project on aviavtion insurance

SAFE SKIES WITH AVIATION INSURANCE

INTRODUCTION OF INDIAN AVIATION

SECTOR

Aviation Industry in India is one of the fastest growing aviation industries

in the world. With the liberalization of the Indian aviation sector, aviation industry

in India has undergone a rapid transformation. From being primarily a

government-owned industry, the Indian aviation industry is now dominated by

privately owned full service airlines and low cost carriers. Private airlines account

for around 75% share of the domestic aviation market. Earlier air travel was a

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A proud Air India Flying


privilege only a few could afford, but today air travel has become much cheaper

and can be afforded by a large number of people.

The origin of Indian civil aviation industry can be traced back to 1912, when

the first air flight between Karachi and Delhi was started by the Indian State Air

Services in collaboration with the UK based Imperial Airways. It was an extension

of London-Karachi flight of the Imperial Airways. In 1932, JRD Tata founded Tata

Airline, the first Indian airline. At the time of independence, nine air transport

companies were carrying both air cargo and passengers. These were Tata Airlines,

Indian National Airways, Air service of India, Deccan Airways, Ambica Airways,

Bharat Airways, Orient Airways and Mistry Airways. After partition Orient

Airways shifted to Pakistan.

In early 1948, Government of India established a joint sector company, Air

India International Ltd in collaboration with Air India (earlier Tata Airline) with a

capital of Rs 2 crore and a fleet of three Lockheed constellation aircraft. The

inaugural flight of Air India International Ltd took off on June 8, 1948 on the

Mumbai-London air route. The Government nationalized nine airline companies

vide the Air Corporations Act, 1953. Accordingly it established by 1995, several

private airlines had ventured into the aviation business and accounted for more

than 10 percent of the domestic air traffic. These included Jet Airways Sahara,

NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines,

Continental Aviation, and Damania Airways. But only Jet Airways and Sahara

managed to survive the competition. Meanwhile, Indian Airlines, which had

dominated the Indian air travel industry, began to lose market share to Jet Airways

and Sahara. Today, Indian aviation industry is dominated by private airlines and

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these include low cost carriers such as Deccan Airlines, GoAir, SpiceJet etc, who

have made air travel affordable.

HISTORY OF AVIATION INSURANCE

Aviation Insurance was

first introduced in the

early years of the 20th

Century. The first

aviation insurance policy

was written by Lloyd's of

London in 1911. The

company stopped writing

aviation policies in 1912

after bad weather and the

resulting crashes at an air

meet caused losses on

many of those first policies.

It is believed that the first aviation polices were underwritten by the marine

insurance Underwriting community.

In 1929 the Warsaw convention was signed. The convention was an

agreement to establish terms, conditions and limitations of liability for carriage by

air, this was the first recognition of the airline industry as we know it today.

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A light flight of 1911

http://en.wikipedia.org/wiki/Warsaw_convention

http://en.wikipedia.org/wiki/Underwriting

http://en.wikipedia.org/wiki/Aviation


By 1933 realising that there should be a specialist industry sector the

International Union of Marine Insurance set up an aviation committee, and by 1934

eight European aviation insurance companies and pools were formally established

and the International Union of Aviation Insurers was born.

The London insurance market is still the largest single centre for aviation

insurance. The market is made up of the traditional Lloyds of London syndicates

and numerous other traditional insurance markets. Throughout the rest of the world

there are national markets established in various countries, this is dependent on the

aviation activity within each country, the US has a large percentage of the world's

general aviation fleet and has a large established market.

No single insurer has the resources to retain a risk the size of a major airline,

or even a substantial proportion of such a risk. The Catastrophic nature of aviation

insurance can be measured in the number of losses that have cost insurers hundreds

of millions of dollars (Aviation accidents and incidents). Most airlines arrange

"fleet policies" to cover all aircraft they own or operate.

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http://en.wikipedia.org/wiki/Aviation_accidents_and_incidents

http://en.wikipedia.org/wiki/Lloyds_of_London

LIABILITIE

S

NORMAL RISKS


RISK COVERED IN AVIATION INSURANCE

There are different types of risk which takes place in aviation insurance and

those risks are covered in aviation insurance they are as follows:

The

above diagram suggests that there are mainly two kinds of risks which an aviation

insurance company will cover which has been divided into two parts. They are:

1. Normal Risks

2. Liabilities

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AVIATION INSURANCE


These two risks are further divided into various parts which involve various

risks and liabilities they are which is explained in detail later on.

NORMAL RISKS

These risks are those risks which every aviation company in this industry

carries it on its back when it enters into the business. These risks may differ from

time to time and situation to situation. These are

1. Hull Risks

2. Hull War Risks

3. Spares All Risks/ War Risks

4. Hull total Loss Only cover

These risks are those risks which takes place when these takes place when

any of these factors comes into action. Because all the above risks mentioned

above are unpredictable and may occur at any time

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HULL RISKS

The hull "All Risks" policy will usually refer to something like "all risks of

physical loss or damage to the aircraft from any cause except as hereinafter

excluded".

Airline hull "All Risks" policies are subject to a standard level of deductible

(that is an uninsured amount borne by the Insured) applicable in the event of partial

(non-total) loss. Currently, this deductible can range from $50,000 in respect of a

Twin Otter to $1,000,000 in respect of a wide-bodied jet aircraft, such as a Boeing

747.

Deductibles too can be reduced by means of a separate "Deductible

Insurance" policy. The Deductible Insurance Policy is effected to reduce the large

"All Risks" policy deductibles to a more manageable level. For example the

US$1,000,000 applicable to a Boeing 747 can be reduced to say US$100,000.

The term "all risks" can be misleading. "All risks of physical loss or

damage" does not include loss of use, delay, or consequential loss. "Grounding" is

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a good example of consequential loss. Some years ago when there had been a

couple of accidents involving DC10 Aircraft, the Civil Aviation Authorities

throughout the world imposed a "grounding order" on that type of aircraft.

That order in effect said until certain things had been established and

checked out those aircraft could not fly. The operators of those aircraft were unable

to fly them and as a consequence of that they "lost" the use of them. But the

aircraft were not "lost" - it was known precisely where they were but they could

not be used to carry passengers. Such an eventuality would not be covered by an

"all risks" policy because in such circumstances there is no PHYSICAL loss or

damage.

What the policy will cover is the reinstatement of the aircraft to its "pre-loss"

condition, if repairable damage is involved, or some other form of settlement in the

event that more substantial damage is sustained. Exactly what form of settlement

will depend on the policy conditions.

Today, the vast majority of airline hull "all risks" policies are arranged on an

"Agreed Value Basis". This provides that the Insurers agree with the Insured, for

the policy period, the value of the aircraft and as such, in the event of total loss,

this Agreed Value is payable in full. Under an Agreed Value policy the

replacement option is deleted.

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The hull risks does not cover some risks whish are as follows

1. Wear, tear and gradual deterioration - in common with most non-marine

policies (which includes aviation insurance) these perils are thought to be

a trading expense and not a peril to be insured.

2. Ingestion damage - caused by stones, grit, dust, sand, ice, etc., which

result in progressive engine deterioration is also regarded as "wear and

tear and gradual deterioration", and as such is excluded. Ingestion

damage caused by a single recorded incident (such as ingestion of a flock

of birds) where the engine or engines concerned have to shut down is not

9

Concorde plane disaster in France, 25 July 2000


regarded as wear and tear and is covered subject to the applicable policy

deductible.

3. Mechanical Breakdown - likewise is thought by aviation insurers to be an

operating expense, but subsequent damage outside the unit concerned is

usually covered. However, it is possible to obtain insurance coverage

against mechanical breakdown of engines by way of a separate policy.

This coverage has a high degree of exposure and as a result is relatively

expensive. The majority of airlines do not purchase it probably viewing

such exposure as a part of the "engineering"

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HULL WAR RISKS

The hull "All Risks" policy will contain the exclusion of "War and Allied

Perils". Generally speaking, throughout the aviation insurance world, "War and

Allied Perils" have a defined meaning. In the London Aviation Insurance Market

the standard exclusion is called the War, Hi-jacking and Other Perils Exclusion

Clause (currently known by its reference - AVN48B for short) this lists and defines

these so-called war and allied perils. It say,

1. War - this includes civil war and war with no formal declaration.

2. The detonation of a weapon

3. Strikes, riots, civil commotions and labour disturbances.

4. Political or terrorist acts.

5. Malicious or sabotage acts.

6. Confiscation, nationalization, requisition and the like by any

government.

7. 7.Hijacking or Unlawful exercise to control plane other than crew

members of the flight concerned.

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12

The brutal second plane crash in World Trade Center, New York, United States of Ameica,

11 September,2001


The majority of the excluded "War and Allied Perils", other than the

detonation of a nuclear weapon and a war between the Great Powers (the aviation

insurance world identifies these as the U.S.A., the Russian Federation, China,

France and the UK), can normally be covered by way of a separate "War and

Allied Perils" policy. Aircraft deductibles are not normally applied in respect of

losses arising out of "War and Allied Perils".

Other exclusions insurers will usually apply are, as follows:-

1. Confiscation etc. by the "state" of registration (this exclusion can often be

deleted in respect of financial interests - albeit, in some instances at an

additional premium charge)

2. Any debt, failure to provide bond or security or any other financial cause

under court order or otherwise;

3. The repossession or attempted repossession of the Aircraft either by any title

holder or arising out of any contractual agreement to which any Insured

protected under the policy may be party;

4. Delay and loss of use. (Although there is often an extension to the policy for

a limited amount for extra expenses necessarily incurred following

confiscation or hijacking).

The aircraft hull "War and Allied Perils" policy will cover the aircraft on an

"Agreed Value" basis against physical loss or damage to the aircraft occasioned by

any of these perils. This statement is made carefully and deliberately in order to

highlight the essential difference from a "Political Risks" Insurance.

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SPARES ALL RISKS

First of all we must identify what we mean by a "spare" or perhaps - "when

is a spare not a spare" to which a simple answer is "when it is attached". Under

most "Hull" policies the word "Aircraft" means Hulls, machinery, instruments and

the entire equipment of the aircraft (including parts removed but not replaced).

Once a part is replaced it is no longer, from an insurance viewpoint, part of the

aircraft. Conversely once a spare part is attached to an aircraft as a part of that

aircraft (not in the hold as cargo or on the wing as an extra pod) it is no longer a

"spare".

If the equipment is insured on the hull "All Risks" policy the automatic

transfer of coverage from "aircraft" to "spare" and vice versa is automatically

accomplished.

Having established when a spare is a spare how is it insured as such?

Usually in one of two ways. Either under a "spares" section of a hull policy or by a

separate Spares Policy. In either case the scope of coverage will probably be

similar. All Risks whilst on the Ground and in Transit for a limit of [so much] any

one item or sending or any one location. War Risks can also be covered (in respect

of transits), Strikes, Riots, Civil Commotions can be covered in accordance with

standard market clauses. Spares coverage is usually subject to a small deductible

except, however, in respect of ground running of spare engines when the

appropriate Ingestion deductible will be applied. Spares are normally covered on

an agreed value basis - usually their replacement cost (be it new or reconditioned -

as is required).

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Spares installed on any aircraft are not covered by the Spares Insurance.

They become, from an insurance standpoint, a part of the aircraft upon which they

are installed and a part of the Agreed Value for which it is insured. This becomes

particularly important if the parts are loaned to another airline.

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A flight cockpit with its spare parts An engine with its spare parts working inside

http://i227.photobucket.com/albums/dd319/BladeBV/random/air_engine.jpg


HULL TOTAL LOSS ONLY COVER

This is similar to Hull All Risks cover given above but will respond only to total

losses of aircraft, whether actual, constructive or arranged. This is particularly

given for old aircraft since the old aircraft are heavily depreciated and insured for

low sums and premium on such low sums would result in low premium, which

would be inadequate for the partial losses. The ratio of partial losses to total losses

in such old aircraft is distorted.

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The Aerocor (Aerolineas Cordeillra) DC-3 used in 60’s and 70’s


LIABILITIES

Liabilities are those risks which may arise due to some consequences or

some “reasons” the company has to face. Those “reasons” are as follows

1. Aircraft Liability

2. Excess Liability

3. Aerospace Manufacturers products and Grounding Liability

4. Airport Owners and Operations Liability

5. Product Liability

A liability is a present obligation of the enterprise arising from past events,

the settlement of which is expected to result in an outflow from the enterprise of

resources embodying economic benefits.

The explanations of all the liabilities are given below

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AIRCRAFT LIABILITY

Here in aircraft liability there are many other liabilities involved which are

further divided into four parts. They are

These are the kinds of liabilities which are covered in aviation insurance the

explanation in detail is given below

BAGGAG

E

CARGO

AND

MAIL

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AIRCRAFT

LIABILITY3RD PARTY

PASSENG

ER


PASSENGER LIABILITY

Coverage for

aircraft operators in the

event a passenger is

injured, killed or

disabled during an

accident while aboard

an insured aircraft.

Aviation policies

divided liability

coverage into two

parts--general liability (excluding passengers), and passenger liability.

A Passenger Liability policy covers incidents resulting from the transportation of

passengers by land, sea or air and can often be included as part of a aviation

insurance policy.

However care must be taken to check that the motor policy wording does not

exclude fare-paying passengers, which is often the case. It is unlikely that an

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Passengers injured in 'Turkish Airlines Plane Crash in Netherlands' Feb 25, 2009


underwriter will be prepared to cancel or amend the wording of a standard motor

vehicle policy.

For this reason Daily Cover policies are specifically for to cater for fare-paying

passenger liability.

THIRD PARTY LIABILITY

This program offers 3rd Party Liability insurance coverage for non-

commercial operations only. Pilot and passenger injuries and aircraft physical

damage are not covered. This member benefit program is designed to allow non-

commercial pilots the benefits that insurance coverage can offer.

While pilot and passenger injuries and damage to the aircraft itself are not

covered under a Third Party program, financial responsibilities bodily injury or

property damage caused by the aircraft for which the pilot is found to be legally

liable to pay to others is covered. Additional insured parties such as landowners,

municipalities and airports, can also be covered under this type of policy. Because

the possession of Third Party coverage provides landowners with a Certificate of

Insurance showing that coverage is in place, access to more flying sites are

accessible for the operation of your aircraft

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When one engages in recreational activities requiring the use of a vehicle - whether

it be land, water, or air sports related - there are inherent factors that could result in

liability issues. No one wants to enjoy an activity and then have the pleasure of it

clouded with possible situations that would result in liability claims against their

hard earned savings. This Third Party liability insurance for USUA members can

help relieve the worry of possible claims against the pilot should this type of

situation occur. Additionally, access to airports, flight parks, and flying events

often require liability coverage. Many states require insurance of this nature just to

operate an airplane of any description. Third party liability coverage is also less

expensive than full coverage, and therefore allows the members (insurance

21

Concorde crash on a hotel near Paris Airport just few minutes after the take off which

resulted in destruction of th hotel it fell on, 25 July, 2000


holders) the opportunity to enjoy the thrill of aviation without the worry of liability

concerns or the expense of high-priced insurance.

The people can be only eligible who are a registered, certificated or licensed pilot

are eligible. Sport Pilot Students who are endorsed to solo are also eligible. Pilot

registration can be with any recognized organization.

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BAGGAGE LIABILITY

This kind of liability may include various reasons in the happening. They are as

follows:

1. Delays

If your bags are delayed, try not to panic. The airlines typically have ways

to track them, and about 98 percent of all misplaced luggage is returned

eventually. If your bags are on the next flight, you could have them within a

few hours. If they've been sent to the wrong airport, it could take a couple of

days. Make sure to file your claim immediately at the airport and to give the

attendant a hotel or home phone number and address.

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Passengers hit by baggage delay


The airlines will typically bring you your luggage when it is found;

you will rarely need to return to the airport to pick it up. Additionally, many

airlines will reimburse any unexpected expenses caused by the loss or delay

(keep your receipts!). But be careful here -- the airline sometimes has the option

to deduct any reimbursement or stipend from any subsequent awards.

Before you leave the airport, be sure you know how to check on your bag's

status; some airlines have an online system while others will provide you with a

phone number to call for updates.

2. Lost Baggage

If the airline loses your bags, make sure you get a written claim for damages.

This may require a different form than the original "missing luggage" form.

This can be done at the airport or by mail.

On domestic flights, the airline baggage liability is capped at $3,300 per person.

On international trips, the liability limit may vary, as it is governed by various

international treaties, including the Montreal and Warsaw Conventions.

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You may need to

produce receipts to prove

the value of items you had

in your suitcase. If you

have them, include copies

in any documentation you

send to the airline. (Keep

in mind that you will be

reimbursed for the

depreciated value of your items -- so the airline won't give you the full $1,000 you

paid for that suit you purchased two years ago.) You can purchase "excess

valuation" protection if your checked baggage is worth more than these limits (but

before doing so, make sure the items aren't already covered by your homeowner's

or travel insurance policy).

The airlines typically have a long list of items for which they will not be

held responsible; these include jewelry, money, heirlooms and other valuables.

These sorts of items should always be packed in your carry-on bag.

3. Stolen Baggage

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A place consisting lost baggage’s in airport


Head directly to the baggage carousel when you get off your flight.

Many airlines scan bags when they're loaded into the baggage claim area and

keep records, especially at larger airports. Once you've left the baggage claim

area, your claim is no longer with the airline, but with the police.

4.

Damaged

Baggage

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Unclaimed baggage ready to be stolen

A damaged bag due to hush made by the airport workers

in the green belt


Once you've gotten your bags off the carousel, immediately check them for

damage or other signs of tampering or mishandling. Report any damage before

leaving the airport; airline customer service will often want to inspect the bag.

Keep in mind that most airlines won't cover minor wear and tear.

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5. Cargo and Mail Damage

According to,

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Consignment damaged while cargo or mail from one place to another


“Although Martinair Cargo will give its best efforts to deliver your shipment at its final

destination in good order and condition, sometimes damage / depreciation, delay or

(partial) loss unfortunately occurs. In case such an irregularity should affect your

shipment, a claim can be filed with Martinair Cargo Claims. In order to facilitate and

speed up the claim handling process, we kindly would like to draw your attention to the

following:

I What to do in case you receive your shipment with damage

Make sure that the damage of the shipment is noted on the release form/delivery

receipt of the warehouse.

If possible, please take (digital) pictures of the damaged shipment upon receipt of

your cargo at the final destination, as recorded on the Airway Bill.

To strengthen your case, you can appoint an independent and objective surveyor.

However kindly be advised that the decision to appoint a surveyor is up to the

claimant as the claimant always has to provide independent evidence in order to

prove the extent of the damage as claimed for.

Send a written preliminary claim to Martinair Cargo Claims within 14 days from

the date of delivery at the final destination.

Measure the temperature of the shipment upon release and measure the boxes on

the outside of the pallets in case of complete pallet delivery. Please record the

temperature on the release form/delivery receipt of the warehouse.

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To strengthen your case, you can appoint an independent and objective surveyor to

check the condition of your perishable shipment. Please make sure that your shipment

will be surveyed as soon as possible but not later than 8 hours after arrival at your

premises: perishables are time sensitive and/or temperature sensitive commodities,

therefore only a survey done shortly after arrival of the cargo will be considered as an

objective survey.

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II What to do in case of (partial) loss/pilferage of your shipment

Loss:

.

Definition: loss is defined as all pieces (mentioned on the Master Air Waybill)

reported missing

Send a preliminary claim to Martinair Cargo Claims within 120 days from the date

of issue of the Master Air Waybill.

Partial loss / pilferage:

Partial loss is defined as one or more pieces of the total shipment (mentioned on

the Master Air Waybill) are reported missing

Pilferage is defined as the loss of one or more items out of one or more pieces

Send a preliminary claim to Martinair Cargo Claims within 14 days from the date

of delivery (both partial loss and pilferage are considered as damage).

Make sure, that partial loss and/or pilferage is noted on the warehouse release

form/delivery receipt of the warehouse or on the Trucking document in case of

direct deliveries. In case of pilferage, please also establish the weight discrepancy.

III How to file a priced claim

Whenever a priced claim is filed, the necessary information must be gathered. We

strongly request you to enclose the relevant documentation and information as

mentioned below, in the English language:

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Vendor’s / shipper’s invoice covering the complete shipment. Please explicitly

indicate the items / pieces claimed for. Please note that Martinair Cargo cannot

offer full compensation based on the commercial / sales invoice as a refund for

loss of profit is not part of our contractual liability.

Packing list. Please indicate the items / pieces claimed for Cession of Rights, if

required, from the party (shipper / consignee as mentioned of the Master Air

Waybill) entitled to claim, which states that your company is authorized to act on

their behalf.

Copy of the Martinair Master Air Waybill (and if possible a copy of the relevant

House Air Waybill).

A specification of the amount claimed for (by means of a shipper’s invoice,

an independent survey report, a bill of sale or a bill of repair).

Copy of the delivery receipt.

(digital) Pictures, if available.

Your banking details, including swift code.

In case your claim concerns damage / depreciation, please enable us to verify the

extent / direct consequences of the irregularity by also enclosing:

Independent and objective survey report, if issued. In case the amount of the

damage / depreciation is expected to be below the costs involved in employing a

surveyor, a survey report obviously is not required. Please note that the decision

whether or not to involve a surveyor is entirely yours. The presence of an objective

survey report, however, will never reduce the strength of your case.

Destruction report, in case the shipment was no longer fit for sale.

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Bill (s) of sale, in case the shipment was still fit for sale.

Bill (s) of repair (if applicable).

Only upon receipt of the information as requested above, your claim can be taken into

consideration. If any of these documents are not available, please explicitly state so.

Please be informed that an adequate and sufficient provision of all relevant documents

enables a swift and efficient claim handling procedure.

IV Claims handling information

Claims will be handled in accordance with the applicable Conventions and /or

General Conditions and / or Conditions of Contract.

An airline can only be held responsible for proven irregularities which can be held

against the carrier and which occurred while being under its custody. This means

the period from acceptance of the shipment at the airport of departure until

delivery at the airport of destination.

A preliminary notice of claim must be made in writing by separate notice. In case

of damage (also including partial loss and pilferage) a (preliminary) notice of

claim must be filed within 14 days from the date of receipt of the cargo. In case of

loss (all pieces reported missing) a (preliminary) notice of claim must be filed

within 120 days from the date of issue of the Mawb.

The maximum liability of Martinair Cargo is limited. We refer to the relevant

provisions of the Warsaw / Montreal Convention, as well as to our General

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Conditions (available on the website of Martinair Cargo:

www.martinaircargo.com) and our Conditions of Contract. As a consequence

hereof, we politely advise you to file a claim with your (client’s) underwriters in

first instance, in case your shipment is covered by an insurance policy.

For a number of irregularities Martinair Cargo is protected by an exclusion of all

liability. For example: the damage as claimed for is of an indirect / consequential

nature ( e.g. loss of profits, additional taxes incurred, fines etc.), Act of God ,

Force Majeure situation, authority regulations. Reference is made to our General

Conditions. Martinair also will decline all liability for goods not properly packed

for air transportation.

Martinair Cargo does not accept liability for perishable cargo delivered into

our custody at a temperature exceeding the temperature limits mentioned on the

warehouse receipt / acceptance slip or exceeding the temperature limits mentioned

in the “IATA, Perishable Cargo Manual”. Also liability is not accepted by

Martinair Cargo for damages which are a result of inherent defect, nature or vice

of the cargo whilst shipment has not suffered a significant delay.

The right to claim shall be extinguished if any action is not brought within two

years, reckoned from the date of arrival at the destination, or from the date on

which the aircraft ought to have arrived, or from the date on which the carriage

was stopped.

Whenever our liability for a claim exceeds our policy deductible, Martinair Cargo

will be forced to hand over the file to the liability claims adjusters appointed by

our insurers. The claim will then be dealt with directly by these claims adjusters

and the claimants will be contacted accordingly.

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In case we accept liability we request the claimant to sign and to stamp a Final

Release Form before being able to settle, hence relieving Martinair Cargo from

any further future liability. After receipt of the duly signed and stamped Final

Release Form and if necessary the Cession of Rights, settlement will be effected.

Our financial department will transfer the amount to your bank account, for which

we of course need your banking details, including swift code.”

EXCESS LIABILITY

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Excess liability is all about the refueling and the defueling of the aircraft. Excess liability is also

known as THIRD PARTY WAR RISKS.

36

Refueling done by one aircraft to another in air

Refueling done on ground


AEROSPACE MANUFACTURERS PRODUCTS AND GROUNDING LIABILITY

MANUFACTURERS PRODUCTS LIABILITIES

This type of insurance is essential for the manufacturer of aircrafts, its

components and related equipment. In addition, it is also necessary for those

engaged in selling airplanes, its parts or fuel, and for individuals who repair

and/or maintain the aircrafts.

There are different laws, federal regulations and considerations for

commercial airliners versus small planes.

General aviation refers to aircraft such as small planes that seat less than 20

passengers and were not engaged at the time of the flight in scheduled

passenger-carrying operations. It includes helicopters, as well. Knowledgeable

brokers can assist in the process of identifying what type of coverage is

necessary on a case by case basis.

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Coverage

This policy protects parties from claims arising from injury or damage

caused by defects in the products sold or manufactured or from improperly

completed operations. Manufacturers, distributors and sellers can be open to

liability even if it is proven that the product was used improperly. Insurance

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Wings of the plane made of Aluminum

Lifeline of an aircraft- Big 1.5 storey size engines


coverage will cover their legal fees needed for defense against claims and class

action suits

Three times big tyres of a plane

Statistics

Though air traffic is considered to be a safe means of transportation,

accidents do occur. Some of the more common causes of many of these

incidents are faulty equipment and structural or design problems. Aviation

products can cause catastrophic accidents as the result of relatively minor

failures.

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GROUNDING LIABILITIES

This may include liabilities as follows

PREMISES-LIABILITY

This basic part of the policy will protect the liability of the operation for the

employees while performing their duties. This would be the fueling operation, and

any part of the business associated with the office and ramp areas. The facility will

add to this policy additional parts to cover the specific needs of each operation.

40

Ground staff at its work


HANGARKEEPERS

The larger operations, you know, like a Bell service center with 8 to 10 beautiful

ships in various stages of maintenance with full pilot training facilities for instance,

is almost always going to have exceptional policies covering their business

operations that include what you do. Their policy will cover any person acting on

behalf of the operation in the carrying out of their duties. This policy will protect

you if you should do something unintentional that causes damage. An example

might be in the process of moving a helo in or out of the hangar with a power tug.

If you are watching one side and start the turn too soon and catch the tail boom or

rotor on the hangar door or another helicopter sitting next to the one you are

moving, the damage you cause will be covered by the coverage.Now let’s say you

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work for a maintenance only shop with just 1or 2 ships being worked on at any one

time. In these difficult economic times, it is not unheard of for some operations to

trim expenses and not purchase the Hangarkeepers option of the policy. If you are

unsure, work up the courage to ask your boss if you are covered under this part of

the policy. Seeing a copy of the declarations page with the policy effective dates

will help reassure you and will operations Hangarkeepers also tell you if the

coverage has been purchased.

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People working as hangar keepers


TRAINING

A pilot getting trained in a cockpit

It is the hope of the insurance underwriters that if you are asked to do

something new that you will have received training ahead of time. If you usually

move a Robinson R22 or Schweizer 300 and are now asked to move a multi-

million dollar Sikorsky S-61, please be sure you ask for training or assistance. This

same training will apply to any part of the operation you perform. Even something

that seems as simple as fueling or de-fueling must be part of your training before

you perform it by yourself. Underwriters would prefer the operation participate in

NATA’s Safety

43


IN-FLIGHT-HANGARKEEPERS

This coverage is important if you are operating the helicopter in flight. It is not

uncommon for an operation to do a test flight after maintenance has been

performed or if avionics have been installed or changed. Sometimes a problem

reported by the owner can only be replicated while in flight. If you are the one who

flies it, be sure you meet all of the pilot requirements of both the operators’ policy

and the helicopter owners’ policy.

In almost every case, an owner will have an aircraft policy that has as part of their

pilot warranty a paragraph that states what qualifications a pilot needs to meet

before he can fly as part of a maintenance flight. There are some operators who

believe that the owners’ policy will cover any damage that results from a loss to

the aircraft while flying under this provision. Remember that the owner has a

policy to protect them; not you.

44

Eligible pilots


AIRPORTS OWNERS AND OPERATIONS LIABILITY

AIRPORT OWNERS LIABILITY

The work done by airport employees is considered to involve the greatest level of

professional responsibility. Even smallest errors by airport personnel can result in

enormous casualties and material losses. Therefore it is important for airport

owners to insure not only their property but also third-party liability.

Insurance objects:

← The Insured’s liability as an airport owners and/or airport structures that may

include:

← - airport terminal, airfield and other infrastructure;

←

← - fuelling station;

←

← - air traffic control center.

Insurance risks:

← - liability for causing material damage to third parties;

←

← - liability for causing damage to life and health of third

← parties.

45


46

Beautifully built Riyadh Airport


Insurance period:

← Period specified in the insurance policy – normally one year.

←

← The cost of insurance is influenced by:

←

← - number of takeoff and landing operations;

←

← - types of aircraft based at the airport;

←

← - passenger and freight flow volumes;

←

← - structures comprising the airport;

←

← - security measures;

←

← - working conditions of air traffic control center.

Exclusions:

47


← Standard: military risks; risks related to nuclear explosion effects and

radiation hazard.

←

← Specific :

← - liability to the Insured’s personnel;

←

← - liability for property owned or temporarily possessed by the Insured;

←

← - liability for injuries to persons and property resulting unless such

activities have been agreed on with the Insurer.

Also to mention that airport owner’s liability also includes operations

liabilties

PRODUCT LIABILITY

Product liability is the area of law in which manufacturers, distributors,

suppliers, retailers, and others who make products available to the public are held

responsible for the injuries those products cause.

Theories of liability

48


In the United States, the claims most commonly associated with product liability

are negligence, strict liability, breach of warranty, and various consumer protection

claims. The majority of product liability laws are determined at the state level and

vary widely from state to state. Each type of product liability claim requires

different elements to be proven to present a successful claim.

Types of liability

Section 2 of the Restatement (Third) of Torts: Products Liability distinguishes

between three major types of product liability claims:

manufacturing defect,

design defect,

49

Plane crash due to manufactures and other members related with the airlines

http://en.wikipedia.org/wiki/Consumer_protection

http://en.wikipedia.org/wiki/Breach_of_warranty

http://en.wikipedia.org/wiki/Strict_liability

http://en.wikipedia.org/wiki/Negligence


a failure to warn (also known as marketing defects).

Manufacturing defects are those that occur in the manufacturing process and

usually involve poor-quality materials or shoddy workmanship. Design defects

occur where the product design is inherently dangerous or useless (and hence

defective) no matter how carefully manufactured. Failure-to-warn defects arise in

products that carry inherent nonobvious dangers which could be mitigated through

adequate warnings to the user, and these dangers are present regardless of how

well the product is manufactured and designed for its intended purpose.

FUTURE OF AVIATION INSURANCE

During the past century, man has realized his dream to fly. The aircraft has

been developed and partially perfected. The aviation industry, as it is known today,

has grown into a set of definable sub-industries based upon usage. Modern-day

aircraft range from military to commercial airlines to the most diverse group,

50

http://en.wikipedia.org/wiki/Skill


general aviation. As with any technology-based industry, aviation continues to

grow and develop. New uses for aircraft are identified, better aircraft and avionics

are created, and problems are recognized and solved.

Although aviation has come a long way in the last 100 years, it is still a

developing industry. With growth and development come problems that must be

solved before an industry can graduate to the next level. In the United States,

aviation is now being confronted with a series of problems that may take as long to

solve as the act of flight itself. As aviation enters the new millennium, it is these

problems with which the aviation insurance industry must deal. Some are simply

growing pains. Others are outside influences for which no simple solution may

exist.

LEGAL CONCERNS

In many cases, changes in other areas of our society have a great influence

over aviation. This is the case with our court system. The trend toward

unreasonable verdicts and ridiculous awards has forced many aircraft owners to

create shell corporations to "front" as the registered owner of their aircraft. Owners

today are uncertain as to how much liability insurance is adequate protection, a

situation made far worse by the growing reluctance of insurance underwriters to

offer higher limits of liability protection at any price. The underwriters explain that

it is impossible for any aviation insurance company to predict an adequate liability

premium rating structure when the court decisions are so volatile and erratic. All

aviation insurance companies are heavily reinsured by companies in London and

other foreign markets, and those foreign insurers usually charge passenger liability

premiums for aircraft operated in the United States that are three to five times as

much as those paid by non-U.S. operators.

51


And so it goes for the owner of general aviation and commercial aviation aircraft

in the United States. Aircraft owners seem to be trapped between inadequate

coverage limits, high-priced liability insurance premiums, and the perils of the U.S.

court system.

CAN SMALL AVAITION BUSINESSES SURVIVE ?

In the future, some sectors of the aviation community may simply cease to

exist as a result of the threat of financial devastation due to lawsuit. We've had a

glimpse of this already when the escalating cost of products liability insurance

practically stopped the production of light aircraft in the mid-1980s. It was only

after a change in legislation limiting the time an aircraft manufacturer could be

held responsible for products liability that our industry resumed production of new

light aircraft.

In the future, such sectors of general aviation as the small piston repair shop

and the small flight training school may not be able to afford the increasing

insurance premiums and in some cases may not be able to buy adequate insurance

at any price. This may spell the end for many in these businesses. As of February

2000 at least three aviation insurance companies have ceased writing small

"Instruction and Rental" risks while others have increased their premiums for this

class.

The future may see the small maintenance facility replaced with a new-

technology aircraft requiring far less maintenance. The same style of maintenance

used by the military and airlines -- the remove-and-replace concept -- may become

commonplace throughout general aviation as well. Maintenance problems may be

identified by computer and repaired only by the manufacturer at factory service

52


centers, a practice that is already common in today's bizjet fleet. "Plug and fly"

replacement parts keyed to a computer analysis may decrease cost with little or no

downtime.

All this, of course, is little consolation to owners of existing, older-

technology, maintenance-intensive aircraft. They're not getting any younger ... and

neither are we.

AGNG FLEET, AGING PILOTS

While aviation is not exactly a mature industry, it is aging. Maybe what

we're seeing today is just the end of a plateau in the overall development of

aviation. The average age of both our pilot population and our fleet (both

commercial and general aviation) is increasing. Many commercial and airline

pilots today received their initial training in the military. The World War II pilots

are now in their 70s and 80s, the Korean War pilots are in their late 60s, and the

Vietnam pilots are in their 50s and 60s. One of the most common conversations we

have with our clients and friends concerns how they can extend their insurable

years as a pilot. Aviation is a great hobby for our retirement years.

Aircraft hull and liability insurance for the senior pilot has become such a

concern that our insurance agency has developed a special task force to help deal

with this problem. Looking into the future, as the baby boomers age, our average

pilot populations continue to age. As with automobile drivers, we have found this

segment of our industry to be no more likely to have an accident than the younger

group. In fact, they tend to be more cautious, better trained, and better financed

than most underwriters care to admit. Maybe it is because we are growing older

ourselves, but we believe increased awareness at the underwriting level will soon

53


improve insurance company acceptance and serve to extend the insurable age of

the senior pilot. We can assure you, we are doing everything in our power to

influence the underwriting community in that direction.

Meantime, what can be done to infuse new blood in the cockpit? The

industry is currently suffering from a lack of trained professional pilots. Without

the military-trained pilot to help fill the need for commercial and airline pilots, we

must depend solely upon civilian-trained pilots. This then becomes an economic

problem. There is no longer a generous GI Bill to offset the cost of flight training

in an age of escalating costs.

Many of our charter and corporate clients complain of sending a young

second-in-command to school on their aircraft, only to have the airlines snap them

up upon completion. The trend toward younger and younger pilots in the right seat

is disturbing whether at the charter, corporate, or airline level of operation.

SHRINKING FLEET

Primary training costs are increasing for a number of reasons. The high cost

of new replacement training aircraft and inadequate and expensive insurance

render the training sector of aviation vulnerable to lawsuits and financial disaster,

and a shortage of qualified instructors has slowed the flow of new pilots to a

trickle. The shortage of career CFIs is due in part to the low pay scale at most

54


flight schools, whose owners respond that they're just barely able to stay in

business as it is.

The majority of the general aviation aircraft flying today are 15 to 20 years

old and older. To replace a simple single-engine Cessna 172 today would cost in

excess of $140,000. A new twin-engine Beech Baron is in the $1,000,000 range.

Of course, used aircraft are always an option. The obvious problem is that as new

replacement aircraft increase in cost, the price of good used aircraft is forced up as

well. Today, there are no bargains. It is often a struggle to find a used aircraft for

sale with no damage history. Couple the normal attrition of our aging fleet with the

high cost of replacement aircraft and it is easy to understand why our overall

general aviation numbers are plummeting.

Again, a look into the future suggests that the majority of primary training

will be done in flight simulators and computerized flight-training devices. As

demand increases and technology advances, the full-motion simulator should

become much more affordable and so realistic the only thing left for the student

pilot is the checkride. "Safe and inexpensive" will become the name of the game.

If you want proof, the military has already adopted this method of training

from the combat tank to aircraft and everything in between, and airline pilots are

getting type-rated in new transport jets without having ever set foot in the actual

aircraft.

TREND TOWARDS TUBINES

55


The current trend for corporate-owned-and-operated aircraft seems to be

toward turbine-powered aircraft. If new Barons sell for "a million bucks" out of the

factory and a good used King Air is also in the $1 million range, the decision is

clear to many which is the preferable aircraft in size, safety and maintenance cost.

The myth that a light piston twin is easier to fly than a turbine-powered aircraft is

beginning to be dispelled. Now that the underwriting community is imposing

virtually the same training requirements upon the multi-engine piston pilot as the

turbine operator, there is less advantage in buying the piston-powered aircraft.

Couple the ease of operation of the turboprop and jet aircraft with the comparable

cost of acquisition, and you have an even more compelling argument against the

piston engine.

The proof is in the requests our agency receives for insurance quotations. We are

seeing increasing momentum toward turbine and jet aircraft. For years, the

corporate flight department has insisted upon the business jet for comfort and

safety. Now, with the development of the single-pilot jets, there is increased

interest from the businessman pilot in Citation SPs, CitationJets, and other new-

generation Williams-engine-powered jets. In our opinion, this is clearly a look into

the future. With the ease of operation and safety and the decreasing acquisition and

operational costs of new-generation turbine aircraft, it is easy to see what the near

future holds for the piston-powered aircraft.

TRANING : BETTER MORE EXPENSIVE

There is no argument among most commercial pilots and aviation insurance

underwriters that full-motion flight simulators should be a part of every training

process. You simply cannot practice the emergency procedures in the aircraft that

can be demonstrated in a simulator. Although not available for every aircraft at this

56


time, more and more underwriters are requiring simulator-based training at least

annually. We get the complaint from many of our clients that the cost to attend

FlightSafety or Simcom is too high. Usually, they do not take into account the cost

of aircraft operation when comparing this with the traditional in-aircraft flight

training.

There is good news ahead, however. There is more competition in the upper-level

flight training area. With increased competition will come improved programs and

improved affordability. There will be more flight simulators available for a wider

variety of aircraft. In the future, we predict there will be full-motion simulator-

based training at every level ... yes, even for primary training. You may see a pilot

solo without ever leaving the ground. This is an insurance underwriter's dream!

WHAT DOES THE FUTURE HOLD ?

We have no idea what can or should be done about the U.S. court system

with its irrational verdicts and out-of-control damage awards. From this standpoint,

aircraft owners and operators will continue to be plagued by high liability

insurance premiums and inadequate limits. We can only hope that society will

wake up at some point, change its attitude toward litigation, and break loose from

the hold that attitude has over all of us.

Of course, adversity is the mother of innovation (and invention). With this in mind,

the future is very bright. New methods of training using simulators at all levels will

produce more, better-trained pilots. As these techniques become more available,

the costs will continue to decrease. Some of the new-generation flight simulation

software for home PCs is quite spectacular, and CFIs tell us it offers excellent

training value (although the FAA does not yet recognize this fact). New technology

57


and new production methods may eventually bring down the cost of new aircraft

ownership, and a younger, more efficient fleet will be born. A modern fleet of this

type should be less expensive to repair and with the improved repair costs,

insurance hull premiums will also decline. In addition, these new-age

improvements are producing aircraft that are easier to handle and fly. Safety and

comfort seem to be a priority. As this permeates our fleet, accidents will surely

decrease, and insurance premiums will decline as well.

The advent of the computer is changing the way we live our lives, and the cockpit

is no exception. First seen in our navigational aids with the very affordable GPS,

the computer is revolutionizing the entire look and function of our instrument

panels. Tom Chappell, president of our agency, recently attended the open house of

one of our clients to view his new Lear 45. This new-generation aircraft is truly an

awakening. Sitting in the cockpit wondering just what all the new pretty and

colorful screens and dials were, Tom felt as if he was viewing a piece of equipment

from a future epoch. The instrumentation, function and completeness of the panel

were truly a look into the future of general aviation. The way pilots are trained in

the future will be changing -- not just to cut costs, but because the aircraft of the

future are here and are like nothing you have ever seen.

INDIAN GOVERNMENT ON AVIATION

INSURANCE

Indian Aviation Insurance Market Overview 2008 Anant Pawar*

58


The author is the Vice President & Head – Aviation at Aon Global Insurance

Brokers Pvt. Ltd.

Insurers on aviation growth path Indian Insurers have come a long way in

developing the market capacity for aviation insurance business and as India‟s

growth story continues, Insurers have kept pace with the growing demand from

buyers in India. Today the Indian market is playing a key role in supporting not

only buyers in India but also buyers in the sub-continent, including major support

to the SAARC region. As the Indian aviation industry continues to grow, many

new buyers have entered the insurance market with requirement for different types

of products. Apart from traditional airline and aircraft related insurances, Insurers

are now covering different verticals of aviation industry ranging from airports to

aircraft manufacturers with bigger risks appetite. The year 2008 has seen

heightened level of competition amongst both Public and Private Sector Insurance

Companies in an attempt to retain the current market share and to fulfill an ever

increasing desire to participate in the aviation growth story.

59


60

MR.Praful Patel, Ministry of Civil Aviation, Union Government of India


This is more so in the General Aviation (generally aircraft with less than 61 seats)

segment where the sum insured limits are within the capacities of many Indian

Insurers. General Aviation buyers in India have enjoyed substantially lower

premium payouts in 2008 compared to their world and regional peers, as buyers

have bargained hard taking advantage of the soft market conditions and excess

market quite a few buyers have switched their insurers. On the Airline front,

pricing continues to be driven by leading international markets especially in

London, as Indian Insurers continue to off load major risks to international

companies mainly in the European sub continent, with insurance brokers playing a

very important role in the entire process. Market Potential For 2008, Aviations

direct premium income in India is circa INR 3,750 million and this includes buyers

from all segments including airlines, general aviation, aerospace, airports, ground

handlers, catering companies etc but excluding satellite. Over 75% of the total

premium comes from the airline segment with another 23% from General

Aviation. A very small portion of 2% is contributed by airport, ground handlers,

catering segment etc. In addition, capacity. In the process, National Reinsurer,

„GIC Re‟ writes substantial international aviation business (mainly by way of

inward reinsurance) coming into the country and gradually other insurers are

following suit, but with caution. Over the last 10 years GIC Re has emerged as one

of the largest aviation reinsurer in the international market and is playing a key role

in supporting Indian Insurers. Currently there are over 200 buyers of aviation

insurances in the country who need aviation products in one form or other. Many

new buyers have entered the market in 2008 and the trend is expected to continue

in 2009 albeit at a slow pace. For the airline sector, customer base and number of

aircrafts has increased significantly in the past three years but current economic

situation is taking a toll on its future growth.

61


When one compares the above limits to 2-3 years back it signifies a jump of over

200%-250% and majority of the capacity comes from National Reinsurer, GIC Re.

New capacity has entered Indian market especially during 2007, 2008 with Private

Insurers buying reinsurance programmes to support their direct underwriting. At

the same time existing Insurers have expanded their underwriting limits.

It is expected that capacity will be more or less stable during 2009 and as a result

dependence on international market for General Aviation is likely to get reduced,

but for large airline risks reliance on international market is expected to continue.

62

Three aviation marketing giants


63


Claims Scenario

Each Insurer will have its own underwriting experience

to show and can vary from its peers considerably depending on their participation

on the policies that has produced losses. General Aviation claims in 2008 are

expected to exceed Rs. 500 million and 2009 has started on a bad note with claims

in first five months exceeding Rs.350 million. As against this, past 10 years

average general aviation losses are hovering around Rs.400 million. When we

compare these claim figures against the total general aviation premium in India,

one may come to a conclusion from the insurers perspective that general aviation is

profitable over the last 10 years period. This may not be true for all insurers,

especially considering the fact that 10 years average loss figure consists of two or

three major losses in each year. Insurers participating on these losses would have

been hit hard. Majority of the losses in the last 10 years are on account of aircraft

damages and liability claims forma a very small portion of it. However, by no

means does this give any indication into the future considering the catastrophic

nature of aviation business.

64


Montreal Convention

The Indian Government ratified “Montreal Convention 1999” in March 2009 and

currently it applies to international travel. There is nothing on record at this stage

to show that the revised liability limits are applicable to domestic sectors. In brief,

the Convention has increased compensation levels for international passengers in

the event of death or bodily injury and damage and delay to the passenger baggage

and cargo. While the compensation for death or bodily injury has increased almost

7 times from the existing levels of approximately USD 20,000 to around USD

140,000, the compensation for damage to the checked baggage has increased from

approximately USD 20 per kg to around USD 1,400 per passenger. The

compensation for damage to cargo has increased from USD 20 per kg

approximately to USD 24 per kg. The Warsaw System, which is in force in India

by way of Carriage by Air Act, 1972 had allowed four choices of jurisdiction for

filing of a claim by the passenger, namely, place of issue of ticket, principle place

of business of the carrier, the place of destination of the passenger and the place of

domicile of the carrier.

65


Through the Montreal Convention a fifth jurisdiction is added which is the place of

domicile of the passenger, provided the airline has a presence there. Therefore an

Indian would be able to file claim in India even if the journey was undertaken

outside India. Liability Limit for domestic passengers in the event of death or

bodily injury continues to be at the old level of Rs.750,000 for passengers above

12 years of age and Rs.350,000 for below 12 years. As regards damage and delay

to the passenger, baggage compensation is Rs.4,000 per passenger for hand

baggage and Rs.450 per kg for registered baggage. So far, Insurers have responded

very positively by covering their customers based on the revised limits for

international travel and it remains to be seen whether new limits will be applicable

for domestic travel as well and its impact on the liability claims scenario.

66


Aviation Liability Insurance Limits in India:

Western European countries including countries in the Far East namely Hong

Kong, Singapore have adopted regulations specifying minimum liability insurance

limits for aircraft based on the “maximum take off weight of the aircraft” and

“passenger seating capacity”, however India is yet to adopt any such regulations.

Even neighboring countries like Sri Lanka and Nepal have minimum liability

insurance requirements for aircraft and it may not be too long before India adopts

such requirements. While Airlines and Corporate Jet owners are buying liability

limits in line with the international trend, there is no similar trend when it comes to

helicopter operators. Like Airline policies, liability limits on Corporate Jets many

times are driven by financing /purchase agreements; however helicopter operators

tend to buy low limits

67


AVIATION INSURANCE SERVICE

PROVIDERS IN INDIA- NEW INDIA LIFE

ASSURANCE CO. LTD

In India the one

company which provides

aviation insurance as a

service is New India Life

Assurance Co. LTD

This company provides

this service as a

commercial product to the

aviation sector. Started in

1946 as Aviation

Insurance of Air India,

company provides

professional aviation

insurance advice and

solutions to the needs of small aircraft operators as well as scheduled airlines.

The aviation portfolio encompasses following type of covers.

68

The logo of THE NEW INDIA LIFE ASSURANCE


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.

69


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.

Besides the aforesaid general aviation policies New India Assurance

Company also provides various other tailor-made insurance as per specific

requirements of the insured.

Claims

In case of claims following are illustrative documents that are generally

called for from the insured.

Documents in connection with aircraft details

Documents in connection with flight details

70


Documents in connection with the accident

Certificate of airworthiness/registration

Crew details

Maintenance & engineering information

Operational manual passenger documentation in case of claims

71


FORMS REGARDING AVIATION

INSURANCE CLAIMS

There are basically three types of forms provided by the company regarding

aviation insurance. They are as follows:

1. Personal Accident Insurance Forms

2. Aircraft/ Aviation Liability Insurance Forms

3. Loss of Flying License Insurance Forms

All the forms are different from each other and also the columns to be filled. In

other words they differ from each other.

They look as follows:

72


The New India Assurance Company LimitedRegistered & Head Office: New India Assurance, 87, M.G. Road, Fort, Mumbai - 400 001.

Declaration Form for Aviation Personal Accident Policy For Crew Members

(To be completed by each person to be insured and to form part of the Aviation Personal Accident Proposal Form)

1. Name :

2. Age till last birthday :

3. What is the exact nature of your duties :

4. If you are pilot or navigator or flight engineer statea. Number and type of license :b. Date of license :c. By whom granted :d. Date of expiry of license :e. Type/s of aircraft in respect of which the license is granted :f. Date of last medical examination for the license :

5. Has your license been suspended or

withdrawn or have you ever been chargedwith any offence under the air navigationregulations? : If so, give details :

6. Give details of your flying experience : Aircraft Total No. of Hours Flown

7. Have you been involved in any aviationaccident during the last 5 years? :If so, give details of each accident :

8. Have you made any claim during the last5 years under an Aviation PersonalAccident Policy :If so, give details of each claim :

9. Has any insurance company at any time,a. Declined your proposal for aviation

P.A. Policy or Life Insurance :b. Required an increased premium or

73


imposed special conditions? : c. Cancelled or refused to renew

your insurance? : If answer to a, b or c is “yes”,

Please give details :

10. What are the types of aircraft youcontemplate flying? :

I, the undersigned, hereby declare that all the above particulars are true and complete in every respect, that I am in good health and free from physical infirmity or defect of any kind, that I am and always have been of temperate habits, and that I have not withheld or suppressed any information regarding the proposal.

Place:

Date: (Signature of the person to be insured)

Agency Policy No.

74


Proposal Form for Aviation Personal Accident Policy(For pilots, navigators, aircraft flight engineers, aircraft flight technicians & other crew members)

1. Proposer’s Name in full :

2. Proposer’s Address :

3. Proposer’s business or occupation :

4. Persons to be insured(A declaration form in the prescribed format should be completed by each person to be insured and attached to this proposal)

SL. Name Age last Designation/ Capital Table of No. Birthday Occupation Sum Insured Benefits

(In years) (Rs.)

5. Period of Insurance From :To :

6. Nature of flying to be done :

7. Geographical limits to which flying will be confined :

8. Has any of the persons to be insured,to your knowledge, any physical defect or infirmity of any kind? :

9. Has any insurance company at any time,a. Declined your proposal? :b. Required an increased premium or imposed special conditions? : c. Cancelled or refused to renew your insurance? :

10. Has any aircraft owned or operatedby you ever met with an accident

75


involving injuries to passengersand/or crew members? :

11. Is the insurance to apply on 24 hours basis, or to apply to flying risks only? :

12. The proposer may, at his option complete this column.If the proposer is also the insured person, this column should be completed.

I, ____________________________________do hereby assigns the monies payable by The New India Assurance Company Limited in the event of insured person’s death to _______________________________, ___________________(relationship to the insured) and I declare that his/her receipt shall be sufficient discharge to the company.

(Signature of the Insured)

Witness Signature of the witness:

Name of the witness :

Address of the witness :

I/We hereby declare that the above statements are true and complete. I/We agree that thisproposal and declaration form (signed by the person/persons) to be insured) shall be the basis ofthe contract between me/us and the insurance company. I/We further agree to accept a policysubject to the conditions stipulated therein by the insurance company.

Place:

Date: (Signature of the Proposer)

76



Agency Policy No.

PROPOSAL FORM POR AIRCRAFT AND/OR AVIATION LIABILITIES INSURANCE

(DEFINITE ANSWERS SHOULD BE GIVEN FOR ALL QUESTIONS. NO COLUMN SHOULD BE LEFT BLANK OR COMPLETED WITH A '-' (DASH))

1. Proposer's name in full:

2. Proposer's address:

3. Proposer's business: or occupation

4. Details of aircraft to be insuredAir Frame Engines

Passenger Seating Capacity Number & Date of issue of last renewal of C of A

Number and Type

Maximum All Up weight of aircraft in kgs

Make, Type & Series No.

Year of construction

Licensed Declared for the purpose of this insurance

Registration/Identification Marks

5. Value of the aircraft

Year of purchase

Price PaidRs.

Present value of the aircraft with standard instruments and equipment (Rs.)

Extra equipment and accessories fitted to or carried in the aircraft

Details Value

Total value of the aircraft for the purchase of insurancee

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6. Purpose for which the aircraft will be used

7. Geographical limits for which mover is required

8. Will aircraft be flown at night ?

9. By whom will the maintenance and running repairs be carried out

10. (a) Where will the aircraft usually be kept ? (b) Is the aircraft normally kept in a hanger ? (c) If so, state type of construction of hanger

11. Will the aircraft be taxied by persons other than licensed pilots or competent licensed engineers?

12. Have you entered into any agreement with any party whereby liability is assumed or denied in respect of the operations of the aircraft ?If so, give details

13. Has any insurance company at any time, (a) Declined your insurance proposal? (b) Cancelled or refused to renew your policy? (c) Required an increased premium or imposed any special condition?

If answer to (a) or (b) or (c) is “ Yes" Please give details,

14. Please state details of all accidents/losses during last 5 years.Date of Accident

Brief details of accident Cost of estimate of repairs to Aircraft (Rs.)

Amount of liability claims incurred (Rs.)

Third Party Passenger

15. Give details of pilot who will fly the aircraft.Pilot Pilot Pilot

NameAgeTypes of aircraft flownFlying experience (in hours)Total Day:Total Night:During last 3 months:On type & make of aircraft proposed for insurance:

Current LicenseDate of expiryClassification

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Details of accidents, if any, during last three years

16. Details of insurance required:(A) SECTION 1 - LOSS OR DAMAGE TO THE AIRCRAFT Whether cover required:

If so, risks to be covered: (State "Flight", Taxying" "Ground" "Moored" as the case may be)

(B) SECTION II - THIRD PARTY LIABILITY Whether cover required:

If so, Limit of Indemnity (any one accident):

(C) SECTION III PASSENGER LIABILITY Whether cover required: Limit of liability per passenger: Whether cover required on 'Legal Liability" basis or "Admitted Liability” (voluntary settlement)

basis: Baggage Liability Whether cover required: Limit of Indemnity per passenger:

17. (a) Do you require Hull War Risks cover? (b) If full Hull War Risks cover is not required, do you require limited coverage for Malicious

Damage/Strikes, Riots & Civil Commotion/ Sabotage/Hi-jacking ? 18. PERIOD OF INSURANCE From___________________ To_______________

DECLARATION: I/We warrant that the abovementioned aircraft is/are my/our property, and the statements and particulars given are true and that no material information has been withheld or suppressed, and I/We agree that this proposal and declaration shall be the basis of the contract between me/us and the Insurance Company and to accept a policy subject to terms, conditions and exclusions prescribed therein.

Signature of the Proposer

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Proposal Form for Loss of Flying License Insurance

Proposal No: Policy No:

A. Surname:

Christian Names:

Address:

Date of Birth:

Occupation: Flight Category:Captain/Pilot:First/Second Offer:Navigation Officer:Radio Officer:Flight Engineer/Instructor/ Glider Instructor(delete whichever is inappropriate)

What is your present total remunerationfrom your above stated occupation?

B. Name and address of present Employer:

If freelance state: -1. Type of Employment anticipate and all remunerated occupation:

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2. Type of flying during past 2 years e.g. Air Line, Crep-spraying, Helicopter etc

C. Type and number of license:By whom granted?Date of Issue:Date of last renewal:

(This must not be confused with the date of last medical examination of such renewal. The date of actual renewal must be given)

D. State whether or not you already have a Loss of License Insurance Policy, (State “Yes” or “No”. If Yes, state: -

a. With whom?b. For what amount?c. Date of expiry of the Insurance:d. Particulars of Insurance required:

E. PARTICUALRS OF INSURANCE REQUIRED a) For What Sum? b) For What Period? From To

NOTE: This insurance may be invalidated by the existence of another Loss of License insurance unless prior agreement is obtains from the "NEW INDIA ASSURANCE CO. LTD."________________________________________________________________________I hereby declare that to the best of my knowledge I have not sustained any personal injury whatsoever and I am not at the present time and have not been at any time afflicted any illness whatsoever (including temporary or otherwise of my physical aural or eye condition) except as detailed below: -

I further declare that the certificate of validity forming part of my above mentioned License has never been invalidated for any period, except as stated below: -

I warrant that the above statements and particulars are true and thereby agree that this Declaration shall be held to be promissory and shall form the basis of the contract between me and the New India Assurance co. Ltd. and I am willing to accept a policy subject to the terms, exceptions and condition prescribed by the Company therein, and to pay the premium thereon.

DATE_______20 PROPOSER'S SIGNATURE:_________________________________________________________________________

WARNING TO ALL PROPOSERS

In your own interest great care must be taken in completing the declaration set out above. Non disclosure or incomplete disclosure of any fact which is or may be material to the New India Assurance Co. Ltd. in deciding whether to accept your proposal for insurance may invalid to the policy and cause you to be deprived of all benefits thereunder.

THE NEW INDIA ASSURNACE COMPANY LIMITED reserves the right to impose special conditions or refuse to accept a proposal form.

________________________________________________________________________

SPACE FOR MEDICAL HISTORY(IF NIL, State NIL)

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(State all illnesses of whatsoever nature and all accidents involving injury and give result of last cardiograph examination with date in all cases)

DATE: __________20 PROPOSER'S SIGNATURE:

SPACE FOR DETAILS DURING WHICH THE CERTIFICATE OF VALIDITY FORMING PART OF THE PROPOSERS' LICENCE HAS BEEN INVALIDATED (State date and cause: If NIL state NIL.)

DATE: _______20 PROPOSER'S SIGNATURE:

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