Territorial Limitations - Aviation Insurance & Risk Management ...

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Thomas H. Chappell Tom Chappell is the President and CEO of Chappell, Smith & Associates, Inc., parent company of CS&A Aviation Insurance. He is a graduate of Middle Tennessee State University, and is a member of several local and national professional organizations as well as the international Aviation Insurance Association (AIA). His articles are published in numerous aviation trade publications dealing with aircraft operations and the changing trends in aviation insurance. He has served on various boards and insurance company advisory councils. He was honored to serve on an advisory panel for the National Academy of Sciences advising NASA on their “Small Aircraft Transportation System Initiative.” Tom is considered one of the industry’s foremost authorities on aviation insurance having been in this specialized field for over 30 years. He has distinguished himself in the area of aviation risk management and in the placement of insurance for high performance aircraft. He works extensively with FBO’s, maintenance, parts, training and service organizations, as well as regional airlines. He is respected as a speaker in the area of aviation insurance and risk management and frequently participates in aviation seminars. 800.999.1109 www.aviationinsurance.com 8 Aviation Insurance & Risk Management SM AIRCRAFT OWNERS Territorial Limitations What Does My Aviation Insurance Policy Impose? by Thomas H. Chappell
My past articles have cautioned many times that you should never assume all aviation insurance policies are the same. The fact is, they are very different. Even different policy forms issued by the same company can have great variations in coverage. We have advised that you must read and understand the basic coverages your policy offers. Know the pilot require- “If you operate your aircraft only within the 48 contiguous states, you are covered by every basic policy issued by domestic aviation insurance underwriters. This is where the universal similarities end.” AIRCRAFT OWNERS ments, confi rm the hull value, and defi ne the purpose of use, to name just a few. It is important that all policy variables must be clearly defi ned and understood by you, the aircraft owner and operator. Ignoring such details can lead to disappointing and expensive lessons after a loss has occurred. What about policy territorial limitations? I thought we were covered everywhere. There is no policy detail more important and more confusing than the territory of operation. I might also say, there is no policy detail more poorly defi ned by the industry than the territory of operation. In an effort to simplify the questions surrounding territory defi nition, the Aviation Division at CS&A Insurance has compiled the following information. We compared actual copies of each insurance underwriting company’s basic policy forms, reviewed standard policy expansion endorsements and, in most cases, interviewed the respective underwriters seeking explanations of those areas we felt were ambiguous or poorly defi ned. Through all this effort, the topic remains very confusing. As a result, we are offering the following information only as a guide and would recommend that you review your own policy. If you fi nd it confusing, call your agent for a specifi c explanation or defi nition. So, where am I covered? (Or, do I need a geography lesson?) If you operate your aircraft only within the 48 contiguous states, you are covered by every basic policy issued by domestic aviation insurance underwriters. This is where the universal similarities end. If, however, you are getting ready to hop into your aircraft and pilot yourself and your family on that long anticipated winter Caribbean trip, you should stop and read your aviation insurance policy carefully. If you have changed underwriters recently, or have never paid attention to where you are covered, you may be surprised to discover that the territory your policy covers has changed, or it differs from what you expected. Different underwriters provide different territorial coverages, and the designations they use for the same geographical location may vary between them. By examining each individual policy and the actual territories covered, you can obtain a better understanding of the geographical scope of your coverage. The 48 continental United States and Mexico The normal aviation insurance policy applies within the 48 contiguous states and Mexico. We know of no exceptions to this statement. There is one word of caution, however. When traveling to Mexico, the Mexican government does not recognize your policy issued by a U.S. aviation insurance underwriter. As a result, you must have in your possession proof of Mexican Liability insurance issued through a Mexican insurance company. Some U.S. underwriters purchase these certifi cates from a Mexican insurance company and include them with your U.S. issued policy at no additional cost to you. Some under- Aviation Insurance & Risk Management 9
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