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Glossary of Aviation Insurance Terms
Understanding aviation insurance requires familiarity with specific terminology. Below is a comprehensive glossary of key terms commonly used in aviation insurance policies and discussions.
✈️ Key Aviation Insurance Terms
Actual Cash Value (ACV)
The depreciated value of an aircraft or component at the time of a loss.
Agreed Value
A predetermined amount the insurer agrees to pay in the event of a total loss, regardless of depreciation.
Aircraft Hull Insurance
Covers physical damage to the aircraft itself.
Airport Liability Insurance
Covers the liability of the airport owner/operator for accidents that occur on the premises.
Airworthiness
The measure of an aircraft’s suitability for safe flight.
Annual Inspection
A mandatory inspection performed every 12 calendar months to ensure airworthiness.
Aviation General Liability
Coverage for bodily injury or property damage not directly related to aircraft operations (e.g., premises liability).
Binder
A temporary insurance contract that provides proof of coverage until the full policy is issued.
Broker of Record
The insurance broker designated to manage and represent the policyholder’s insurance matters.
Certificate of Insurance (COI)
A document that verifies coverage and details policy limits, dates, and named insured.
Claims-Made Policy
Provides coverage only if the claim is made during the policy period, regardless of when the event occurred.
Deductible
The amount the insured must pay out-of-pocket before the insurer pays a claim.
Endorsement
An amendment or addition to an existing insurance policy that changes its terms or scope.
Exclusion
A provision within an insurance policy that eliminates coverage for certain risks or situations.
Fixed-Base Operator (FBO)
A commercial business granted the right to operate on an airport and provide services such as fueling and hangaring.
Ground Risk Hull Insurance (In Motion)
Covers the aircraft while taxiing but not during takeoff or landing.
Ground Risk Hull Insurance (Not in Motion)
Covers the aircraft while on the ground and not moving.
Hangarkeepers Liability
Covers damage to aircraft stored or repaired in your hangar.
Insurable Interest
A stake in the value of the subject being insured, which would cause the holder to suffer a financial loss if damaged.
Liability Coverage
Provides protection against legal claims resulting from injury or property damage to others.
Named Insured
The person or entity specifically named in the policy as the insured.
Occurrence Policy
Covers claims from events that occurred during the policy period, even if reported afterward.
Passenger Liability Insurance
Covers injuries to passengers resulting from an accident.
Pilot Warranty
A clause that specifies the required qualifications or experience a pilot must have for coverage to apply.
Premium
The amount paid for an insurance policy.
Reinsurance
Insurance that an insurer purchases to limit its own exposure to loss.
Risk Retention Group (RRG)
A liability insurance company owned by its members who assume and spread risk among themselves.
Slip
A summary of an insurance proposal used in the aviation market, especially in Lloyd’s of London.
Stated Value
An agreed-upon value used to determine the policy payout, often aligned with aircraft appraisals.
Subrogation
The right of an insurer to pursue a third party that caused an insurance loss to the insured.
Underwriter
An insurance professional who evaluates risk and determines policy terms and pricing.
Unmanned Aircraft System (UAS) Coverage
Insurance coverage specific to drones and other unmanned aircraft.
Waiver of Subrogation
A clause in which the insurer waives its right to pursue a third party for recovery after paying a loss.
Warranty
A policy condition that must be strictly complied with, such as pilot experience requirements.