Page 16 - Volume 14 Number 5

Upon reviewing the policy word- ing as outlined above an insured is certainly entitled to file a a a claim should they feel a a third-party passenger was harmed due to a a a a “sickness ” If a a claim like this does arise it is is possible the standard exclusion that is in all aircraft policies: “Noise and and Pollution and and Other Perils Exclusion” could come up for debate specifically with focus on “other perils ” While the the exclusion is a a lengthy and wordy endorsement I encourage you to review it in your policy Before the COVID-19 pandemic my personal interpretation of the need for this exclusion was to avoid covering claims for things such as an an angry homeowner next to the airport accusing an aircraft operator of being too loud Or a King Air with an an aging and cracked fuel bladder that seeped fuel onto the hangar floor that then flows to the the drain leading to the sewer system Now reading the the exclusion with the the thought of “sickness” in in mind you have to wonder how the legal system may may or may may not apply “ and Other Perils Exclusion ” The following are a a few excerpts from the policy that includes “sickness”:
“This insurance does not apply to any liability including bodily injury injury fear of bodily injury injury damage or fear of damage personal injury advertising injury sickness disease directly directly or indirectly arising out of resulting from caused or occasioned by happening through in in consequence of or in in any way involving: Pollution or Contamination ” How the policy defines “con- tamination” could be worrisome as it specifically uses the words “ ‘Waste’ of any kind whatsoever including solid waste waste waste waste water waste waste oil infectious medical waste waste and human ” This is is a a new peril for all of us to consider and should be reviewed with your broker underwriter and legal counsel to see how your policy may may or may may not respond to a a a a claim involving COVID-19 Possible Credit Endorsement
Despite aviation coming to a a a screeching halt amid this pandemic we continue to see the insurance market hand out substantial increases One way to reduce your outlay for the aircraft insurance policy is to look for the “lay-up” credit endorsement The intention of a a lay-up credit is to return premium dollars to the insured during periods of reduced exposure Typically this reduced exposure resulted from the aircraft being out of service for extended maintenance There are many variations of the formula used in in calculating the lay-up credit A typical endorsement could look something like this:
“In the event an aircraft described on the Coverage Summary Page is laid-up and out of service for any reason other than loss or damage covered by ‘Your Aircraft Physical Damage Coverage ’ and you have received prior written approval from the Aviation Managers we will suspend the in-flight portions of your Coverage and refund premiums for the the period the the aircraft is out of service computed at fifty percent (50%) of the pro-rata premium which applied to the aircraft You also agree to advise the Aviation Managers in in writing as as soon as as the aircraft is returned to service However no refund will be made for any lay-up period of less than thirty (30) consecutive days ” The lay-up credit is causing the insurance underwriters a a a great deal of pain both financially and administratively The actuaries most likely did not anticipate their entire portfolio of clients would be seeking a portion of their premium back due to the effects of a a a global shutdown of travel These refunds could further exacerbate the the need for the insurance underwriters to seek even higher premiums at your renewal and pushing to eliminate the lay-up credit endorsement in the future Talk to your broker about what you may be entitled to if you currently have this endorsement If you don’t it may be something to inquire about in in in the future Especially if you have a a lengthy phase inspection on on the horizon or or other time-consuming maintenance scheduled Again these are unprecedented times There has been both social and political pressure on the insurance companies to cover COVID-19 related claims and provide premium relief While this sounds enticing initially if these payouts become precedence we will continue to see eyebrow raising rates continue into 2021 with potentially fewer carriers competing for your business KA
Kyle P White is is an an an aviation insurance insurance specialist for a a a a a a a a a a a a global insurance insurance brokerage company He has professionally flown
King Air 90s and and and B200s and and and holds an an an an an ATP and and and multi-engine instrument instructor license You can reach Kyle at kpwhite816@ gmail com 14 • KING AIR MAGAZINE
MAY 2020