Aircraft Insurance: What it is, Coverage Level, Types

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

What Is Aircraft Insurance?

Aircraft insurance that provides liability and property coverage for aircraft. Aircraft insurance, also called aviation insurance, can be purchased for a number of different types of aircraft, including standard, experimental, and vintage aircraft, as well as seaplanes.

While aircraft insurance typically covers repair or replacement of damaged aircraft and parts, aviation accident insurance will cover liability claims from injury or loss of life.

Key Takeaways

• Aircraft insurance covers repairs to damaged airplanes or other flying machines.
• More comprehensive coverage may also include damage caused to airports, hangars, and other relevant land-based property.
• In addition to aircraft insurance, most pilots or airlines/operators will also carry aviation accident insurance to cover injury or death.

Understanding Aircraft Insurance

Just as boat owners may purchase a boat owner insurance to protect against damages to their boat or watercraft, so too can aircraft owners protect their property from damage. Aircraft insurance is necessary because claims or suits that arise out of the ownership, maintenance, or use of aircraft are generally excluded under the standard commercial general liability (CGL) forms.

Businesses that elect to use private aircraft in their operations must purchase aircraft insurance to cover their aircraft liability loss exposure. This can be aircraft liability coverage or stand-alone non-owned aircraft liability and perhaps excess aircraft liability coverage as well. Coverage for third-party aircraft liability is often provided, which also includes hull (physical damage) and medical payments coverages. Aircraft policies are not standardized and vary widely. Some insurers offer policies that combine aircraft liability and hull with other aviation coverages, such as aircraft products liability, airport liability, land-based general liability, and hangar keepers liability coverage.

The policy may also provide coverage for the personal items of passengers, as well as liability indemnification for the hangar that the aircraft is stored in. Insurance policies may provide for injuries sustained while operating the aircraft, the cost of emergency landings, as well as the costs associated with search and rescue operations.

The type of coverage and the amount of premium depends on the type of aircraft that is being covered by the policy. Insurers may find aircraft that the owner has built at home (referred to as home built aircraft) to carry more risk than aircraft purchased already assembled. Some policies provide first flight coverage for aircraft that are built at home.

Coverage Levels and Types of Aircraft Insurance

Insurance companies may provide different levels of coverage depending on whether the aircraft is being used for pleasure or for commercial purposes. An aviation business may need coverage if it provides flight training services. A financial company may purchase aircraft insurance for its fleet of corporate jets.

Some insurance companies will also provide insurance coverage for aircraft that is rented by the operator rather than owned, since the operator could be liable for thousands of dollars in damage if something were to happen to the aircraft. Aircraft insurance is also available to organizations, such as flying clubs, in which members may share in the use of one or more aircraft.