Non-owned Aircraft Insurance



Non-Owned Aircraft Insurance

Individuals and corporations who use charter services have unexpectedly found themselves partially or wholly liable for damage incurred by a chartered private jet. Even though they had reviewed the charter operator’s insurance policy, the actual details of the situation turned out to be different than they had thought. Unfortunately, relying on a charter operator’s insurance policy could result in being liable for millions of dollars of damage to the private jet and unlimited third party liability.

Costly accidents such as those described above can be avoided through the purchase of non-owned aircraft physical damage and third party liability insurance, which is basically insurance that covers the liability for physical damage and third party liability resulting from the use of a private jet which is not owned, such as a chartered aircraft. Although it may seem superfluous to purchase additional coverage for yourself when the charter operator already has insurance, it can be dangerous not to.

Although the discussion of losing multi-million dollar lawsuits sounds a bit sensational, the events that can lead up to such gloomy outcomes are rather mundane. For example, charter brokers subcontract flights out to many different operators to deliver the lowest-cost service. The trouble with such a system from an insurance standpoint is that each operator will have a different insurance policy. Many individuals and corporations never review each operator’s insurance policy. Even if such measures are taken before signing on with a charter broker, an operator may switch insurance polices or have the terms of coverage changed without notice.

Problems can arise at charter companies that operate their own fleet as well. A charter company that owns several of the same private jet may have a different level of coverage for one that is used less frequently, such as when one of the main fleet is down for maintenance. Clients are unlikely to notice the change in serial number when they depart, and could inadvertently be flying on a private aircraft with less insurance than they expect.

Even charter operators with satisfactory insurance coverage on all their private jets can put their clients at risk if they operate outside of the specified terms in the insurance contract. Those who use charter services will generally not know every detail of the insurance policy, and will certainly not be able to know if a charter company is operating outside of the terms on a given flight.

The risk of being liable for damage when a charter operator fails to properly insure a private jet can be reduced by hiring an independent auditor to investigate a charter service before flying with them. Unfortunately, even conducting an audit might not be sufficient. It is imperative for individuals and corporations to acquire non-owned aircraft insurance to address the risk that unlikely, but extremely damaging, events may occur.