Concerns raised over aircraft liability cover

If you’re a regular flyer
in business planes you’re
likely to be at risk of
flying without sufficient
insurance cover, according
to information released to
FTW by insurance brokers,
Aon South Africa.
“The spate of fatal
aircraft accidents over
the past 18-24 months has
highlighted the fact that
many aircraft owners and
operators are significantly
under-insured in terms of
their liability cover,” said
Graham Smith, head of the
aviation business unit at
Aon.
“This could be attributed
to factors such as a
hardening market that has
driven rates up and hence
the cost of cover, and
secondly, a laissez faire
approach to the legal
implications that could
follow an accident where
there are injuries, or worse,
fatalities of passengers and
crew involved.”
Smith noted that SA
had one of Africa’s largest
light aircraft populations,
numbering about 11000
light commercial, sport
and other aircraft types,
with premiums generated
amounting to R500 million
a year in relation to insured
values across all types
(excluding large commercial
passenger aircraft).
“One of the most
significant parts of
an aircraft insurance
programme is liability – and
knowing how much liability
insurance to buy is often a
complex process,” he added.
“There are generally three
types of liability cover
that an owner/operator
would need to consider:
passengers, third parties
(persons or property outside
the aircraft) and cargo
carried in the aircraft.”
The amount of aircraft
liability insurance needed
depends on a number
of factors such as the
type of aircraft, flying
experience of the pilot,
whether passengers are ever
transported and whether
the aircraft is flown for
business or as a hobby, or a
combination of those.
“Aircraft liability
insurance is usually
purchased for a defined
amount for each occurrence
that happens during the
term of the insurance
policy,” Smith said. “This
insurance applies to bodily
injury (including resulting
death) and property
damage.”
Passenger legal liability
insurance provides
indemnity for the owner or
operator of the aircraft in
the event that they would
have to pay compensation to
passengers, their dependents
or legal representatives in
the event of an accident.
“Unlike other insurance,
where coverage may be
unlimited, the level of legal
liability coverage arising
from accidents involving
aircraft is strictly limited
to the amount specified in
the policy,” said Smith. “SA
law demands a limit of R1m
per passenger and R2.5m
for third party liabilities
in respect of commercial
operators, but in the event
of a claim, the liability
indemnity of the policy
will only respond up to the
limits insured.”
By law, aircraft operators
who carry passengers
for hire or reward must
have insurance in place in
accordance with the Civil
Aviation Act (CAA), Smith
said. “However, even the
experienced private pilot
who takes friends on a
joy ride to a game reserve
or coastal resort would
be recommended to have
passenger liability insurance
in place.”