Page 22 - Volume 13 Number 10

4. assist the Company, upon the Company’s request, in the endorsement of any right against any person or organization which may be liable to the Insured because of injury or damage to which the insurance may also apply.
c. No Insured will, except at its own cost, voluntarily make a payment, assume any obligation or incur any expense, other than for first aid, without the Company’s consent.
This is the exact language from the contract between the insurance company and the aircraft owner/ insured. This wording represents the intent of many aircraft hull and liability policies. When you review yours, you will find very similar language. What does all of this mean, and how does the process actually work?
First of all, do not assume and act like this will just go away. At the first inclination you may be getting served legal papers, call your insurance professional/ broker. Even for something as simple as “defamation of character.” Assume you have coverage unless the insurance company determines you do not via a “reservation of rights” letter. Furthermore, your broker is, in essence, your risk manager. They do not have the authority to tell you something is or is not covered; that power resides solely with the insurance carrier. Your
broker should guide you through the claims process and be your sounding board/trusted advisor. Be open and honest with them so they can provide you the best advice possible.
Many aircraft policies have a “failure to report” clause in the policy that states you must report a claim within a certain number of days. If you fail to report the claim during that timeframe, they could deny the coverage. Though it is rare a claim would be denied under that clause, it is possible. So, notify your broker immediately at the first indication you may have a claim or suit on your hands.
Next, gather all of the facts as stated in the “conditions” above. Not assumptions, just facts as you know them at the present time. Send all of this information, in writing, to your broker and they will be able to help you through the process of notifying the carrier.
The insurance company will assign a claims adjuster and review the circumstances to determine how coverage applies. In the vast majority of situations, coverage is available to protect and defend the insured. The insurance company will retain an attorney with aviation expertise to defend you. These attorneys are not amateurs, they know aviation, specifically aircraft hull and liability policies, and they’ve defended thousands of operators just like you.
Your aircraft policy pays for cost of legal defense and the fees they pay the attorneys are outside of the policy limits. Meaning, if you have a $25,000,000 liability policy, the funds used to pay the attorney does not draw down that $25,000,000 limit. The full liability limit is available to pay settlements and other items associated with the accident/incident. Even the physical damage to your aircraft is not paid out under this liability limit. If you only carry $1,000,000 of liability coverage, beware, the insurance company is going to look at the case and may settle or pay policy limits if they think the legal bills will not justify the cause. Think about it like this: The bigger the purse (liability limits) the more money the insurance company is going to spend on your behalf to make sure the plaintiff doesn’t get their hands on it.
Your FBO is keeping a watchful eye on their exposure to keep their premiums in check; you can do the same. The next time you ask a third
20 • KING AIR MAGAZINE
OCTOBER 2019