Does Aviation Liability Insurance Cover Aircraft You Operate but Don't Own?

Does Aviation Liability Insurance Cover Aircraft You Operate but Don't Own?

Not reliably. Some aviation liability policies contain limited non-owned aircraft provisions, but the coverage varies significantly and may not address every exposure created when your business operates an aircraft it does not own.

If your company flies borrowed, rented or leased aircraft, this deserves specific review.

What is non-owned aircraft exposure?

Your business may create a non-owned aircraft exposure when it operates an aircraft owned by someone else.

That can happen through:

• Rentals
• Short-term use arrangements
• Certain leases
• Borrowed aircraft
• Customer or affiliated aircraft, depending on the circumstances

The fact that the aircraft is insured by its owner does not automatically mean your company has all the protection it needs.

Aviation CGL may provide only limited protection

Aeris’s source material notes that some Aviation Commercial General Liability policies contain a Non-Owned Aircraft Liability section.

But it is not universal.

Coverage can also be subject to limitations—for example, the policy may treat liability to third parties differently from physical damage to the non-owned aircraft itself.

There may also be restrictions based on whether the aircraft is in flight.

That makes this an area where reading the actual coverage form matters more than relying on the policy name.

Liability and physical damage are different questions

When evaluating a non-owned aircraft exposure, ask at least two separate questions:

1. What happens if our operation causes injury or damage to somebody else?

and

2. What happens if the non-owned aircraft itself is damaged?

Those are not necessarily covered in the same way.

Match the insurance to how the aircraft is actually used

The right solution depends on the operation.

Occasional incidental use creates a different risk from regularly operating leased or non-owned aircraft as part of the business.

Coverage definitions and exclusions vary significantly between insurers.

For that reason, Aeris’s underlying guidance is straightforward: do not assume non-owned aircraft exposure is covered simply because an aviation liability policy is in place.

If your company uses aircraft it does not own, include that activity in your Coverage Risk Review so the actual policy language can be checked against the operation.

Common questions:

• What Insurance Does an FBO or MRO Need?
• Does General Liability Insurance Cover “Hangar Rash” to a Customer Aircraft?
• What Is Hangarkeepers Legal Liability?
• Named Insured vs. Additional Insured: What’s the Difference?
• How Much Aviation Liability Insurance Does an FBO or MRO Need?
• Should Your Insurer Review Hangar Leases and Service Contracts?