Liability Insurance Article
Thread Starter
Join Date: Aug 2013
Location: Dorset
Posts: 42
Likes: 0
Received 0 Likes
on
0 Posts
Liability Insurance Article
There was an article in the September edition of Light Aircraft magazine on the subject of liability insurance for GA risks and they have made the piece available online HERE.
The article discusses the risks of arranging insufficient liability cover and also looks at the benefits of using a combined single limit (CSL) to encompass both the passenger and third party liability elements.
I know insurance is not everyone’s favourite subject but I hope this is of some interest.
Cheers
Bob
The article discusses the risks of arranging insufficient liability cover and also looks at the benefits of using a combined single limit (CSL) to encompass both the passenger and third party liability elements.
I know insurance is not everyone’s favourite subject but I hope this is of some interest.
Cheers
Bob
Join Date: Feb 2009
Location: England
Posts: 245
Likes: 0
Received 0 Likes
on
0 Posts
Bob, thanks I've read that now.
Below is an extract from my policy, got to confess I find it confusing! 2 questions, is this normal blurb for aircraft insurance polices? And is it stating that my indemnity, should I cause a passengers death and if proven not to be negligent is upto 3.5 mil.
Or, do I not have single limit liability?
Part 4
Particulars of Liability Limits of Indemnity
(Appropriate boxes to be completed – others to be marked “Not Applicable”)




Section 2 – Liability to Third Parties :
£
3,500,000
each Accident
Section 3 – Liability to Passengers :
£
125,000
each person
£
250,000
each Accident

Section 2 & 3 Combined – Combined Single Limit Liability to Third Parties & Passengers :
£

not applicable

each Accident


The limit of Underwriters’ liability in respect of the coverage provided by Extended Coverage Endorsement (Aviation Liabilities) AVN52E shall be the higher of either the combined sum of the limits of Section 2 (Liability to Third Parties) and Section 3 (Liability to Passengers) or Combined Single Limit stated above any one Accident and in the annual aggregate (the “sub-limit”). This sub-limit shall apply within the full Certificate limit and not in addition thereto.
Below is an extract from my policy, got to confess I find it confusing! 2 questions, is this normal blurb for aircraft insurance polices? And is it stating that my indemnity, should I cause a passengers death and if proven not to be negligent is upto 3.5 mil.
Or, do I not have single limit liability?
Part 4
Particulars of Liability Limits of Indemnity
(Appropriate boxes to be completed – others to be marked “Not Applicable”)




Section 2 – Liability to Third Parties :
£
3,500,000
each Accident
Section 3 – Liability to Passengers :
£
125,000
each person
£
250,000
each Accident

Section 2 & 3 Combined – Combined Single Limit Liability to Third Parties & Passengers :
£

not applicable

each Accident


The limit of Underwriters’ liability in respect of the coverage provided by Extended Coverage Endorsement (Aviation Liabilities) AVN52E shall be the higher of either the combined sum of the limits of Section 2 (Liability to Third Parties) and Section 3 (Liability to Passengers) or Combined Single Limit stated above any one Accident and in the annual aggregate (the “sub-limit”). This sub-limit shall apply within the full Certificate limit and not in addition thereto.
Thread Starter
Join Date: Aug 2013
Location: Dorset
Posts: 42
Likes: 0
Received 0 Likes
on
0 Posts
Hi Echo,
You are right to be confused because I do not think that the traditional insurance providers have made aircraft cover very clear (the cynic might suggest the complexity helps justify their existence and cost)!
So first let’s have a quick bit of background info. In the EU, aircraft owners and operators must legally have in place at least a minimum amount of insurance against their potential liabilities for loss, damage or injury to third parties which might arise from the flying of their aircraft. Passengers are not regarded as third parties, so if the aircraft has passenger seats then there is also a legal minimum cover requirement in respect of the owner’s potential passenger liabilities. There are other rules for cargo and baggage but let’s leave them aside.
The law only specifies minimum levels of cover that must be in place, and these vary based on factors such as the aircraft’s maximum take-off weight, number of passenger seats and type of use. To check the minimum cover you need, the CAA website provides a useful calculator.
As the article states, owners should consider arranging a higher level of cover than the minimum because if you are responsible for an accident which results in damages that are greater than the cover you hold, you (or your estate) will be liable to pay the difference.
The details you have shown look like a fairly standard insurance schedule, and based on this it looks like you do not have a combined single limit as described in the article. Instead it looks like you have separate limits of up to £3.5m cover for third party liability and £125,000 cover for passenger liability.
Thus if you injure a third party in an accident for which you are responsible (e.g. you hit a pedestrian while taxiing without looking) then the maximum payable for your liability would be the £3.5 million. If you have an accident and a passenger is injured then the maximum amount payable for such liability is £125,000. The policy booklet that came with your schedule should provide a precise definition of the cover provided.
The bit down the bottom of your post illustrates my point about things being made more complex than they need be. Most insurance policies exclude ‘war risks’ but the convention in aircraft policies is to include war risks as far as the liability cover is concerned. It does this by adding the AVN 52E clause to your policy wording, so the blurb down the bottom just explains the liability limits for these war risks.
I cannot give you advice on what level of cover to buy or the FCA will come after me with a big stick! However I believe a combined single limit is usually the best solution for more GA owners, and the £125,000 limit on passengers looks very low in the context of the content of the article. I would definitely suggest you ask your broker why he has not offered you a CSL as that might be the most cost effective way of ensuring a higher level of protection.
[No advertising in the forums - mods]
Cheers
You are right to be confused because I do not think that the traditional insurance providers have made aircraft cover very clear (the cynic might suggest the complexity helps justify their existence and cost)!
So first let’s have a quick bit of background info. In the EU, aircraft owners and operators must legally have in place at least a minimum amount of insurance against their potential liabilities for loss, damage or injury to third parties which might arise from the flying of their aircraft. Passengers are not regarded as third parties, so if the aircraft has passenger seats then there is also a legal minimum cover requirement in respect of the owner’s potential passenger liabilities. There are other rules for cargo and baggage but let’s leave them aside.
The law only specifies minimum levels of cover that must be in place, and these vary based on factors such as the aircraft’s maximum take-off weight, number of passenger seats and type of use. To check the minimum cover you need, the CAA website provides a useful calculator.
As the article states, owners should consider arranging a higher level of cover than the minimum because if you are responsible for an accident which results in damages that are greater than the cover you hold, you (or your estate) will be liable to pay the difference.
The details you have shown look like a fairly standard insurance schedule, and based on this it looks like you do not have a combined single limit as described in the article. Instead it looks like you have separate limits of up to £3.5m cover for third party liability and £125,000 cover for passenger liability.
Thus if you injure a third party in an accident for which you are responsible (e.g. you hit a pedestrian while taxiing without looking) then the maximum payable for your liability would be the £3.5 million. If you have an accident and a passenger is injured then the maximum amount payable for such liability is £125,000. The policy booklet that came with your schedule should provide a precise definition of the cover provided.
The bit down the bottom of your post illustrates my point about things being made more complex than they need be. Most insurance policies exclude ‘war risks’ but the convention in aircraft policies is to include war risks as far as the liability cover is concerned. It does this by adding the AVN 52E clause to your policy wording, so the blurb down the bottom just explains the liability limits for these war risks.
I cannot give you advice on what level of cover to buy or the FCA will come after me with a big stick! However I believe a combined single limit is usually the best solution for more GA owners, and the £125,000 limit on passengers looks very low in the context of the content of the article. I would definitely suggest you ask your broker why he has not offered you a CSL as that might be the most cost effective way of ensuring a higher level of protection.
[No advertising in the forums - mods]
Cheers
Join Date: Feb 2009
Location: England
Posts: 245
Likes: 0
Received 0 Likes
on
0 Posts
Bob, thanks again for your time and trouble explaining that, I rather belatedly worked out what my cover actually was last night, and a phone call to my insurers this morning confirmed I don't 'CSL'.
They are now working out what the additional cost will be to provide CSL cover upto the 3.5 mil.
To be honest I had completely overlooked this issue and until reading these threads hadn't realised the difference in 3rd party/ passenger cover, I wasn't made aware in conversation with my insurers when setting up the policy. I guess you live and learn!
They are now working out what the additional cost will be to provide CSL cover upto the 3.5 mil.
To be honest I had completely overlooked this issue and until reading these threads hadn't realised the difference in 3rd party/ passenger cover, I wasn't made aware in conversation with my insurers when setting up the policy. I guess you live and learn!
Join Date: Apr 2004
Location: kent
Posts: 211
Likes: 0
Received 0 Likes
on
0 Posts
You shouldn't have to "live and learn". Your broker should have pointed out this lack of proper cover to you.
If it's the people I think it is, they do it all the time to make it appear their quotes are competitive. You are not the first person to get caught.
Very unprofessional in my opinion.
If it's the people I think it is, they do it all the time to make it appear their quotes are competitive. You are not the first person to get caught.
Very unprofessional in my opinion.
Thread Starter
Join Date: Aug 2013
Location: Dorset
Posts: 42
Likes: 0
Received 0 Likes
on
0 Posts
Hi Echo,
Jodelman is right, it is the broker who should be apologising to you because their role is to try and make sure you have the right cover to meet your needs, otherwise what are you paying them for. Believe me, learning the lessons of not being properly insured can get pretty costly!
There should not be a huge increase in premium for moving to CSL so if they try it on you might want to ask them why they felt £125,000 passenger liability was sufficient for your needs. If nothing else it might just get them to waive the additional premium.
In the meantime, apologies to the moderator for attaching a link to our FAQs.
I've no desire to incur their further wrath so will simply try to respond to any other queries on this subject via the thread.
Cheers,
Jodelman is right, it is the broker who should be apologising to you because their role is to try and make sure you have the right cover to meet your needs, otherwise what are you paying them for. Believe me, learning the lessons of not being properly insured can get pretty costly!
There should not be a huge increase in premium for moving to CSL so if they try it on you might want to ask them why they felt £125,000 passenger liability was sufficient for your needs. If nothing else it might just get them to waive the additional premium.
In the meantime, apologies to the moderator for attaching a link to our FAQs.
I've no desire to incur their further wrath so will simply try to respond to any other queries on this subject via the thread.Cheers,
