Air transport insurance - features, rules and requirements

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Air transport insurance is a collection of insurance types. They provide for the obligations of the insurer to pay insurance in the amount of partial or full compensation for damage. In the event that it is applied to the insurance object.

Air transport is the fastest, but also the most expensive. Its main scope was passenger transportation at distances of more than a thousand kilometers. Freight transport is also carried out, but not as often. Accidents that are associated with the aviation industry entail human casu alties, as well as multimillion-dollar losses. They are borne by aircraft owners and third parties.

Reliable protection is offered by many companies providing insurance for all types of aircraft.

Objects

Under the objectair transport insurance means the property interests of the person whose insurance agreement is signed, related to the disposal, use and possession of an aircraft, due to the destruction (theft, hijacking) or damage to an air transport vehicle, including furniture, motors, equipment, interior decoration, etc..p.

Under the contract can be insured:

• aircraft engines, landing gear, wings and fuselage;
• navigation equipment, hydraulic systems, etc.;
• spare parts for the insured vessel.

Requirements

What are the requirements for air transport insurance?

The insurer has the right to insure air transport vehicles if there is an appropriate license issued by the insurance supervisory authority. To receive it, the company submits an application in the prescribed form to the federal executive branch of government for the supervision of the activities of insurers, constituent documents, papers confirming the payment of authorized capital, insurance rules, and a business case for the insurer.

Rules

The rules provide for the definition of a list of objects and subjects of insurance of air transport; a list of insured events, the occurrence of which gives rise to the company's liability for insurance payments; setting the terms of insurance; insurance rates; the procedure for concluding agreements and paying premiums for insurance. Sample forms of contracts and policies should be attached to them.

Rulesair transport insurance must be strictly followed.

Documentation

To conclude an agreement, the policyholder must submit the following documents to the insurance company:

• application in writing for aircraft insurance;
• confirmation of state registration of the vessel;
• papers on the book value of the vessel;
• aircraft operating conditions;
• certificate of airworthiness of the aircraft;
• number of landings and flight hours, tail number, service life (residual life), number of aircraft overhauls;
• other necessary documents that allow the crew and the aircraft to fly.

What are the risks in air transport insurance?

Features, risks

The obligation of the insured is to inform his insurer of all information about the specifics of the aircraft that reduces flight safety, follow all the requirements of the technical and operational documentation, follow the instructions of the authorities regarding flight safety.

When insuring an aircraft, the sum insured can be set at an amount that does not exceed its insured value, that is, the actual value of the transport at the time of the conclusion of the agreement.

The sum insured established under the aviation insurance contract may be lower than the insurance valueship. Aircraft under such agreements are insured “only against total loss.”

An aircraft is usually considered dead if the cost of rescuing or restoring it, including associated costs, is above 75% of the established sum insured.

If the aircraft is insured "against all risks", then the insurance compensation is paid to the insured both in the event of the death of the aircraft and in case of damage to it that occurs for any reason other than those specifically specified as an exception in the policy.

The insurance agreement can be concluded for specific flights (indicating the start and end points of the flight, places of intermediate landings) and for a specific period (in this case, the areas of operation of the vessel are fixed and the period of insurance is fixed).

Insurance policy

The policy confirms the conclusion of an air transport insurance agreement. One of the earliest disaster policies was issued in London before the First World War. Until now, the London insurance market continues to be one of the main centers of aviation reinsurance and insurance, which represents the majority of associations, insurance companies, pools, surveyors, brokers and other individuals and legal entities that are associated with aviation risk insurance in many world countries.

In international practice, there is a policy on insurance of air transport against damage and death, which does not contain detailedlisting the risks covered by the insurance. After it approves aircraft “all-risk” insurance and rather short general conditions, it lists special conditions, additions and exclusions.

Such additions and exclusions (restricting or expanding insurance coverage) may be introduced into the text of insurance conditions or given as attachments in the form of standard clauses that apply in the international insurance market.

Combined policies

In world practice, combined policies, insurers and air transport (“air hull”), and various types of liability that are due to their operation, have become especially widespread. Such policies list conditions that are common to all sections of the insurance agreement, as well as private conditions that apply to a particular section.

The main section of the policy contains information received from the policyholder, agreed with him when signing the insurance contract, including information about the policyholder, beneficiaries, co-insureds, aircraft that are accepted for insurance, deductibles and sums insured for spare parts and aircraft, period of insurance, geographic scope of transport operation, crew competence, nature of its use, etc.

If the conditions specified in the policy are violated, for example, changing the scope of use of the vessel, its geographical operational limits, in case of violation of a number of other conditions, for example, piloting by a person who does not havesuch a right, deviation from the rules of operation, etc. Insurance compensation is not paid in case of violation not related to insurmountable circumstances.

Procedures for insuring air and water vehicles are very similar.

Water transport

Insurance for water transport is a set of types of insurance that provide for the obligations of the insurance company for insurance payments, their amount is partial or full compensation for the damage that was caused to the insurance object. In this case, the object of insurance means the property interests of the person for whom an agreement is concluded related to the use, possession, disposal of the vessel as a result of the destruction or damage of a water transport vehicle, including rigging, motors, equipment, interior decoration, etc.

CASCO insurance has become the most common, in which ships with equipment, machinery, rigging (rigging), freight, equipment costs and other expenses associated with operation, and transport under construction are insured.

We looked at how air transport insurance works in Russia.