What Insurance Does an FBO or MRO Actually Need?

If you run an FBO, MRO, airport, or any aviation business with fixed-base operations, your insurance program needs to cover a lot more than most operators realize. A single policy won't do it. Here's what a complete program looks like and where the gaps usually hide.

Most FBOs and MROs need a layered program, not a single policy. The backbone is an Aviation Commercial General Liability (CGL) policy for third-party bodily injury and property damage, plus a Commercial Property policy for buildings, contents, inventory, and business interruption. Beyond those, common necessities include hangarkeepers legal liability, environmental pollution liability, hired and non-owned auto, workers' compensation, cyber liability, and employment practices liability.

No two operations are identical, so the right combination depends on your specific exposures: whether you fuel aircraft, store customer aircraft, perform maintenance, sell aircraft, or give advice. The value of an aviation insurance specialist is mapping every exposure to a coverage so nothing falls through the gaps between policies.

Aviation Commercial General Liability (CGL)

Your CGL policy is the foundation. It covers third-party bodily injury, property damage, and aircraft servicing operations on your premises. But it does not cover damage to aircraft in your care, custody, or control. That's a separate coverage (hangarkeepers), and confusing the two is one of the most common and expensive mistakes in the industry.

Hangarkeepers Legal Liability

Hangarkeepers legal liability covers damage to aircraft you don't own while they're in your care. It carries two limits: per aircraft and per occurrence. Set the per-aircraft limit to the value of the most expensive aircraft you'd realistically have on site, and the per-occurrence limit to the total value that could be hit in one event, like a hangar fire. These limits get set once and forgotten, so review them regularly.

Commercial Property and Business Interruption

Your property policy covers buildings, contents, and inventory, but the limits for parts inventory and fuel stock are among the most under-insured exposures in the industry. An MRO's parts stock can swing by hundreds of thousands of dollars over a year, and fuel values move with volatile prices. Review these limits regularly. Business interruption (time element) coverage replaces lost income when a covered event stops your operations, and extra expense coverage pays the added costs of getting back up and running.

Environmental Pollution Liability

Most aviation policies exclude pollution unless it results from a covered aircraft accident. Gradual seepage from fuel tanks, leaking storage containers, or a fuel truck spilling on the ramp is not covered by your CGL or aircraft policy. A separate environmental pollution liability policy is a core part of the program for any aviation business handling fuel, oil, or hazardous materials.

Cyber Liability, EPLI, and Professional Liability

If you use the internet and store customer data, you have a cyber exposure. If you have employees, you have an employment practices liability exposure. If you give advice, do consulting, or perform pre-purchase inspections, you have a professional liability (E&O) exposure. All three are specifically excluded from your CGL, aircraft, and property policies, which means each one needs its own standalone coverage.

Hired and Non-Owned Auto

Even if your business owns no vehicles, you need this coverage. Employees driving rentals, courtesy cars, or their own personal vehicles on company business create a liability exposure that lands on the business. FBOs with courtesy cars have an even more direct need.

Excess Liability

If your real-world exposure exceeds the limits your primary carrier will write, excess liability bridges the gap. Just because your carrier can only write a certain level of limits doesn't mean higher limits aren't available.

Listen to Our Podcast Series on Often Overlooked Coverages

Tim Bonnell Jr., CIC, CAIP, breaks down these coverages in detail across a three-part podcast series:

Part 1: Commercial property, inland marine, time element coverages, environmental pollution, and excess liability. Watch here: https://www.youtube.com/watch?v=cHuLoqW75_0

Part 2: Cyber liability, employment practices liability (EPLI), professional liability and E&O, and hired and non-owned auto. Watch here: https://www.youtube.com/watch?v=EJjaKDupzoE

Part 3: Contractual liability, insured contracts, indemnification, hold harmless agreements, and contract review. Watch here: https://www.youtube.com/watch?v=EZlQ1-npNH4

Not sure whether your current program covers all of these? Request an Aviation Coverage Risk Review before your next renewal.

Coverage availability, exclusions, limits, and endorsements vary by insurer, policy form, state, and operation. This content is general education, not coverage advice. Review your actual policies and contracts with an aviation insurance specialist.