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What Buy Non-Owned Aircraft?

Two different situations apply:

1) If the insured has fractional ownership of a plane, the current agreements put quite a bit of responsibility back on the insured. In this situation, the exposure is laid out fairly simply. The agreement essentially states that the owner is responsible jointly with the operator.

2) If the insured does not have fractional ownership but does engage in private charters, there are several areas of exposure. Some scenarios follow:

• Insured contracts with a carrier for charter. The carrier has good limits. The carrier is unable to service the insured's schedule and arranges for a plane with another carrier. That replacement carrier may not have sufficient limits.
• Depending on the location of the charter, per seat insurance requirements of a given country may not be sufficient. The FAA's requirement is $200,000 per seat which, in the event that a high-profile individual is on board as a guest, may also be insufficient.
• Carrier limits are generally shared among all of their aircraft. If an incident involves more than one plane, even high limits may be insufficient (this can happen as carriers tend to keep several planes at one airport).
• The insured may allow family members/guests of their employees on board. This can open them up to additional liability beyond Workers’ Compensation issues if there is an allegation of negligence on the part of the insured.
• If the insured is chartering rotor wing aircraft the accident rate is approximately 4 - 6 times higher than that of a fixed wing craft.
• The carrier's insurance may not respond to a claim if the qualifications of the pilot do not meet the standards set forth in the contract. Coverage has been denied on this basis. If this happens, the only recourse for the insured would be their own non-owned aircraft policy.
• Keep in mind that the carrier will protect itself first. The charterer is an Additional Insured only, not the primary policyholder.
• If the carrier or their insurance providers feel the insured was negligent, they may decline all or part of the insured's defense or seek recovery of monies paid from the insured.

Depending on the number of charters in a year and the number of passenger seats occupied, this coverage can be very inexpensive for the protections provided. An aircraft incident is generally going to be larger in scale. There typically are no small aircraft claims. We have arranged with most of our Excess/Umbrella insurance companies to provide coverage above either 5,000,000 or 10,000,000 primary non-owned aircraft coverage in order that the insured may have higher limits at little or no additional cost. If an insured charters, this is a very cost-effective way to protect the insureds.