A
A-Rated Carrier:
An A-rated insurance company is one that the credit agencies judge to be on strong financial footing. An A-rated insurance company is more likely to honour the terms of your policy than a company with a lower grade.
Accident Forgiveness:
A program offered by an insurance carrier, which when specific training requirements are met, deductibles are waived with no increase in renewal premium, due to an accident, incident or claim.
Additional Insured:
A person or entity with an interest to be protected but who is not a named insured.
Additional Premium:
This will come into play if a cover is changed during the term of the policy and incurs an extra cost.
Aggregate Policy Limit:
The maximum amount an insurance company will pay under the terms of a policy during the term covered by that policy.
Aircraft Hull and Liability Insurance:
Aircraft Insurance can come in two parts (for example in the US) as Hull and Liability Insurance (as defined below) and issued in the same policy. In other parts of the world, policies may be issued as two separate policies for the same aircraft.
Aircraft Liability Insurance:
This form of coverage protects the insured from claims for bodily injury or death by members of the public and passengers if included under the terms of the insurance. This kind of insurance is normally written with limits per injured person, and another limit per occurrence. Other policies may be issued with a combined single limit, or total aggregate amount with no limit per person, or for each passenger. Protection against loss from claims filed by any third party for damage to property, including the use of that property, is a part of this coverage.
Aircraft Non-Ownership Liability Coverage:
This protects the named insured from liability arising out of the use of aircraft not owned by or regularly provided to the named insured.
Airport Premises Liability:
Designed to protect the owner or operator of an airport against losses arising out of use of the airport.
Air Taxi and Charter Operators:
Non-scheduled air carriers operating on-demand commercial service for passengers and cargo shippers.
Aircraft Physical Damage Insurance:
Reimburses the insured for physical damage to the aircraft due to an accident or incident. Typically, does not cover loss of use, diminished value, or wear and tear. Also known as Hull Insurance.
All Risk Insurance:
All risk insurance is far more comprehensive cover including all risk and often covers commonly excluded commodities and automatically covers any risk that the contract does not explicitly omit.
All Risk Cargo insurance is door-to-door cover.
Amended Coverage:
To adjust, modify, or change coverage.
B
Blanket Insurance:
One amount of insurance covers all property located at multiple locations.
Bodily Injury Coverage:
The physical injury, sickness, disease and, if arising out of the foregoing, mental anguish, or death of a person including damages for care and loss of services caused by an occurrence.
Bound Policy:
A bound policy is temporary coverage extended to an applicant during the application process. A policyholder may bind their coverage, and then have a set amount of time thereafter to get their application completed and their premiums paid.
Breach of Warranty:
Provides physical damage (hull) coverage in the event that the insured invalidates or breaches the contract and the company would otherwise not be obligated to pay.
C
Cargo Insurance:
Insurance cover aimed at protecting goods whilst being transported around the world, whether by road, rail, sea, or air.
Certificate of Insurance:
Document proving the existence of the insurance policy and describes the key features and conditions.
Commercial Insurance:
Commercial Insurance is coverage that protects businesses against property damage or bodily injury claims. A Commercial Insurance Policy allows the insured to charge for their services.
Comprehensive Coverage:
Insurance designed to pay for the repair or replacement of the policy owner’s aircraft in the event of damage not resulting from an accident. Term used for a variety of insurance policies providing broad protection.
Contractual Liability:
A contractual obligation to pay damages for which another is legally liable for.
D
Declaration Page:
The first page of the insurance policy which “declares” pertinent information describing important information about the Risk such as the Named Insured, the policy period, aircraft number and description, limits of liability and hull value, territory, pilot clause. Sometime the declaration page is accepted as proof of insurance rather than getting a specific Certificate of Insurance.
Degree of Risk:
The likelihood of an occurrence; the accuracy with which losses can be predicted.
E
Earned Premium:
That portion of a premium for which the policy protection has already been given during the now-expired portion of the policy term.
Effective Date of Coverage:
This is the date your coverage becomes effective upon the receipt of your premium, provided your enrolment has been approved.
Employers’ Liability Insurance:
Employers’ liability insurance safeguards businesses against legal and compensation expenses from employee claims. It’s a key type of insurance, because if one of your employees falls ill or sustains an injury in the context of the work they do for you, you could be held liable.
Exclusions:
Aviation Insurance – Items or conditions that are not covered by the insurance contract.
F
Family Sub-Limits:
A limitation in an insurance policy that places a maximum on the amount available to a family member of the policyholder.
Fixed Base Operators:
Airport-based commercial operators who provide some or all of the following activities: line services, aircraft and engine maintenance, sale of parts and accessories, aircraft sales, charter and rental of aircraft, corporate flight services, and flight training.
Flying Club:
An aircraft owned or operated by three more individuals. Flying clubs can be incorporated or nonincorporated organizations generally formed for the purpose of operating aircraft at a reasonable cost per capita.
G
General Damages:
Include many intangible losses in addition to the loss of financial support such as loss of society, companionship, consortium, love, care, and protection.
Grounding Coverage:
Grounding coverage was introduced to provide liability cover to aviation manufacturers. Grounding coverage is provided for claims arising out of the loss of use of aircraft following an accident that necessitates grounding all other aircraft of that type pending investigation, repair or modification.
Grounding Risk Only:
A type of insurance that ONLY applies protection cover whilst the aircraft is on the ground and not in the air.
H
Hangar Keepers:
This is a general liability policy that insures the policy holder against damage the policy to a third party’s aircraft while in their care, custody, and control. This cannot take the place of the aircraft owner’s aircraft insurance. Hangar keepers Liability pays only for the policy holder’s mistakes. It does not cover the policy holder’s aircraft, pay for damage caused by the owner of the aircraft, or acts of god like the aircraft being destroyed by a tornado while in the policy holder’s hangar.
Hull Insurance:
Insurance covering the aircraft, including the engine, propeller, and all other systems and equipment permanently attached to the aircraft (though it may be removable for maintenance), including avionics.
Hull insurance may be written for aircraft on the ground, not in motion; for aircraft on the ground and in motion (meaning under its own power), or for aircraft in flight. When specified as all-risk coverage it covers the aircraft under all circumstances, regardless of the reason for damage or loss.
Hull Damage Coverage:
Protection against physical damage to an aircraft.
Hull Value:
The limit for physical damage (hull damage) coverage. Also referred to as “insured value.”
I
Indemnity Insurance:
An insurance policy that compensates an insured party for certain unexpected damages or losses up to a certain limit—usually the amount of the loss itself.
Insured:
The party in the insuring agreement the insurance company agrees to indemnify. For example, an employee of the Named Insured.
In Motion:
This is a deductible that applies when there is damage to an aircraft whilst in motion – this can be in flight or whilst taxiing.
L
Legal Defence Coverage:
Protects the insured in the event he or she is sued for claims that fall within the coverage of an insurance policy.
Liability Coverage:
To pay on behalf of the insured all sums up to the policy limit, which the insured shall become legally obligated to pay as damages because of bodily injury or property damage sustained by another party.
Limited Commercial Use:
Use of an aircraft for which a charge is made while providing instruction and rental services.
Lloyds of London:
A corporation that neither underwrites (subscribes) policies of insurance nor directly issues them itself. Insurance is written by individual “underwriting members” who must be elected to membership within the Lloyd’s Association. The actual insurer then is not Lloyd’s but instead the various underwriters at Lloyd’s. The exchange (Lloyd’s) provides underwriting quarters for its members and a place for transaction of insurance business by member underwriters, as well as risk management support services.
Loss of Use Coverage:
Part of an insurance policy that is intended to reimburse an owner for the inability to use his or her property that was damaged by another party’s negligence.
Loss Ratio:
The ratio of claims paid to premium received.
N
Named Insured:
The actual policyholder who is specifically named in the policy.
Non-binding:
No coverage is issued, and no premium paid. An application for insurance is submitted to the insurance company to find out whether you will be accepted.
Non-Owned Coverage:
An excess policy written to cover the liabilities arising out of one’s use of an aircraft owned by another party.
Non-Owned Hull (Aircraft Damage Liability):
Insurance designed for pilots flying rented, borrowed, or club aircraft, or for students flying flight-school aircraft, covering the value of the aircraft.
Not in Motion:
A deductible that will apply in when damaged is incurred when the aircraft is not moving under it;s own power.
P
Pilot Advocate:
A Pilot Advocate is a person or organization who publicly supports pilots and the pilot community. A pilot advocate pleads and defends the rights of other pilots.
Primary Policy:
The coverage that goes into effect first when a policyholder files a claim.
Premises Liability Insurance:
Part of a General Liability policy that insures the policy holder against any third party damage or injury arising out of a faulty premises.
Products Liability Insurance:
Part of a General Liability policy that insures the policy holder from third party liability arising out of the use of the product they manufacture and/or install on the airplane. This is not warranty insurance.
Product liability insurance protects you against the cost of compensation for:
- personal injuries caused by your faulty product
- loss of or damage to property caused by your faulty product
- unforeseeable circumstances such as product faults that your quality control system could not identify
Proof of Loss:
A statement that provides insurers with the facts necessary to determine the existence and extent of their liability.
Pro Rata:
How much premium will be returned if a policy is cancelled mid term by the policy holder.
Purpose of Use:
Defined in each policy, this spells out the approved uses of the aircraft under the policy.
R
Rotors in Motion:
This is a deductible that applies when there is damage to a helicoptor whilst in motion – this can be in flight or whilst taxiing.
S
Smooth Coverage:
A limit of liability that offers a combined single limit of coverage that applies to all bodily injury and property damage claims. A specified maximum amount can be paid out from a covered occurrence in any combination of passenger bodily injury, other person’s bodily injury or property damage.
Short Rate:
If the insured cancels the policy, then the premium return is calculated on a short rate basis.
“Split Limit” Coverage:
An older type of coverage that divides the coverage limits up over multiple areas. “Split limits” appear on the policy as separate amounts (e.g. $100,000 property damage, $100,000 bodily injury, $200,000 each occurrence).
Stock Throughput Insurance:
Cover that insures a company’s inventory and the flow of goods from the source of production to its final destination. This is important for the aftermarket traders to cover stock that they are having passing through.
Subrogation:
Gives the insurance company (in lieu of the Named Insured) the right to pursue a third party for recovery of damages paid that they feel is responsible for the loss.
T
Terrorism Risk Insurance Act:
A federal law designed to cover potential losses and liabilities that occur as a result of terrorist activities. It provides that the insurance industry and the federal government share certain losses on specified terms.
W
Waiver:
A waiver is the relinquishment of a right or privilege. For example a Waiver of Subrogation is the insurance company waiving the right to subrogate or recover for payments made.
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. For example, it is common for a contract pilot to be asked to be named as an Additional Insured with a Waiver of Subrogation to defend him against third party liability and to protect him from being sued by the insurance company for mistakes he might make in the operation of the aircraft which may have contributed to the damage.
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