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
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 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.
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
doesnt 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 Insureds
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
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 Owner/Financier
DEFINITIONS
Accident means any one accident or series of accidents arising
out of one event.
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 insureds 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 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
baggage

towards

passengers

and

their

Airports Owner/Operators Liability

Ground Handlers Liability (Legal Liabilities towards
persons and property on the ground)

A) Personal Accident of aircrew

B) Personal accident of Passengers
Legal Liability of airport owners and operators
Satellite Insurance
Excess War Liability
Unearned Premium Insurance
AIRCRAFT INSURANCE POLICY
COVERS AVAILABLE
POLICIES

TO

AIRCRAFT

UNDER

AVIATION

Hull All Risks & Liability AVNIC

Hull War Risks LSW 555D
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 underwritten on the following basis:

The policy can be

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.
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.
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 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 insureds
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
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 Electrical and electromagnetic interference

Interference with the use of the property
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
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.
(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
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 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
LIABILITIES) : AVN 51 CLAUSE

(AVIATION

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.
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.
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 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 subparagraphs (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.
War and Allied Perils Write Back Provisions Liability Extended Coverage Endorsement (Aviation Liabilities) AVN 52E

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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

Peoples Republic of China

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
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 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 Dawsons 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.

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Review and Cancellation LSW 555D

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 subparagraphs (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 Policy

Hull and Spares All Risks and Liability

Additional Covers under Hull All Risks

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

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force

Spares All Risks

Loss of or damage to aviation spare parts (including ground
support equipment), engineers and mechanics tools
Covers while in storage
Covers at the premises of others
Covers whilst in transit by any mode of conveyance
Spares All Risks exclusions
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
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 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
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
Hybrid
Narrow bodied

USD 1,000,000
USD 750,000
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
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 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
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

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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
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
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 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
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
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 (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.
Kiln Geographic areas Exclusion Clause LSW 617E

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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
Hangarkeepers 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
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
22

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
Hangarkeepers 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
23

 Damage to insureds 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
Insureds 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
Operators

consideration

for

Airport

Owners

and

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.
24

 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 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
COMPENSATION IS PAYABLE
90 DAYS OF THE INCAPACITY
THE AGGREGATE IN ANY ONE

LICENSE POLICY NO
IN RESPECT OF FIRST
CONSEUCTIVELY OR IN
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.
25

Table of compensation
Item
Type of Disablement
No.
1
Incapacity
causing
permanent
Total
Disablement
(otherwise
than due to psychosis or
psychoneurosis
or
epilepsy)
2
Incapacity
causing
permanent
Total
Disablement
due
to
psychosis
or
psychoneurosis or epilepsy
3
Incapacity
causing
temporary
Total
Disablement
(otherwise
than due to psychosis or
psychoneurosis or epilepsy

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

Legal and or other costs

incurred with consent of

26

Compensation
After
deduction
of
any
payment made under other
items 3 or 4 the balance of
one hundred percent of the
Capital Sum Insured.
After
deduction
of
any
payment made under other
items 3 or 4 the balance of
18% of the Capital Sum
Insured
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
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
Upto Rs.2000/ per life insured.

the company
*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.
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.

27

 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.
Age of Pilot
No.
1
Upto 45 years
2
46 to 50 years
3
51 to 55 years
4
56 to 57
5
58 years and above
Group

Capital Sum Insured

Sl.
Age of Pilot
No.
1
Upto 45 years
2
46 to 50 years
3
51 to 57 years
4
58 years and above
Mid term enhancement of Sum

Capital Sum Insured

28

3.5 times of annual income

3 times of annual income
2.5 times of annual income
2
1 time of annual income

3.5 times of annual income

3 times of annual income
2.5 times of annual income
1 time of annual income
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 ofTable - A

1.

Death

2.

Loss of sight of two eyes/two

limbs/one eye, one limb).
29

Table - B

Table - C

100% of CSI

100% of CSI

100% of CSI

Nil

100% of CSI

100% of CSI

date of accident)

3.

Loss of one limb or sight of oneNil

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

50% of CSI

50% of CSI

4.

Temporary total disablement. Nil

1% of CSI
for
maximum
52 weeks

1% of CSI for
maximum 52 weeks

5.

Permanent total disablement Nil

caused otherwise than by loss
of limbs or sight.

100% of CSI

100% of CSI

6.

Permanent partial disablement

i. Loss of toes all

Nil

Nil

ii. Great Both phalanges

Nil

Nil

iii. Great one phalanx

Nil

Nil

iv. Other than Great, if more

than one toe lost.

Nil

Nil

As per the % of CSI

below:
20%
5%
2%
1%

v. Loss of Hearing:
a. Both ears

Nil

Nil

50%

b. One ear

Nil

Nil

25%

vi. Loss of four fingers and

thumb of one hand

Nil

Nil

40%

vii. Loss of four fingers

Nil

Nil

35%

Nil

Nil

25%

Nil

Nil

19%

Nil

Nil

6%

Nil

Nil

4%

Nil

Nil

2%

viii. Loss of thumb:

a. Both phalanges
b. One phalange
ix. Loss of middle finger
a. Three phalanges
b. Two phalanges
c. One phalange

30

x. Loss of ring finger

a. Three phalanges

Nil

Nil

5%

b. Two phalanges

Nil

Nil

4%

c. One phalange

Nil

Nil

2%

a. Three phalanges

Nil

Nil

4%

b. Two phalanges

Nil

Nil

3%

c. One phalange

Nil

Nil

2%

First or Second

Nil

Nil

3%

Third, Fourth or Fifth

Nil

Nil

2%

xiii. Any other permanent

partial disablement

Nil

Nil

As assessed by
Doctors

xi. Loss of little finger

xii. Loss of meta carpuses

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;
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.
31

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 hours 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.
Rating:
Rate for 24 hours basis inclusive of on-duty cover:
Table of
Benefits
32

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 Insureds 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.
The Insurance Cover:
33

Coverage A liability.

Personal injury and property damage

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.
34

Coverage B:
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.
35

 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 insureds 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
36

 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.
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.
37

 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
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.
38

 To provide means of collaboration among the Air transport

Enterprises engaged directly or indirectly in IATS and to cooperate 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

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

197 1992
3
Death of passenger for 12 2 & 5& 2.5 lacs
years and above below 12 1
years
lac
Loss of cargo
160 300 per kg
39

1998
7.5 & 3.75 lacs

450-00 per Kg

Hand Baggage
Registered Baggage
Rates for cancellation:

100 2500
0
160 300 per kg

4000 kg
450-00 per kg

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 2 month & up to 3

months

60

More than 3 month & up to 4

months

50

More than 4 month & up to 5

months

40

More than 5 month & up to 6

months

30

More than 6 month & up to 7

months

25

More than 7 month & up to 8

months

20

More than 8 month & up to 9

months

15

More than 9 months

No refund

Compiled by:
Narender Wadhawan
Dy. Manager
Vigilance Deptt.,
40

DRO-I, New Delhi

41