Aviation insurance is an insurance coverage geared specifically to the operations of aircraft and the risk involved in aviation industry.
Aviation insurance policies are distinctively different from the other area of transportation and tend to incorporate aviation terminologies as well as terminology limit and clauses specific to aviation insurance.
Like the marine insurance, aviation insurance has policies for aviation hull, cargo, freight and liability of aircraft operators, manufacturers as well as airport authorities.
Cover for Hull is usually written on indemnity basis and it is effected by aircraft owners or operators against loss or damage to the aircraft itself.
The policy provides compensation for accidental loss or damage for whatsoever cause on the aircraft while in flight, taxing, and on ground.
Apart from the accidental loss in incident described above, the policy also provides cover against disappearance of an aircraft if not found within 60 days after flight. Any emergency expenses incurred by the owner for immediate safety arrangements, the component part if temporary detached and expenses incurred in minimizing loss.
It should be noted that structural defect, electrical and mechanical breakage, wear and tear or damage caused by progressively commutative effect is not covered.
Historically, aviation insurance was first introduced in the early years of 20th century.
The first aviation policy was written by Lloyd’s of London in 1911, and stopped in 1912.
Aviation insurance companies write policies in one or two ways: directly (direct writer) or through an appointed aviation insurance agent/broker. The market structurally has both individual and group buyers as well as direct (companies) or indirect (agents).
Being a form of transportation like marine, the basic principles of aviation insurance are basically the same or except for the few principles that are different. Being policies of indemnity, insurers and even re-insurers have the right of subrogation.
Types of Aviation insurance coverage
Aviation insurance is divided into several types of coverages.
1. Public Liability Insurance or Coverage
This is often referred to as third-party liability. It covers aircraft owners for damage that their aircraft does to third-party properties such as houses, cars, crops, airport facilities and other aircraft struck in a collision. It does not provide coverage for the insured aircraft itself or coverage for passengers injured on the insured aircraft.
2. Passengers Liability Insurance
The coverage protect passengers riding in the accident of the aircraft who are injured or killed. In many countries this coverage is mandatory only for commercial or large aircraft.
3. Combined Single Limit
A combination of public and passenger liability into a single coverage with a single overall limit per accident. This policy provides flexibility in paying claims for liability especially if passengers are injured but little damage is done to third party property on the ground.
4. Ground Risk Hull Insurance(not in motion)
This provides coverage for the insured aircraft against damage when it is on ground and not in motion.
5. Ground Risk Hull Insurance (in motion)
This is similar to ground risk hull insurance (not in motion), but provides coverage while the aircraft taxing but not while taking off or loading.
6. In-flight Insurance
This provides coverage for an aircraft against damage against all phases of flight and ground operation including whiled parked or stored.
Aviation Insurance Law in Nigeria
There are many aviation laws in Nigeria. The proliferation of the aviation law has led to avoidable mishaps in the country as well as corrupt practices in the industry. It is important to carefully read the details about each individual law in Nigeria as they may vary considerably.
Aviation laws in Nigeria relates to the following:
- Safety of air operation.
- Requirements to join the industry.
- Liability of operators and practitioners etc.
However, the primary legislation regulating aviation in Nigeria is the Civil Aviation Act (C.A.A) whose contents or provisions are obsolete and apparently conflicting with that of Nigerian Civil Aviation Authority(N.C.A.A.)- A body established to regulate matters such as safety, security, Aircraft registration, Personnel licensing, commercial air transport, aerodrome, and air space standard and the provision allied aviation services.