Aircraft insurance is one of the most complex and important types of insurance in the world of aviation. They offer protection for airlines and aircraft owners from the financial consequences of accidents, damage and liability claims. This article explains the basics of aircraft insurance, introduces the most important providers on the market, examines the legal basis for insuring commercial aircraft, reasons for exclusion of coverage and the financial impact of aircraft damage. The current situation in Israel is particularly discussed.
Aircraft insurance is specialized insurance policies designed for airlines, private aircraft owners, manufacturers and other companies operating in the aviation industry. They are designed to minimize financial risks associated with aircraft accidents, damage to aircraft and liability claims.
There are different types of aircraft insurance, including:
Hull Insurance: This covers damage to the aircraft itself caused by accidents, fire, theft or vandalism.
Liability Insurance: This insurance protects against liability claims resulting from damage to third parties or their property due to aircraft accidents.
Passenger Liability Insurance: This covers damage suffered by passengers due to accidents during the flight.
War Risk Insurance: This special form of insurance comes into effect when damage occurs due to war or terrorism. Important: As a rule, this is an expensive extra that is subject to a surcharge and is only booked by airlines or aircraft owners if you really need it. Many machines do not have such additional insurance, which is why they can no longer be used in Israel, for example.
The main providers of aircraft insurance
The aircraft insurance industry is a specialized market dominated by a few large companies. The most important providers include:
Lloyd's of London: This is one of the most reputable insurance organizations in the world and offers a wide range of insurance solutions for the aviation industry.
The American International Group (AIG) is a global insurance company and offers comprehensive aviation insurance.
Allianz Global Corporate & Specialty (AGCS): This arm of the Allianz Group focuses on specialized insurance services for companies and also offers aviation insurance.
Chubb is another large insurance provider specializing in tailored solutions for the aviation industry.
The above list is of course not complete. Numerous other companies are also active in the aircraft insurance sector. These are just exemplary examples of particularly large providers who are largely active worldwide.
Legal basis for commercial aircraft
In many countries, commercial aircraft are required by law to carry liability insurance. This obligation is intended to protect the interests of passengers and other third parties. The exact legal requirements vary from country to country, but generally airlines are required to provide a minimum amount of liability insurance to cover damage to third parties.
For example, in the United States, the Federal Aviation Administration (FAA) regulates the minimum insurance requirements for airlines depending on the size of the aircraft and the number of passengers. These requirements are intended to ensure that sufficient financial resources are available to compensate victims in the event of an accident.
Reasons for exclusion of coverage
Not all aircraft are automatically insured against all risks. There are certain exclusions and situations in which insurers are not liable. One of the most important reasons for exclusion is coverage for damage in war zones or in the event of terrorism.
Many aircraft insurance policies contain an explicit exclusion for damage in war zones and terrorist acts. This means that damage caused by wars or acts of terrorism in certain areas is not covered by insurance. This exclusion serves to limit the financial risk for insurers and keep premiums affordable for policyholders.
Exactly this fact became widely known to the general public shortly before Russia's military attack on Ukraine, because numerous carriers had to discontinue their connections not only because of the acute threat of war for security reasons, but also because insurance companies increasingly withdrew coverage. This also led to many Lessors demanding an immediate flight out of Ukraine and expressly prohibiting the use of Ukraine's airspace.
The situation is now similar in Israel, which was plunged into war by a major attack by the terrorist organization Hamas. More and more aircraft insurers are refusing coverage because the region is classified as a war zone. As a result, some airlines are no longer allowed to fly to destinations in Israel, not only for safety reasons but also due to a lack of insurance coverage.
The government of Israel has already responded to this circumstance and is introducing special state liability for machines from domestic operators. This would mean that the state would be liable in the worst case scenario. When it comes to leasing machines, the owner's consent is also required. It is impossible to estimate how the Lessors will behave. However, it can be assumed that El Al in particular will have good cards, as the aviation company has the highest security standards in the world and even missile defense systems.
Some insurance companies also offer additional packages that provide insurance protection in crisis and war regions for a considerable surcharge. It depends on the exact structure of the contract, as cheaper options only offer cover if the event occurs during your stay in the respective country. If you fly in even though there has been unrest, war, etc. for days, there is no insurance cover. More expensive options also cover this risk, but under certain circumstances insurance companies may declare that they can no longer accept liability after a certain point. Since war risk insurance is extremely individual and the contracts are negotiated individually, it is very difficult to make a general statement. It just depends on what the airline or aircraft owner and the insurance company contractually agree with each other.
Financial impact of aircraft damage
Airplane insurance is expensive but necessary as it covers the financial risks in the aviation industry. On average, insurance companies worldwide pay out billions of euros in benefits each year due to damage caused by aircraft. This includes not only damage to aircraft themselves, but also liability claims from passengers and third parties.
Overall, aircraft insurance is a complex and essential element of the aviation industry. They protect airlines and aircraft owners from financial disaster and enable the industry to operate safely and economically, even in times of uncertainty and unpredictability.
The Cockpit Association considers flying in war zones to be risky
“Due to the obvious danger situation in Israel, the Cockpit Association considers repatriation flights by civil airlines to be unsuitable. Due to the incalculable risk, the professional association's flight safety experts recommend that the air force carry it out. Air Force crews are trained for such operations and military aircraft have appropriate equipment to carry out evacuations.
The risk potential of military conflicts for civil aviation is very difficult to assess and should not be underestimated. In the past, several assumptions were made about armed conflicts that turned out to be fatally wrong.
At the same time, the voluntary commitment of the pilots who carry out the evacuation flights deserves the highest recognition. They are doing extraordinary things to quickly help the local people in the current exceptional situation.
“Our greatest respect goes to all the colleagues who agree to carry out evacuation flights,” says VC President Stefan Herth. “Your voluntary willingness to help shows great humanitarian responsibility. Of course, the people who want to leave Israel now must be helped quickly. However, a flight into a risk area represents an incalculable risk. Civilian pilots are in no way trained for such flights.”
“We fundamentally advise against flights into and over war and crisis areas, due to too many incalculable risks for the crews,” says Anja Granvogl, deputy director of flight safety at VC. “If such flights are nevertheless carried out, it is absolutely crucial that the crews are fully informed about the situation and danger and can then only decide for or against such service on a voluntary basis. Voluntariness and flight safety must have top priority.”“