funeral services.