Aviation Insurance Regulations:
3. Types of Aviation Insurance
4. Exceptions under Aviation Insurance Policies
5. Analysis of the Global Aviation Insurance Market in 2009-2010
6. Indian Aviation Insurance: A Rocky Road Ahead for Airlines?
7. Global Aviation Insurance: What Lies in Store
Aviation Insurance: An Introduction
Aviation insurance is insurance coverage geared specifically to the operation of aircraft and the risks involved in aviation. Aviation insurance policies are distinctly different from those for other areas of transportation and tend to incorporate aviation terminology, as well as terminology, limits and clauses specific to aviation insurance. Aviation insurance has come to acquire an increasingly broad scope, and is sometimes referred to in modern times by the wider term ‘Aerospace insurance’. This is because of the presence of insurance policies that cover a wide range, from privately-owned ultralights to entire airline jet fleets, from maintenance shops to airframe and engine manufacturers, from small general aviation airfields to major airports, and from micro-satellites to commercial space launchers.
The History of Aviation Insurance
Aviation insurance was first introduced in the early years of the 20th Century. The first aviation insurance policy was written by Lloyd's of London in 1911. The company stopped writing aviation policies in 1912 after bad weather and the resulting crashes at an air meet caused losses on many of those first policies. The first aviation polices were underwritten by the marine insurance underwriting community. The first specialist aviation insurers emerged in 1924. In 1929 the Warsaw Convention was signed. The convention was an agreement to establish terms, conditions and limitations of liability for carriage by air, this was the first recognition of the airline industry as we know it today. In 1931, Captain Lamplugh, the British Aviation Insurance Company's chief underwriter and principal surveyor, said of the new industry: “Aviation in itself is not inherently dangerous. But to an even greater degree than the sea, it is terribly unforgiving of any carelessness, incapacity or neglect.” Realising that there should be a specialist industry sector, the International Union of Marine Insurance (IUMI) first set up an aviation committee and later in 1933 created the International Union of Aviation Insurers (IUAI), made up of eight European aviation insurance companies and pools.
The London insurance market is still the largest single centre for aviation insurance. The market is made up of the traditional Lloyd's of London syndicates and numerous other traditional insurance markets. Throughout the rest of the world there are national markets established in various countries, this is dependent on the aviation activity within each country, the US has a large percentage of the world's general aviation fleet and has a large established market.
No single insurer has the resources to retain a risk the size of a major airline, or even a substantial proportion of such a risk. The catastrophic nature of aviation insurance can be measured in the number of losses that have cost insurers hundreds of millions of dollars. Most airlines arrange "fleet policies" to cover all aircraft they own or operate.
Types of Aviation Insurance
Aviation insurance normally covers physical damage to the aircraft and legal liability arising out of its ownership and operation. Specific policies are also available to cover the legal liability of airport owners arising out of the operation of hangars or from the sale of various aviation products. These latter policies are similar to other types of liability contracts. Aviation insurance is divided into several types of insurance coverage available.
Public liability insurance
This coverage, often referred to as third...