Introduction to Aviation Insurance
Aviation insurance is a highly specialized field within the property and casualty industry. For students preparing for the complete FL 2-20 exam guide, it is essential to understand that unlike Personal Auto or Homeowners insurance, aviation insurance does not utilize standardized policy forms across the industry. Instead, each insurer develops its own language, although most follow a similar structure.
The primary risks covered in aviation policies are divided into two main categories: Physical Damage (Hull) and Liability. Because of the catastrophic potential of aircraft accidents, underwriting is rigorous, focusing heavily on the qualifications of the pilot and the specific use of the aircraft.
Types of Hull Coverage
| Feature | Coverage Level | Scope of Protection |
|---|---|---|
| Ground Not in Motion | Physical damage while the aircraft is parked or being pushed by hand. No coverage for taxiing or flight. | |
| Ground Including Taxi | Covers ground risks plus damage while the aircraft is moving under its own power (taxiing), but not during takeoff or flight. | |
| All Risks (Flight & Ground) | The broadest coverage. Includes all ground operations, taxiing, takeoff, flight, and landing. |
Understanding Aircraft Hull Coverage
Hull Coverage refers to the insurance of the aircraft itself. In the aviation world, these policies are almost always written on a Valued Policy basis. This means that in the event of a total loss, the insurer pays the limit of insurance stated in the declarations, rather than the actual cash value (ACV) or replacement cost.
Key aspects of Hull coverage for the Florida 2-20 exam include:
- Deductibles: Deductibles are typically expressed as a flat dollar amount or a percentage of the insured value. It is common to have a smaller deductible for ground losses and a larger one for flight-related losses.
- Territorial Limits: Policies generally restrict coverage to the United States, Canada, and Mexico. Operations outside these areas usually require a specific endorsement.
- Exclusions: Common exclusions include wear and tear, mechanical breakdown (unless caused by an insured peril), and losses resulting from war, hijacking, or illegal use.
Exam Tip: The Meaning of 'In Flight'
For insurance purposes, an aircraft is generally considered 'in flight' from the moment it begins its takeoff roll until it completes its landing run. This distinction is critical because different deductibles and coverage triggers apply depending on whether the aircraft is on the ground or in the air.
Aircraft Liability Coverages
Aviation liability insurance protects the owner or operator against claims for bodily injury and property damage arising out of the ownership, maintenance, or use of the aircraft. Unlike auto insurance, aviation liability is often split into specific sub-limits:
- Bodily Injury Excluding Passengers: Covers injury to people outside the aircraft (e.g., people on the ground or in another aircraft).
- Passenger Bodily Injury: Covers injury to the passengers currently inside the aircraft. This is often subject to a specific limit per seat.
- Property Damage: Covers damage to the property of others, such as airport hangars, runway lights, or other aircraft.
Many modern policies utilize a Combined Single Limit (CSL), which provides one lump sum of coverage for all bodily injury and property damage claims, though it may still contain a sub-limit per passenger.
Ancillary Aviation Coverages
Admitted Liability and Medical Payments
Two unique coverages often appear on the Florida General Lines exam: Admitted Liability and Medical Payments.
Admitted Liability (also known as Guest Voluntary Settlement) is a unique aviation coverage. It allows the insurer to offer a predetermined settlement to an injured passenger in exchange for a full release of liability from that passenger. This avoids lengthy litigation. It is not mandatory for the passenger to accept, but if they do, the claim is settled quickly without proving negligence.
Medical Payments coverage is similar to that in auto policies. It pays for reasonable medical or funeral expenses for the pilot and passengers regardless of fault. However, it is important to note that Medical Payments are usually excess over any other valid and collectible insurance.
To prepare for these concepts in a testing environment, students should engage with practice FL 2-20 questions to see how these scenarios are presented.
Frequently Asked Questions
Typically, the pilot's injuries are covered under the Medical Payments section of the policy, or if the pilot is an employee, through Workers' Compensation. Liability coverage itself is for third-party claims, not the insured's own injuries.
This is a form of Bailee insurance. It protects fixed-base operators (FBOs) or hangar owners against liability for damage to aircraft that are in their care, custody, or control for storage or repair.
No. Florida's Personal Injury Protection (PIP) laws apply specifically to motor vehicles. Aviation accidents are governed by traditional negligence laws and the specific terms of the aviation insurance contract.
This is a condition in the policy stating that the aircraft must be operated by a pilot who meets specific criteria, such as a minimum number of flight hours or holding a valid medical certificate. If an unqualified pilot is flying, coverage may be voided.