Magazine Ultimate Jet #74

INSURANCE I 60
T
he first aviation policy was written in 1911 by Lloyd’s of London, in order to cover the monoplanes and biplanes of
the time. Today, Lloyd’s aircraft policy, commonly named AVN1C, is a widely used insurance mechanism covering
hull losses as well as passenger injuries and liability to third parties caused by an aviation accident. The basic policy
wording is adapted by adding various model clauses. Initially adopted by the London market, these vetted exclusions and
endorsements have evolved to become industry standards. Insurance brokers and underwriters worldwide commonly
price aviation risks using strings of AVN, LMA, NMA and LSW references, which can seem cryptic to the neophyte. For
example, AVN 48B introduces the exclusion of war, hi-jacking and other deliberate acts of violence. Then AVN52E (other
than AVN 48b) reinstates cover for passenger injuries in war circumstances, except in case of detonation of a nuclear
weapon or other radioactive material. Damage to aircraft hull during hostilities is also written back into policies with
LSW555D or AVN51. Such clauses were fundamental to address the 9/11 losses, the disappearance of Malaysia flight
MH370, the shooting down of flight MH17 and the crash of Germanwings flight 4U 9525. Successive LSW617 clauses
exclude certain countries or regions from the agreed geographical flight zone. Other endorsements aim to address
practicalities such as AVN90 providing cover for ferry flights performed by pilots who are not named on the policy.