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AVIATION INSURANCE

SALIENT FEATURES OF AVIATION ISNURANCE

Aviation insurance predominantly, if not exclusively, a specialized form of non-marine insurance.

The aero-plane was invented by Wright Brothers in 1903. First commercial flight was take off in 1919 from London to Paris. In 1910 First Accident Damage was offered. Initially Passenger and Third Party Liability cover was issued. After World War-I, first Policy under Aviation Business was issued in Marine

Hull Section to cover the aircraft. The aviation insurance is influenced by Marine and Accident Cover. In the year 1934 International Union of Aviation Insurers was established

and it was funded by leading aviation underwriter of the U K and Europe. After World War-II, the world has noticed tremendous growth in Aviation

Industry and thus resulted in drafting of Comprehensive Policy with Hull and Liability Sections.

Today BOEING X AIRBUS Industries presently dominate the market. In the year 1961 LAD was set up. Later on in the year 1993 AVN 67B was introduced. The attack on World Trade Centre, USA had given a huge Impact on

Aviation Insurance. Aviation insurance Contracts, like other General Insurance contracts, are

governed by the special principles evolved under Common Law and these relate to Insurable Interest, indemnity and utmost good Faith.

It is also practice under Aviation Insurance to issue Agreed Value basis and this amount is paid in the event of total Loss.

However, the principle of indemnity is also applied to Legal Liability Covers. The certificate of airworthiness for Hull is valid for1 year and renewable

every year thereafter It is mandatory to maintain log books for the aircraft in respect of

passengers and cargo. The perils covered under an aircraft policy are while the aircraft was

airborne, when the aircraft was taxiing and when the aircraft was stationery at the ground.

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Ingestion damage to engine by a flock of birds is covered under aviation hull all risk policy bu Ingestion damage to engine by grit and sand is not covered.

The passengers’ liability of an aircraft policy depends on -any one passenger - any one accident and limit during the period of insurance

Excess is stipulated separately for flight taxiing and ground risks and Higher excess is applied for flight taxiing and this doesn’t apply when the claim is settled for total loss.

Under Aviation hull war risk – war terms includes: malicious and sabotage act and political and terrorist act

Aviation Refuelling Liability Insurance Policy Covers - damages for bodily injury or property damage caused by an occurrence during the period mentioned in the Schedule and arising out of Insured’s business as suppliers and/or refiners of Aviation product including the manufacture, sale or distribution of Aviation fuel and lubricants

In addition to the Principle of Insurance, the Aviation Insurance Industry is governed by various laws:

The Carriage by Air Act, 1972 (India)

Who can take Aviation Insurance

Airlines Private operators Pilot/crew Aircraft manufacturers/repairers/Service providers at the Airport (Flight

Kitchen, Ground Equipment). Airport owners Re-fuellers Owner/Financier

DEFINITIONS

Accident – means any one accident or series of accidents arising out of one event.

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Aircraft – shall mean the aircraft specified in the schedule hereto together with the engine(s) and standard instruments and equipment any extra equipment or accessories, the value of which is specifically mentioned in the schedule.

Business – means the uses stated in Private Pleasure and used for the purpose of the insured’s business or profession but not used for Hire or Reward.

Commercial – means the uses stated in Private Pleasure and Business and used for carriage by the insured of passenger, baggage accompanying passengers and cargo for Hire and reward.

Flight – means from the time aircraft moves forward in taking off or attempting to take off whilst in the air and until the aircraft completes its landing run.

Ground – shall be deemed to include all periods during which the aircraft is not in flight, taxing or moored.

Moored – means in the case of aircraft designed to land on water, whilst the aircraft is afloat and is not in flight or taxiing as defined and includes the risks of inching and hauling up.

Taxiing – means movement of the aircraft under its own power (other than in flight as defined above). Taxiing shall not be deemed to cease merely by reason of a temporary halting of the Aircraft.

Types of important covers available under Aviation Insurance

Hull All Risk Insurance Policy: This policy is suitable for small aircraft operators belonging to flying clubs, companies engaged in agricultural spraying operations, aircrafts especially designed for VVIPs, business executives and for those engaged in industrial aids. The policy scope includes all physical loss or damage sustained by the insured aircraft including total loss, disappearance. All losses are paid subject to deductibles.

Spares All Risk Insurance Policy: Covers loss or damage to spares, tools, equipments and supplies owned by the insured or the property for which the insured is responsible whilst on ground or in transit by land, sea, air including in own aircraft or whilst on the premises of others for storage only.

Hull/Spares War Risk Insurance: Indemnity is provided to the aircraft as well as spares caused by war, invasion, acts of foreign enemies, hostilities, civil

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war, rebellion, revolution, resurrection, martial law, strikes, riots, civil commotion, malicious acts, sabotage.

Hull Deductible Insurance: Airlines at times have to bear a proportion of loss due to application of a deductible under All Risk Policy, which may impose considerable financial difficulty on the insured. Therefore the operators insure part of their deductibles under this kind of insurance.

Aviation Personal Accident (crew member) Insurance: This cover is designed to cover insured person against injury, disablement or death arising as result of an accident that is generally granted on annual basis. The cover operates while mounting or dismounting from and whilst traveling an aircraft while the aircraft is being used within the geographical scope as per its permitted usage. This cover can also be on 24 hours basis. The capital sum insured varies according to the status of the insured or earning capacity and fixed by the insurers.

Loss of License Insurance: Operating crews of the aircraft are required to have valid license. License is liable to be suspended either temporarily or permanently on medical grounds. Consequential financial loss is covered by the loss of license policy. Cover provided is in respect of incapacity causing permanent total disablement or temporary total disablement due to bodily injury or illness.

Legal Liabilities towards passengers and their baggage Airports Owner/Operator’s Liability Ground Handlers Liability (Legal Liabilities towards persons and property

on the ground)A) Personal Accident of aircrewB) Personal accident of Passengers

Legal Liability of airport owners and operators Satellite Insurance Excess War Liability Unearned Premium Insurance

AIRCRAFT INSURANCE POLICY

COVERS AVAILABLE TO AIRCRAFT UNDER AVIATION POLICIES

Hull All Risks & Liability – AVNIC Hull War Risks – LSW 555D

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HULL ALL RISKS & LIABILITY – AVNIC – The scope of the cover is divided into three sections as under:

Section –I Loss of or damage to Aircraft (HAR) Section-II Legal Liability to Third Party Section-III Legal Liability to Passengers (it can be covered on Legal Liability

& Admitted Liability basis)

Section-I Loss or damage to the Aircraft (HAR)

Accidental loss of or damage to the Aircraft – Accident means any one accident or series of accidents arising out of one event.

Disappearance – Aircraft is unreported for 60 days after the commencement of the flight.

Expenses (AVN-62) - Necessarily incurred or the immediate safety of the aircraft consequent upon damage or forced landing (upto 10% of the Amount insured) subject to deductible not applicable to Total Loss.

IMPORTANT – Hull All Risk Policy (AVN61) are written on Agreed Value Basis. The parties agree at the time of effecting the policy on the value of the aircraft for purpose of insurance.

HULL ALL RISK – Total Loss - The policy can be underwritten on the following basis:

Insured Value – Insurer have the option to replace the aircraft or pay the insured amount exceeding the insured amount.

Agreed Value – The insurers are obliged to pay to the insured the value agreed upon, do not have the option to decide to replace the aircraft.

Total Loss Only (TLO) cover is given when the insurers do not want to cover the partial losses.

Premium - payable is less than that paid for full Hull All Risks cover

Determination of Sum insured

Section -I - Sum insured is determined on Agreed Value Basis

Section II – Limit of indemnity to be fixed for AOA/AOP

Section III – Separate limits of indemnity for Passengers Legal Liability & Baggage Liability.

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Exclusion under this Section-I

Wear and tear, deterioration, breakdown, defect or failure, howsoever caused in any unit of the aircraft and the consequence thereof with such unit.

Damage to any unit by anything which has a progressive or cumulative effect but damage attributable to a single recorded incident is covered.

However, accidental loss or damage consequent upon above is covered.

SECTION-II Legal Liability to Third Party- Sums which the Insured is legally liable to pay in respect of :

Accidental bodily injury Accidental damage to property caused by the Aircraft or by any person or

object falling there from. Legal costs and expenses payable in addition to the indemnity limit

Exclusion applicable to this Section only

Injury (fatal or otherwise) or loss sustained by any Director or Employees of the insured or partner in the insured’s business whilst acting in the course of his employment with or duties for the insured.

Injury (fatal or otherwise) or loss sustained by any member of the flight cabin or other crew whilst engaged in the operation of the craft.

Injury (fatal or otherwise) or loss sustained by any passenger whilst entering, on board or alighting from the aircraft.

Loss of or damage to any property or bodily injury (fatal or otherwise) to animals belonging to or in the care, custody or control of the insured.

Any member of the household or family of the insured. Any subcontract of the insured or any agent or servant of the insured while

such person is engaged in his duties as such or any person claiming by virtue of any contract with the insured.

Indirectly or consequently (AVN 46B)

Noise (whether audible to the human ear or not) vibration, sonic boom and phenomena associated therewith.

Pollution and contamination of any kind whatsoever Electrical and electromagnetic interference Interference with the use of the property

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Unless caused by or resulting in a crash, fire, explosion or collision, a recorded inflight emergency causing abnormal aircraft operation.

SECTION III – LEGAL LIABILITY TO THE PASSENGERS – Legal liability towards

Accidental bodily injury (fatal or otherwise) to passengers whilst entering, on board, or alighting from the aircraft and

Loss of or damage to baggage and personal articles of passengers arising out of an accident to the aircraft.

Legal costs and expenses payable in addition to the indemnity limit

GENEAL EXCLUSIONS (applicable to all sections)

Illegal uses Outside the geographical limits Piloted by any person other than the pilot Transportation by other conveyance Landing and take-off from a place not complying with the

recommendations laid down by the manufacturer. Contractual liability Number of passengers exceeds the declared maximum number of

passengers. Claims payable under any other policy or policies. Nuclear risks exclusions War, invasion, acts of foreign enemies, hostilities, civil war etc. Hostile detonation of any weapon of war employing atomic or nuclear

fission and/or fusion or radioactive force or matter. Strikes, riots, civil commotions or labour disturbances Terrorist act Malicious act or act of sabotage Confiscation, nationalization seizure, restraint, detention, appropriation ,

requisition for title or use by or under the order of any Government. Hi-jacking or any un lawful seizure or wrongful exercise of control of the

aircraft.

WARRANTY – APPLICABLE TO ALL SECTIONS

The aircraft is airworthy at the commencement of each flight. All log books to be maintained

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The employees and agents of the insured comply with order and requirements.

IMPORTANT CONDITIONS Due Observance – in fulfillment of the warranties, terms, provisions,

conditions, clauses. Notice of Claim – Immediate notice by the speediest possible means to the

company in the event of Loss. To act as insured – In the event of loss, the insured shall act as if he is

uninsured. Cancellation – A) Cancellation by the Insurer – The policy can be cancelled by giving 10

days prior notice to the insured, under such circumstances, pro-rata refund will be given by company.

B) Cancellation by the Insured - The policy can be cancelled by the insured by giving 10 days notice in writing, under such circumstances, the insured shall be entitled to a return of the premium as per scale.

ARBITRATION – A) This condition will be governed by the provisions of the Arbitration and

Conciliation Act-1996. B) If the parties are not agree upon a single arbitrator within 30 days of any

party invoking arbitration the shall be referred to a panel of three arbitrators.

Disclaimer – The company shall disclaim liability to the insured for any claim, if the insured fails to claim within 12 months from date of such disclaimer.

IMPORTANT CLUASES – The Aviation Insurance is governed by various clauses.

WAR & ALLIED PERILS (War, Hi-Jacking and other Perils Exclusion Clause (Aviation) –AVN 48B - After the Israeli raid on Beirut airport of 28 December 1968, the London market introduced a war and hijacking risk exclusion, which after undergoing certain amendments, is now inserted into every aviation hull and liability policy. This clause is AVN 48B.

(a) War, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, martial law, military or usurped power or attempts at usurpation of power.

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(b) Any hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter

(c) Strikes, riots, civil commotions or labour disturbances. (d) Any act of one or more persons, whether or not agents of a sovereign

Power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional.

(e) Any malicious act or act of sabotage. (f)Confiscation, nationalisation, seizure, restraint, detention, appropriation,

requisition for title or use by or under the order of any Government (whether civil military or de facto)) or public or local authority.

(g) Hi-jacking or any unlawful seizure or wrongful exercise of control of the Aircraft or crew in Flight (including any attempt at such seizure or control) made by any person or persons on board the Aircraft acting without the consent of the insured.

IMPORTANT - War Hi-jacking and Other Perils Exclusion Clause (Aviation)AVN 48B

AVN 48B further provides that the policy does not cover claims arising whilst the insured aircraft is outside the control of the insured by reason of any of the perils described above.

The aircraft is deemed to have been restored to the control of the insured on its safe return to him at an airfield not excluded by the geographical limits of the policy, and entirely suitable for the operation of the aircraft.

EXTENDED COVERAGE ENDORSEMENT (AVIATION LIABILITIES) : AVN 51 CLAUSE

1. This is clause provides that on payment of extra premium some of the exclusion of Clause AVN 48B can be covered.

2 It means that following covers can be covered on additional premium

c) Strikes, riots, civil commotions or labour disturbances. (e) Any malicious act or act of sabotage (g) Hijacking or any unlawful seizure or wrongful exercise of control of the

Aircraft or crew in Flight (including any attempt at such seizure or control) made by any person or persons on board the Aircraft acting without the consent of the insured.

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The cover terminates at midnight on the 15 days following the confiscation whichever occurs earlier.

3. Limitation of liability under clause AVN 52D

Shall be a sub-limit of US $150,000,000 or as applicable under Policy limit whichever is less

The sub limit shall apply within the full policy limit and not in addition thereto.

4. Automatic Termination under Clause AVN 52D

i) All cover –Upon the outbreak of war (whether there be a declaration of war or not) between any two or more of the following states namely, France, the Republic of China, the Russian Federation, the United Kingdom, the United States of America.

ii) Any cover extended in respect of the deletion of sub-paragraph (a) of Clause AVN 48B -(b) Any hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.

iii) All cover in respect of any of the Insured Aircraft requisitioned for either title or use – upon such requisition.

Provided that if an Insured Aircraft is in the air when (i),(ii) or (iii) occurs, then the cover provided by this endorsement (unless otherwise cancelled, terminated or suspended) shall continue in respect of such an Aircraft until completion of its first landing thereafter and any passengers have disembarked.

Review and Cancellation AVN 52D

Review of premium and/or Geographical Limits (7 days) – Insurers may give notice to review premium and/or geographical limits – such notice to become effective on the expiry of seven days from 23.59 hours GMT on the day on which notice is given.

Limited Cancellation 48 – Following detonation as specified in 4 (ii) above, insurers may give notice of cancellation of one or more parts of the cover provided by paragraph 1 of this endorsement by reference to sub-paragraphs (c), (d), (e),(f) and/or (g) of Clause AVN 48B – such notice to become effective on the expiry of forty eight house from 23.59 hours GMT on the day on which notice is given.

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Cancellation 7 days – The cover provided by this endorsement may be cancelled by either insurers or the insured giving notice to become effective on the expiry of the seven days from 23.59 hours GMT on which such notice is given.

Notices – All notices referred to herein shall be in writing.

War and Allied Perils Write Back Provisions – Liability - Extended Coverage Endorsement (Aviation Liabilities) AVN 52E writes back all risks excluded by AVN 48B with the exception of risks contained in paragraph (b) i.e.

Any hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.

Hull War and Allied Perils - LSW 555D - Covers all risks excluded by AVN 48B with the exception of risks contained in paragraph (b) –

IT MEANS THAT WITH A SEPARATE POLLICY THESE CAN BE COVERED.

Section-I

Covers loss of or damage to the aircraft against claims excluded by AVN 48B with the exception of risks contained in paragraph (b)

Section-II

Covers Extortion and hijacking expenses : 90% of any payment properly made in respect of

A) threats against the aircraft or its passengers or crew B) extra expenses necessarily incurred following confiscation etc. or

hijacking etc. Important - Sum Insured taken is 10.00% of the Hull Value

Exclusions

A) War between any of the following states: UK USA France Russian Federation People’s Republic of China

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IMPORTANT - If the aircraft is in air when an outbreak of such war occurs, this exclusion shall not apply until the aircraft has completed its first landing thereafter

b) Confiscation etc. by the government of Registration (c) Emission, discharge, release or escape of chemical, biological, or

biochemical materials or threat of same, but not to apply in (1) the hi-jacking, unlawful seizure or wrongful exercise of control of the

aircraft in flight (2) any threat against the aircraft, its passengers or crew

(extortion) (d) Debt failure or any other financial cause (e) Repossession or attempted repossession of the aircraft either by any

title holder or arising out of any contractual agreement (f) Consequential loss (g) Radioactive contamination (h) Electromagnetic pulse (i) Atomic or nuclear fission

IMPORTANT - Subject to the same warranties, terms and conditions of the Hull All Risks policy except for provisions relating to cancellation, termination and revision of terms.

Aviation Hull War & Allied Peril Policy Features

The premium The obligation to investigate and defend The renewal agreement (if any) The amount of deductible Aggregate limit

Aggregate Limit

First introduced after the events at Dawson’s Field in Jordan in September, 1970.

This is specified maximum sum that will be payable in respect of any or all claims made in respect of events occurring during the policy period.

This limit will usually be around the sum of the top three valued aircraft.

Review and Cancellation LSW 555D

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Review of premium and/or Geographical Limits (7 days) – Insurers may give notice to review premium and/or geographical limits – such notice to become effective on the expiry of seven days from 23.59 hours GMT on the day on which notice is given.

Limited Cancellation 48 – Following detonation as specified in 4 (ii) above, insurers may give notice of cancellation of one or more parts of the cover provided by paragraph 1 of this endorsement by reference to sub-paragraphs (c), (d), (e),(f) and/or (g) of Clause AVN 48B – such notice to become effective on the expiry of forty eight house from 23.59 hours GMT on the day on which notice is given.

Cancellation 7 days – The cover provided by this endorsement may be cancelled by either insurers or the insured giving notice to become effective on the expiry of the seven days from 23.59 hours GMT on which such notice is given.

Notices – All notices referred to herein shall be in writing. 7 days notice by either party days prior to the end of each quarter from

inception Automatic termination upon the outbreak of war between the five major

powers

Airlines - Hull and Spares All Risks and Liability Policy

Additional Covers under Hull All Risks

Parts temporarily detached and not replaced Missing aircraft 10 days Cost of dismantling and transportation following force majeure Leased components with Stipulated Loss Value (SLV) Loss payee provisions Unearned Premium Insurance

Spares All Risks

Loss of or damage to aviation spare parts (including ground support equipment), engineer’s and mechanic’s tools

Covers while in storage Covers at the premises of others Covers whilst in transit by any mode of conveyance

Spares All Risks – exclusions

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Breakdown, wear and tear War Hijacking and other perils (AVN 48B) Loss of damage to property detached from the aircraft and intended to be

refitted Loss of or damage to property sustained while under any process

(excluding engine running) Property fitted to and forming part of the aircraft Inventory losses Ingestion damage during engine running which cannot be attributed to a

single recorded incident Loss of damage to property after operation of fitting it to aircraft

commences

IMPORTANT – Spare is a Spare part until it is attached with Aircraft.

Spares All Risks – Limits

Separate limit for any one occurrence and any one sending Total Loss - To pay replacement cost (including insurance, transportation

and import duties) less deductible Partial Loss – To pay cost of repairs less deductible

Spares All Risks – Deductible

USD 10,000 any one occurrence (standard market deductible) Not applicable to loss or damage arising out of accident to carrying aircraft

or other conveyance Not applicable to loss or damage caused by Fire, AOG perils Ingestion damage during engine running subject to the Hull Deductible

(excluding TL/CTL)

Liability - Deductible

Baggage – USD 1,250 each and every claim Cargo – USD 10,000 each and every airway bill (standard market

deductible) Not applicable to A) Damage caused by Fire, AOG perils B)Damage arising out of accident to carrying aircraft or other conveyance

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Airlines - Spares War Risks Cover - Usually included in Hull All Risks cover at nil additional premium

Spares All Risks - Premium Computation

Provisional premium charged at inception based on declared maximum value of spares

Premium is adjusted on expiry based on average monthly value

Hull Deductible

Jets wide bodied USD 1,000,000 Hybrid USD 750,000 Narrow bodied USD 500,000

Hull and Spares Deductible Insurance

To indemnify against the amount of deductible applied on the Hull and Spares All Risks Policy

A method of reducing the deductible to a more acceptable level

Exclusions – Same as applicable to All Risk cover

Conditions – Same as applicable to All Risk cover

Hull and Spares Deductible Insurance

Limit

To pay up to the deductible amount under the all risks policy in excess of a specified amount, for example :

Hull All Risks deductible USD 1,000,000 Deductible Policy pays USD 900,000 Excess of USD 100,000 Aggregate limit during policy period

Rating

Flat amount per aircraft % of indemnity Profit commission on renewal

Extended Coverage Endorsement (Aviation Liabilities) AVN 52E Clause

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AVN 52E writes back all paragraphs of AVN 48B except for Nuclear Exclusion paragraph (b)

Limits third party war liability coverage to USD 150 Mln each occurrence and in the aggregate

( except in relation to passengers, cargo, baggage where full limit applies) The above limit is for airlines, for smaller risks the limit taken normally is

USD 50 Mln or the policy limit whichever is less

Automatic termination

All cover upon outbreak of war between any two or more of the major 5 powers

Cover extended in respect of paragraph (a) i.e. war etc. upon hostile detonation of nuclear weapon

All cover upon requisition of the aircraft for either title or use IMPORTANT - If the aircraft is in air then cover will continue until

completion of first landing and disembarkation of passengers

War Hi-jacking and Other Perils Excess Liability insurance - AVN 52E Clause

Covers third party war and allied perils liability only Covers in excess of USD 150 Mln only Drops down if primary policy is exhausted Limits up to USD 1 Bln any one occurrence / USD 2 Bln in the aggregate Automatic Termination, Review and Cancellation to follow AVN 52E except

cancellation by either party subject to 30 days notice instead of 7 days

Rating

1.Hull – Percentage of the aircraft value 2.Spares – Percentage of the average monthly value at risk 3.Liability :

Airline

Departure rate plus passenger carried basis USD amount per 1,000 Revenue Passenger Kilometres (RPK) Smaller risks TPL :USD per aircraft plus PL : USD per seat

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Separate charge for AVN 52E

Example of Airline Liability Rating

USD 11.8361 per aircraft departure plus USD 0.1682 per passenger carried Additional premium for increase in the AVN 52E limit from USD 50 Mln to

USD 150 Mln : USD 0.0249 per passenger carried

Passenger and Baggage Liability (in India) - Governed by Carriage by Air Act 1972, amended from time to time

Death or permanent disability

above 12 years : Rs. 7,50,000

Below 12 years : Rs. 3,75,000

Checked baggage : Rs. 450 per kg

Uncheked baggage : Rs. 5000

Clauses attached to all policies

Nuclear Risks Exclusion Clause AVN 38B Noise and Pollution and other Perils Exclusion Clause AVN 46B War , Hijacking and other Perils Exclusion Clause AVN 48B Extended Coverage Endorsement (Aviation Liabilities) AVN 52E Deferred Premium Clause AVN 5A Asbestos Exclusion Clause 2488AGM00003 Date Recognition Exclusion Clause AVN2000A Kiln Geographic Areas Exclusion Clause LSW 617E

Other Clauses

Additions and Deletions (combined) Clause AVN 19A Unlicensed Landing Ground Suitability Clause AVN 23A Aircraft Laying – up Returns Clause AVN 26A Personal Injury Extension Clause AVN 60 Profit Commission on Renewal Clause AVN 64B Liability to Pilots and Crew Clause AVN 73

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Pilot Indemnity Clause AVN 74 Supplementary Payments Clause AVN 76 Unauthorised Use Clause AVN 77 Medical and Related Expenses Inclusion Clause AVN 80 Out of Notified Hours Clause AVN 81 No Claim Bonus on Renewal Clause 85 Ferry Flight Endorsement AVN 90

Noise and Pollution and other Perils Exclusion Clause AVN 46B

Does not cover claim caused by (1) Noise, vibration, sonic boom (2)Pollution and contamination of any kind (3)Electrical and electromagnetic interference (4)Interference with the use of property Unless caused by or resulting in a crash fire explosion or collision or a

recorded in-flight emergency causing abnormal aircraft operation Insurers’ duty to investigate or defend claims does not apply

Deferred Premium Clause AVN 5A

Premium to be paid in installments Automatic cancellation of policy if any installment is not paid within the

due date In the event of any claim exceeding the installments paid the outstanding

premium to be paid forthwith

Agreed Value Clause AVN 61

Total Loss Insurers lose the option to repair or replace and pay the agreed value of the

aircraft less any applicable deductible Insurers, at their discretion, may take salvage of the aircraft No abandonment to insurers Partial Loss Insurers retain the right to repair, replace or make good as they deem

expedient

Asbestos Exclusion 2488 Clause AGM003 – Does Not cover claims arising out of presence of asbestos.

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Kiln Geographic areas Exclusion Clause LSW 617E

Important exclusions : Afghanistan Pakistan Nepal Jammu and Kashmir Sri Lanka Iran, Iraq, Syria Can be covered subject to approval of reinsurer prior to flight

Kiln Geographic areas Exclusion Clause LSW 617F

Important Exclusion Iraq Excluded territory covered following landing due to force majeure

Other Aviation Insurances Frequently Taken by Aircraft Owners/Operators

Airport Owners and Operators Liability Insurance

Scope of cover

Airport Premises Liability Hangarkeeper’s Liability Products Liability

Section-I Premises Liability

Bodily injury or property damage In or about the premises specified in the schedule, as a direct result of the

services granted by the insured. Elsewhere in the course of any work or of the performance of any duties

carried out by the insured or his employees in connection with the business or operations specified in the schedule.

Section-II Loss of or damage to Aircraft or Aircraft Equipment

Not belonging to the insured Whilst on ground in the care, custody or control or Whilst being serviced, handled or maintained by the insured

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Section III Bodily injury or property damage arising out of

Product/goods Manufactured/repaired/serviced/supplied/distributed by the insured Provided the products/goods which form part of or are used in conjunction

with aircraft and only after such goods/products have ceased to be in the possession or under the control of the insured.

Exclusions

Bodily injury, property damage caused by mechanically propelled vehicle, ship, aircraft

Bodily injury arising out of air meet, constructions, demolitions of buildings, runways

Hangarkeeper’s Liability - Covers the insured in respect of loss of or damage to aircraft or aircraft equipment not owned, rented or leased by the insured while such aircraft or equipment are on the ground and in the care, custody or control of the insured , or being serviced, handled or maintained by the insured.

Exclusions

Loss of or damage to wearing apparel, personal effects Aircraft /aircraft equipment hired or loaned to the insured Loss of or damage to any aircraft while in flight

Product Liability - Provides cover in respect of bodily injury or property damage arising out of possession, use, consumption or handling of any goods or products manufactured, constructed, altered, repaired, serviced, treated, sold, supplied or distributed by the insured, but only in respect of such goods or products which form part of or used in conjunction with aircraft, and then only after such goods or products have ceased to be in the possession or under the control of the insured

Cover

Bodily injury and property damage liability Grounding liability Legal expenses Other expenses incurred at the request of the insurers

Exclusion

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Damage to insured’s property or property in his care, custody and control Loss of use of any aircraft not actually lost in an occurrence Noise and Pollution and other perils Insured’s own property

Grounding - Complete and continuous withdrawal from all flight operations at or about the same time of one or more aircraft due to a mandatory order of the civil aviation authority, because of an existing , alleged or suspected like defect, fault or condition affecting the safe operation of two or more like aircraft and which results from an occurrence

Underwriting Consideration Aircraft Insurance

Type of aircraft (FW/RW) Make/Model Year of manufacture Use Maintenance Pilots Area of operations Claims experience Annual utilisation

Underwriting consideration for Airport Owners and Operators

Aircraft movement Number of passengers Revenue earnings No. of airports to be covered

Loss of license Insurance

Operative crew of the aircraft are required by law to have a valid professional license

The issuance and renewal of the license is subject to certain terms and conditions.

This insurance covers consequential loss arising out of suspension of the license or medical grounds only.

The license is liable to be suspended either temporarily or permanently (a) due to medical ground (b) other than medical ground for non observance of

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Rules and Regulation of Regulatory body (DGCA in India) and accident to the aircraft.

This policy is issued world-wide basis.

Basic coverage – In the event of the person insured suffering bodily injury or illness resulting at any time whether during or after the period of insurance (but not beyond a period of five years after the expiry of this insurance) in their incapacity then the compensation as detailed below is payable.

IMPORTANT – IN LOSS OF LICENSE POLICY NO COMPENSATION IS PAYABLE IN RESPECT OF FIRST 90 DAYS OF THE INCAPACITY CONSEUCTIVELY OR IN THE AGGREGATE IN ANY ONE YEAR OF INSURANCE.

Exclusions:

• Death of the Insured Person

• Any personal injury, illness, disease or disability existing prior to the inception of the Policy

• Insured Person taking part in riots or civil commotion

• Intentional self injury, suicide, provoked assault, dueling, fighting or venereal diseases

• Deliberate exposure of the Insured Person to exceptional danger

• Any personal injury, illness, disease or disability giving rise to a claim under any previous Permanent Total Disability

• Riding or driving in any kind of race

• Chronic alcoholism

SUM INSURED IS FIXED GENERALLY 3 TO 5 TIMES OF ANNUAL INCOME.

Table of compensation

Item No.

Type of Disablement Compensation

1 Incapacity causing permanent Total Disablement (otherwise

After deduction of any payment made under other items 3 or 4 the

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than due to psychosis or psychoneurosis or epilepsy)

balance of one hundred percent of the Capital Sum Insured.

2 Incapacity causing permanent Total Disablement due to psychosis or psychoneurosis or epilepsy

After deduction of any payment made under other items 3 or 4 the balance of 18% of the Capital Sum Insured

3 Incapacity causing temporary Total Disablement (otherwise than due to psychosis or psychoneurosis or epilepsy

At the rate per calendar month for not more than twelve months or up to the prior death or permanent total disablement of the insured person. ** In the case of total disablement of the person insured of two per centum of the CSI

4 Incapacity causing temporary Total Disablement due to psychosis or psychoneurosis or epilepsy

At the rate per calendar month for not more than twelve months or up to the prior death or permanent total disablement of the insured person. ** In the case of total disablement of the person insured of 1/2 per centum of the CSI

5 Legal and or other costs incurred with consent of the company

Upto Rs.2000/ per life insured.

*Liability of the Company will not exceed 100 per centum of the CSI *No compensation is payable in respect of the first 90 days of the incapacity consecutively or in the aggregate in any one year of insurance ** Company is entitled to withhold payment of the balance of the CSI for twelve calendar months after expiry of said 90 days but paying to the person insured compensation at the rates mentioned above.

Definition:

Incapacity means any incapacity causing the permanent total disablement or temporary total disablement of the life assured.

Permanent Total disablement means any disablement due to bodily injury or to illness, disease or disability including natural deterioration of the life assured which is of a permanent nature and prevents him/her from attending to the occupation.

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Temporary Total disablement means any disablement due to personal injury or illness, disease or disability including natural deterioration of the life assured which is a temporary nature and entirely prevents him from attending to the occupation.

Conditions:

• Disputes to be referred to Medical Referee

• Insured to authorize Company to seek opinion of the principal medical officer of the competent civil authority to ascertain whether or not an incapacity is presumed to prevent him to follow his occupation

• Insured Person may, if required have to submit to an independent medical or surgical examination

• Policy will cease automatically if the Insured Person loses or terminates his membership of anyone of the Aircrew Association Extensions.

• Insured if required shall submit to an independent medical or surgical examination.

• Policy to cease if insured losses or terminates his membership of any aircrew

Associations if the same has been obtained through the offices of any such association.

• This insurance shall apply while the insured is anywhere in the world.

• Insurer has the liberty to appeal against suspension, restriction or loss of license in the name of the insured and the insured shall provide information and assistance for defense.

Determination of sum insured/values to be insured

Proposal should be accepted only from pilot in the age group of 18-65 years having valid license

Individual

Sl. No. Age of Pilot Capital Sum Insured1 Upto 45 years 3.5 times of annual income2 46 to 50 years 3 times of annual income

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3 51 to 55 years 2.5 times of annual income4 56 to 57 25 58 years and above 1 time of annual income

Group

Sl. No. Age of Pilot Capital Sum Insured1 Upto 45 years 3.5 times of annual income2 46 to 50 years 3 times of annual income3 51 to 57 years 2.5 times of annual income4 58 years and above 1 time of annual income

Mid term enhancement of Sum Insured:

It is not desirable to increase the CSI mid term of the policy. However in the case of substantial increase in salary the CSI can be increased subject to submission of:

- Medical Certificate issued by DGCA

- Medical assessment report of DGCA

- TMT& Blood Sugar (PP)

- Declaration by insured that he does not have any knowledge of illness

- Enhanced CSI should not be more than 25% of the CSI in existing Policy

Aviation Personal Accident (crew member)

Introduction: A Policy designed to provide compensation to pilots and members of the crew against injury, disablement or death arising out of an accident caused by accidental, external and visible means while entering into alighting from or being as pilot member of the crew or passenger in any licensed standard type of aircraft anywhere in the world. Such risks are excluded under PA Policies.

Customer: Pilots, Co Pilots, members of crew

The Insurance Cover:

Basic Coverage: The Policy covers crew against injury, disablement or death arising out of an accident caused by accidental, external and visible means while entering into alighting from or being as pilot member of the crew or passenger in any licensed standard type of aircraft anywhere in the world.

Sr. No. Cover (Within twelve months of Table - A Table - B Table - C

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date of accident)

1. Death 100% of CSI 100% of CSI 100% of CSI

2. Loss of sight of two eyes/two limbs/one eye, one limb).

Nil 100% of CSI 100% of CSI

3. Loss of one limb or sight of one eye, Loss of one limb or loss of sight of one eye.


4. Temporary total disablement. Nil 1% of CSI for maximum 52 weeks

1% of CSI for maximum 52 weeks

5. Permanent total disablement caused otherwise than by loss of limbs or sight.


6. Permanent partial disablement

i. Loss of toes all

ii. Great Both phalanges

iii. Great one phalanx

iv. Other than Great, if more than one toe lost.

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

As per the % of CSI below:

20%

5%

2%

1%

v. Loss of Hearing:

a. Both ears

b. One ear

Nil

Nil

Nil

Nil

50%

25%

vi. Loss of four fingers and thumb of one hand

Nil Nil 40%

vii. Loss of four fingers Nil Nil 35%

viii. Loss of thumb:

a. Both phalanges Nil Nil 25%

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b. One phalange Nil Nil 19%

ix. Loss of middle finger

a. Three phalangesb. Two phalangesc. One phalange

Nil

Nil

Nil

Nil

Nil

Nil

6%

4%

2%

x. Loss of ring finger

a. Three phalanges

b. Two phalanges

c. One phalange

Nil

Nil

Nil

Nil

Nil

Nil

5%

4%

2%

xi. Loss of little finger

a. Three phalanges

b. Two phalanges

c. One phalange

Nil

Nil

Nil

Nil

Nil

Nil

4%

3%

2%

xii. Loss of meta carpuses

First or Second

Third, Fourth or Fifth

Nil

Nil

Nil

Nil

3%

2%

xiii. Any other permanent partial disablement

Nil Nil As assessed by Doctors

Exclusions:

Death/Bodily injury arising out of/traceable

• Suicide, self injury;

• Any breach of law by Insured;

• Any breach by the insured of any air navigation/air worthiness orders;

• Insanity, Insured being under the influence of drugs/intoxicating liquor;

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• Test flights;

• Insured taking part in any military, naval or air force operations;

• Death /Bodily injury or any illness.

Conditions: Accidental death shall not be presumed by reason only of the disappearance of the Insured Person.

Underwriting Guidelines:

• Duly completed proposals forms are to be referred to HO, Technical for approval of rates / terms.

• The proposal form should be duly completed and should be checked for the following:

- Make/Type of the Aircraft

- Engine Number and Type

- Year of Construction of Aircraft

- Maximum Take off weight

- Seating Capacity

- Use of Aircraft

- Area of Operation

- Details of Insurance required ( Viz Hull All Risks, Hull War Risks, Third Party

Legal Liability, Passenger Legal Liability, PA to Pilot/Crew, Baggage Liability)

- Period of Insurance

- Details of Pilot (whether Named Pilots or any pilot with valid license, Total Flying hour’s experience).

All proposals referred to HO for approval of rates and terms.

Determination of sum insured/values to be insured: Sum Insured is the Capital Sum Insured and is generally 3 to 5 times the annual income of the Insured Person.

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Rating:

Rate for 24 hours basis inclusive of on-duty cover:

Table of Benefits A B C

Pilots 0.50% 0.75% 1.00%

Documents for Claims Settlement:

• Medical Report, Discharge Certificate from the Hospital/Nursing Home

• Police Report, DGCA Report

• Death Certificate, Post Mortem Report, Death Certificate

• Certificate from Employer as to last use of License

• Medical Certificate/Doctors Certificate on PPD/PTD

• Any other document required to deal with PA Claim

Aviation Product &Grounding And other Aviation Liabilities Insurance

Introduction:

Product:

The policy provides cover for Insured’s legal liability to pay compensation to third parties for bodily injury or property damages caused by an occurrence arising out of the product hazard.

The insurer will indemnify the insured for their legal liability to pay as damages for the loss of use of completed aircraft, occurring after delivery to and acceptance by a purchaser or operator of such aircraft for flight operations and caused by a grounding arising out of the product hazard.

Customers: Manufacturers, Distributors, Importers and Exporters of aviation products.

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The Insurance Cover:

Coverage A - Personal injury and property damage liability.

The company will indemnify the insured for their legal liability to pay compensation including defense cost for death / bodily injury or damage to property including use of loss of property caused by an occurrence arising out of the product hazard

Coverage B: Grounding Liability:

The company will indemnify the insured for their legal liability to pay as damages including defense cost for the loss of use of completed aircraft, occurring after delivery to and acceptance by a purchaser or operator of such aircraft for flight operations and caused by a grounding arising out of the product hazard.

Definitions:

Product Hazard means the handling or use of or the existence of any condition in an aircraft product provided such aircraft product has ceased to be in the possession or under the control of the insured.

Grounding means a complete and continues withdrawal from all flight operations or use of aircraft in the interest of safety by the authorities of the country where aircraft products will be used or by mutual agreement of the insured and manufacturer /operator of the aircraft.

Aircraft product means completed aircraft, airship, missile, helicopters, launch vehicles, gliders.

Coverage:

Coverage A:

• Any liability for death, bodily injury/sickness of an employee of insured

• Loss of use of any aircraft which has not been destroyed except with respect to an aircraft which has made an emergency landing.

• Legal liability arising from any restriction on or withdrawal from the use of aircraft product not involved in an occurrence.

Coverage B:

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• Loss of use of aircraft during maintenance overall or alterations while being used for purpose other than relating to ground.

Exclusion:

• Noise and pollution and other perils

• War, hijacking, strike, riot, civil commotion, hostile detonation of any weapon of war, employing atomic and nuclear fission.

Conditions: Notice of occurrence or grounding – When an occurrence or grounding takes place, written notice shall be given by or on behalf of the insured to the policy issuing office.

Extensions: Nil.

Underwriting Guidelines:

All proposals should be referred to HO for approval of rates and terms.

Determination of sum insured/values to be insured:

• Limits of indemnity to be selected by proposer for any “one occurrence” and “any one period”.

• Grounding liability limited to 20% of the above limits.

Rating: All proposals should be referred to HO for approval of rates and terms.

Excess: Suitable excess to be imposed

Documents for Claims Settlement:

• Claim form

• Police Report, DGCA Report

• Death Certificate, Post Mortem Report, Death Certificate

• Court award

• Legal opinion.

Aviation Refuelling Liability Insurance Policy covers – Damages for bodily injury or property damage caused by an occurrence during the period

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mentioned in the schedule and arising out of insured’s business as suppliers and/or refiners of Aviation products including the manufacture, sale or distribution of Aviation fuel and lubricants.

Before 1953 there were nine airlines. Paris Convention 1919 - Fitness of Aircraft and Navigation. Rome Conventions 1933 & 1952 dealt with – Carriers liability towards the

passengers. Chicago Convention 1994 dealt with – Carriers liability towards the

passengers Haugue Protcol/Convention 1955 dealt with – Carriers Liability towards

the passengers Montreal Agreement/Convention 1971 dealt with - Carriers Liability

towards the passengers Guatemala Agreement/convention 1971 dealt with - Carriers Liability

towards the passengers The International Air Transport Agreement 1944 – It provides four

freedom of the air by the contracting States to the Chicago Convention. Guadalajara Convention 1961 was for – Position of the Actual and contract

carrier and their liability. Tokyo convention 1963 - dealt with Hijacking & unlawful activity on board Hague convention 1970 dealt with – Hijacking & unlawful activity on board Montreal convention 1971 dealt with - – Hijacking & unlawful activity on

board IACO (INTERNATIONAL CIVIL AVIAITION ORGANISATION WAS FORMED –

In the year 1944 in Chicago convention. IATA (INTERNATIONAL AIR TRANSPORT ASSOCIATION) WAS FORMED – In

the year 1945 following Chicago convention 1944. The registration number of the Indian Aircraft – VT-ASS The colour of the black box is green/Orange Air Navigation commission is composed of the 12 number Standard excess applicable in India for Helicopter Hull – 5% of hull agreed

value of EEL Passengers rate depends on – Passengers KM Airport owners & operators Legal Liability covers bodily injury or property

damage to third party in the premises resulting form the services provided by insured.

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In aviation Insurance Profit commission is granted on renewal where the insured is having more than one aircraft.

Aviation Hull war and allied risk policy can not be issued to Testing Club. In aviation fuelling liability – Limit of indemnity is the amount of

deductible. Excess – It is does not apply in the case of Total Loss/Constructive Total

Loss /Fire & Theft. In Hull Policy – In order to protect the interest of financiers a separate

policy or endorsement is to be issued. Common part Clause – Every part of the second hand Aircraft is value as a

percentage of total value of the Aircraft, this is known as common part clause.

Airport owner and operators legal liability insurance does not cover damage to aircraft hired to or loaned by the insured.

FAUTE LOURDE – Gross negligence of the operator or his servant or his agent.

“dol” – Willful misconduct of the operator or his servant of his agent. C S L – Combined Single Limit Piston Engine has high fire risk. Time limit for filing complaint with the carriers for damage to

baggage/cargo is 7/14 days from the date of receipt respectively. Stalling in aviation insurance is a operational hazard. 70/30 formula is used to workout premium for the aircraft proposed for

reduced value. Total Loss is considered when the repair cost is exceeding 70% of the SI. Lay up Clause provides for return of premium unless the period of lay up is

of at least 30 days consecutive days. Top value of Aircraft is the basis of underwriting for Airline Business.

Main objective of Paris Convention 1919

The rights of nations to the air above their territory. National Registration of Aircraft Safety Requirements of the Aircraft Certificate of Airworthiness and License of the Pilot.

Chicago Convention 1949

Certificate of Registration and Airworthiness

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Journey Log Book and appropriate license Aircraft Radio Station License and list names of passengers and their places

of embarkment and destination.

International Civil Aviation Organisation

It was formed by the Chicago Convention. Ensure the safe and orderly growth of international civil aviation

throughout the world Encourage the art of aircraft design and operation for peaceful purpose Avoid discrimination between contracting states Promote safety of flight in international air navigation

The International Air Services Transit Agreement 1945

The privilege to fly across the territory of another contracting state. The privilege to land for non-traffic purposes.

Main Objectives of IATA 1945

To promote safe, regular and economic Air Tpt. For the benefit of the world.

To faster air commerce and to study the problem connected therewith. To provide means of collaboration among the Air transport Enterprises

engaged directly or indirectly in IATS and to co-operate with ICAO and other International Organization.

Warsaw 1929

Liability of Air carrier for injury to passengers, baggage, cargo Established the principle of presumption of liability against the carrier Fixed the limit of such liability and laid down the defences to the carrier.

Hague Protocol 1955

Limits of liability in respect of carriage of passengers Simplification of documents of carriage Liability towards servants and agents Wording of the Warsaw Convention.

Guadalajara Convention 1961

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It was signed in 18th September, 1961

Tokyo Convention 1963

Offences against penal law Acts which whether or not they are offences against penal law may or do

jeopardize the safe of the aircraft or of passengers or property therein or which jeopardize good order and disciple on the board the aircraft.

Various Notification of Hague protocol Incorporated in India

Type 1973 1992 1998Death of passenger for 12 years and above below 12 years

2 & 1 lac

5& 2.5 lacs 7.5 & 3.75 lacs

Loss of cargo 160 300 per kg 450-00 per KgHand Baggage 1000 2500 4000 kgRegistered Baggage 160 300 per kg 450-00 per kg

Rates for cancellation:

Policy period in force Refund % ( percentage) of annual premium

Up to 1 month 80

More than 1 month & up to 2 months 70








More than 9 months No refund

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Compiled by:Narender WadhawanDy. ManagerVigilance Deptt.,DRO-I, New Delhi

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