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.”