Q:
What is liability insurance?
A: Liability insurance protects you against claims
arising from bodily injury or property damage
you may have caused to others. Your insurance
company's commitment is to defend you if you are
sued, and if you are at fault, to pay for the
damages according to the terms of the policy.
This coverage is not first party medical or life
insurance (the policyholder/insured pilot would
be a first party), but rather, liability coverage
for claims made against you by third parties for
which the law holds you legally liable. (For
more information about liability and negligence
please click here )
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Q:
What limits of liability should I carry?
A: Because different people have different needs,
there is no standard recommended amount of liability
coverage you should carry. You need to consider
factors such as your personal assets, earnings,
the liability limits you carry on your other insurance
policies such as motor vehicle, business and home,
whom you carry as passengers, how the aircraft
is used, and how much insurance you can afford
or that is available, among others - not to forget
prescribed limits such as within the New Zealander
Carriers Liability Act etc'. You might also want
to consider the most popular limits purchased
by owners of comparable aircraft, although this
will probably not be the principal factor on which
you should rely. Obviously, buying the most coverage
you can reasonably afford and that is available
is your safest bet.
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Q:
What is a "Combined Single Limit of Liability"
or "smooth" limit?
A: Most aircraft insurance policies contain liability
coverage sub-limits. An example would be, $100,000
each person for Bodily Injury, $1,000,000 Property
Damage, with an overall Occurrence limit of $1,000,000.
A combined single limit (CSL), often called a
"smooth" limit, has no sub-limits for Bodily Injury
or Property Damage claims.
There is no question
that a "smooth" limit is the broadest coverage
if you only injure one person. However, if more
than one person is injured in an accident and
you are legally liable, the absence of a specific
Bodily Injury sub-limit might result in the injured
claimant who has the fastest or most skilled legal
representative obtaining judgment for the entire
policy limit. If this were to occur, you would
still be personally responsible for paying injury
claims for the remaining claimants, or for any
property damage you may have caused, yet the insurance
policy limits would have already been awarded.
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Q:
Are my legal costs included in the liability coverage?
A: Unless specified in an Underwriter's policy
CAI always endeavours to ensure clients legal
defense costs are included in any policy even
if your limits of liability have been exhausted
by the payment of judgments or claims.
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Q:
How do I ensure my family are protected when they
fly with me?
A: The same way you protect your family when they
are in your car. Check that when you are flying
your aircraft your medical and life insurance
policies provide protection in the event of injury
or death to you or your immediate family. These
are "first party" policies that provide
needed coverage regardless of fault. Remember
aviation insurance is "third party"
liability and only responds if you are legally
liable for the accident. In many cases, a lawsuit
may need to be brought against you for negligent
actions to collect for third party injuries, even
if the "third party" is a family member.
Some policies exclude liability coverage for family
members. Others may limit coverage to an amount
below the full policy limit. If you want additional
protection for claims and lawsuits brought against
you by your own family members, you may request
that it be added to your policy for a likely additional
charge.
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Q:
What is the highest limit of liability CAI can
arrange?
A: For most New Zealander clients operating either
a fixed or rotor wing aircraft with a passenger
carrying capacity of five (5) or less, either
a limit of AUD$5,000,000 or AUD$10,000,000 is
the benchmark with similar but, slightly less
limits in New Zealand and the Pacific Rim region.
Some commercial operators for instance may need
very high limits of cover when undertaking contract
work, especially for governments. Essentially,
there are no limits to the amount of cover which
can be obtained, it's just a matter or need and
cost.
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Q:
What coverage options are generally available
on an aviation insurance policy?
A: Coverage options vary widely from company to
company however, the most common coverages are
as follows:
Liability for
bodily injury and property damage to third parties
that can be purchased as including or excluding
occupants of the aircraft.
Aircraft Damage (hull)
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Q:
How can I reduce my insurance premium?
A: There are many options, depending on your needs.
For instance: remove occupant liability coverage
if you don't carry passengers; change "including
in-flight" aircraft damage coverage to "excluding
in-flight" aircraft damage coverage during
extended periods of time that you're not using
your aircraft; select a higher deductible; or
hangar your aircraft. There are many ways which
CAI could represent your best interests to underwriters.
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Q:
What factors do insurance companies use to determine
my premium?
A: Each insurance company uses different criteria
to determine your premium. Some of the most common
factors include logged flight experience, aircraft
make and model, limits of coverage, whether the
aircraft is hangared, possessing an instrument
rating, claims-free experience, deductible, and
how the aircraft is used. The insurance company
then applies prior experience in these various
"classes" of business to predict future
results, and the premium is determined.
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Q:
Is there a premium difference if I register my
aircraft in the name of my business?
A: If the aircraft is to be used for pleasure
and business, the premium is the same for you
or your business as long as your business is not
an aviation business such as "charter" etc'.
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Q:
Can I get a policy that will allow me to make
a profit from a named approved pilot who uses
my aircraft?
A: Yes, CAI can in most circumstances arrange
for a policy to allow the insured to be paid by
any pilot named on the data page for their personal,
non-commercial use of your insured aircraft. The
can allow the sharing of expenses of the ownership,
maintenance and use of your insured aircraft among
the approved named pilots. This option can be
provided to allow you to be reimbursed by pilot
friends who use your aircraft. It is not meant
to be an aircraft rental policy.
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Q:
In the event of a total loss to my aircraft during
the policy period, am I entitled to a premium
refund for the remainder of the policy period?
A: Not always, it varies from policy to policy.
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Q:
How does CAI define a "non-commercial"
flying club?
A: A non-commercial flying club is defined as
being one or more aircraft owned by more than
five individuals with equitable ownership, operating
under by-laws, and being used for personal and
not-for-profit use.
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Q:
What are some common exclusions that can void
insurance coverage?
A: Exclusions vary from policy to policy. Therefore,
it is very important that you read your policy,
and familiarize yourself with its specific exclusions.
If you have any questions about your aircraft
insurance policy, please call us for clarification.
Check out the article at the end of this page
"Claim Denials Why They Happen
and How to Avoid Them" for more information
on exclusions.
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Q:
What happens if I have to report a claim?
A: CAI has retained a number of professional claim
adjusters throughout the country to provide clients
with immediate assistance in the event circumstances
arising into a claim. CAI clients receive a list
of those persons, located throughout New Zealand
, and their contact details when they secure insurance
cover.
After a claim
is reported a field adjuster should contact you
without delay. CAI will work closely with policyholders,
repair shops, claimants and attorneys to resolve
claims simply and quickly as possible.
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Q:
Who is permitted to fly my aircraft?
A: Usually, any pilot that you have named on your
policy, mechanics employed by a licensed engineer
in connection with inspection or repairs of the
insured aircraft, any CFI while accompanied by
a named pilot, or any pilot that is otherwise
approved by the underwriter and specified in the
policy schedule as so.
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Q:
Are you able to arrange coverage for my flight
instructor?
A: Under some circumstances we can arrange liability
coverage for a CFI who is providing dual flight
instruction to named pilots in the insured aircraft.
You will need to call us to discuss the detail.
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Q:
Do I need to add my CFI to my policy in order
to receive dual flight instruction?
A: No, not usually.
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Q:
Are you able to arrange insurance coverage for
a hangar that I own?
A: Yes, in most cases the hangar coverage will
be recorded as an endorsement to your aircraft
policy.
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Claim
Denials, Why They Happen and How to Avoid Them
Without a doubt
one of the most distressing occurrences in the
insurance business is a claim denial. An insurance
company exists to pay claims - and to have enough
premium to pay those claims, cover the expense
of being in business, and provide an adequate
return on their shareholders' investment.
CAI has obtained
statistics to demonstrate that the single biggest
reason for claim denials is the pilot operating
the aircraft at the time of loss was not an approved
pilot under the policy. Aviation insurance policies
(unlike most personal motor vehicle policies)
are "named operator" policies. The reason is quite
simple, the insurance company needs to know who
will be flying the aircraft in order to properly
underwrite and price their exposure.
As a policyholder,
be sure that anyone who flies your aircraft is
approved to do so. A look at your current "Data
Page" and/or Policy Schedule - or a simple phone
call or e-mail to CAI can verify that the pilots
who operate your aircraft are named on your policy
and therefore covered under the policy.
The second most
common reason for claim denials was because the
"loss" was due and confined to a mechanical breakdown
- which are not generally covered under any property
insurance policy. The ensuing loss as a result
of the breakdown is covered, but the mechanical
failure is not. For example, an owner experienced
two cracks in the windshield that emanated from
installation screws. The adjuster was unable to
identify any evidence of a bird strike, or other
impact due to an object striking the windshield,
or any other accidental cause. It appeared that
the cracks were due to normal wear and tear to
the 26-year-old windshield.
Misrepresentation
was in third place. When a person buys an insurance
policy, he or she makes certain statements or
"representations" to the insurance company. These
statements are usually formalized in an insurance
application. The insurance company then uses those
representations to underwrite the risk. If those
representations are false, it is impossible for
the insurance company to evaluate its exposure
and the customer is likely voiding their coverage.
A classic example of this is when an owner pilot
warrants on the application that they had a current
Flight Review when, in fact, they did not.
Next was because
the loss occurred outside the policy period. In
two cases the customer failed to renew the policy
and in another the customer was cancelled for
non-payment of premium. Be sure to make note of
when your premiums are due. Make sure that we
have your current address and telephone information
to avoid this unnecessary gap in coverage.
Other claims
were denied because customers had chosen not to
purchase the coverage needed at the time of loss.
For example, reducing hull premium by purchasing
"excluding in-flight" hull coverage. Unfortunately,
a claim occurred as a result of circumstances
"in-flight" as defined by the policy. Purchasing
"not-in-flight" coverage is a great way to reduce
your insurance costs, but be sure you completely
understand what is excluded.
In a broad sense,
the best general suggestions for avoiding a claim
denial would include:
| 1. |
Buy the coverage you need,
tell the truth in making the insurance application
and keep the policy in force by paying the
installment premium and renewing the policy.
|
| 2. |
Understand that aircraft
policies (like all property/casualty policies)
do not cover maintenance issues. |
| 3. |
Make sure anyone flying
your aircraft is an approved pilot on the
policy. |
| 4. |
If in doubt about coverage,
verify with us. |
Claim denials
are extremely rare. With a little understanding
and care they can be avoided entirely.
Important:
These FAQ's and answers are general
in nature and are not intended to address
the specific requirements of an individual's
policy. These should be discussed directly
with one of CAI's trained staff. In all
cases, the terms, conditions of the policy
and policy endorsements will determine the
outcome of a specific situation.
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[New Zealand]
