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Date Created: 12/21/15
Aviation insurance is insurance coverage geared specifically to the operation of aircraft and the risks involved in aviation. Aviation insurance policies are distinctly different from those for other areas of transportation and tend to incorporate aviation terminology, as well as terminology, limits and clauses specific to aviation insurance. History Aviation Insurance was first introduced in the early years of the 20th century. The first-ever aviation insurance policy was written by Lloyd’s of London in 1911. The company stopped writing aviation policies in 1912 after bad weather at an air meet caused crashes, and ultimately losses, on those first policies. The first aviation polices were underwritten by the marine insurance underwriting community. The first specialist aviation insurers emerged in 1924. In 1929 the Warsaw convention was signed. The convention was an agreement to establish terms, conditions and limitations of liability for carriage by air, this was the first recognition of the airline industry as we know it today. In 1931, Captain A. G. Lamplugh, the British Aviation Insurance Company’s chief underwriter and principal surveyor, said of the new industry: "Aviation in itself is not inherently dangerous. But to an even greater degree than the sea, it is terribly unforgiving of any carelessness, incapacity or neglect." Realising that there should be a specialist industry sector, the International Union of Marine Insurance (IUMI) first set up an aviation committee and later in 1933 created the International Union of Aviation Insurers (IUAI), made up of eight European aviation insurance companies and pools. The London insurance market is still the largest single centre for aviation insurance. The market is made up of the traditional Lloyd’s of London syndicates and numerous other traditional insurance markets. Throughout the rest of the world there are national markets established in various countries, this is dependent on the aviation activity within each country, the US has a large percentage of the world’s general aviation fleet and has a large established market. No single insurer has the resources to retain a risk the size of a major airline, or even a substantial proportion of such a risk. The catastrophic nature of aviation insurance can be measured in the number of losses that have cost insurers hundreds of millions of dollars (Aviation accidents and incidents). Most airlines arrange "fleet policies" to cover all aircraft they own or operate. Insurance fraud were the motives for suicidal passengers to crash Pacific Air Lines Flight 773, Continental Airlines Flight 11 and National Airlines Flight 2511. Types of insurance Aviation insurance is divided into several types of insurance coverage available. Public liability insurance This coverage, often referred to as third party liability covers aircraft owners for damage that their aircraft does to third party property, such as houses, cars, crops, airport facilities and other aircraft struck in a collision. It does not provide coverage for damage to the insured aircraft itself or coverage for passengers injured on the insured aircraft. After an accident an insurance company will compensate victims for their losses, but if a settlement can not be reached then the case is usually taken to court to decide liability and the amount of damages. Public liability insurance is mandatory in most countries and is usually purchased in specified total amounts per incident, such as $1,000,000 or $5,000,000. Passenger liability insurance Passenger liability protects passengers riding in the accident aircraft who are injured or killed. In many countries this coverage is mandatory only for commercial or large aircraft. Coverage is often sold on a "per-seat" basis, with a specified limit for each passenger seat. Coombbiinedd Singlle Limiit(CSSL)) CSSL coverageecoombbnesspuublc labiiy and passsenger labiiy coveragee nto a singe covverage witha singleovverallmiitper accident.This ypeeoffcoveragee provides mooreflexbiity n paying caimssfor abbity,esppecialy fpasssengers are njured,,but tte damaagee s done tothid party propertyon the groundd. Grrounnd rrskk hull nssurrancee nottin moottonn This provdees coverage forthe nssured arcraftagainst damaage whhen t s on hee grounddannd not n motton.Thhs woouldprovvde protecton forthe aicraftforsuuch evenns as fre,thef, vandallsm, food, muddsldes, anmaalldamaage,,wind orhaaisormss, hangaarcollapse or or uninsured vehicessorraicraftstrking he aircrat.Thee amoount of coverage may be a bbue boookvalue orannaggreed value hattwasssettwheen he policy was purchased. Theeusse ofthe nsurannce erm "huul"to efer o the nsureddaircraft betrays the orgins ofavvation nsurannce n maarne insurance..Moosthulllnsurance incuddes a deduuctble o discourage smaallornuusannce caimss. Grrounnd rrskk hull nssurrancee in mootion (taxxingg) This coverage is smiiarto ground rskkhulllnsurance nottn mootonn,but provdees coveragge whie the arcraft staxing,,butnootwhhie aking offor anding..Normaalylllly coveragge ceases at he startofthe take-offrolannd s n force ony oncce he aircaftt has comppleted ts subsequuent anding. Due to dspuuessbeeweeen aircaft ownees andd nssurance comppannessabooutwhhether he acccdenntaicraftwaas n facttaxing orn attempting to takeoffths coveragge has been disconttnued by maany nssurance companies. In-flight insurance In-fghttcoverageeprotects an nsuueddaircraftagainstdaamaage durngg alphhases of flghtanddgrouund operation, ncuddnggwhhie parked or soredd.Naauraly its moore expensive than not-inmootion coverage since moostaircaftare dammagged whiie niin motion.
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