Many people do not read their policy as they feel this is a responsibility or job of their Broker. The Broker however does not have a crystal ball, and often is not aware of activities or uses you may think you are covered for but in all events may well not be. Further negativity arises from the fact that many aircraft owners don’t know what their policies say, and assume that they are ‘covered’ for anything that may happen.

Each section (or coverage part) of the policy provisions typically begins with a fairly short statement of what the section does for you and then proceeds to list what it doesn’t do for you. In addition, in the general exclusion section, there may be exclusions in each section of a policy which apply only to that part. It is therefore important to review the contract as a whole. Cover that may appear to be provided in one section may be an exclusion under a subsequent section by way of endorsement or exclusion.

Check the policy schedule for accuracy

1. Policy effectives dates (same as previous policy?)
2. Purposes of use
3. Lienholder information (if any or any changes?)
4. Aircraft information – correct?

(Year/Make/Model/Registration)
5. Verify liability limits (Hull Value, Premiums and Deductibles – are they the same as you were quoted?)
6. Approved Pilot Provisions – this is probably the most misinterpreted area of a policy.

• Are the pilots listed correctly?
• Do they have the licenses and ratings as required and stated in the policy?
• Is there a provision for pilots other than named pilots to fly your aircraft?
• Is there an hourly limitation or provision on pilots that fly the aircraft?

The aircraft policy is generally split into three sections; ie.

1. Section One – Material or Loss or damage to the actual aircraft or hull as it is called.
2. Section Two – Legal Liability to Third Parties (other than passengers).
3. Section Three – Legal Liability to Passengers.

This section covers third party "Property" Damage. It is not an automatic payout. The policy holder or insured, as the name implies, has to be legally "liable" before this section of the policy becomes effective.

Accidental bodily injury or death of Third Parties also falls under the scope of the Accident/Rehabilitaion and Compensation Act (formally ACC0 explained below).

In general terms, all incidents resulting in the death or personal injury to passengers is covered under the Accident/Rehabilitation and Compensation Act 1992 (ARCI or ACC as it used to be) and as  such, there is no provisions for Claimants to issue proceedings in New Zealand Courts seeking compensation for death or personal injury. Accordingly, it is not a requirement to carry passenger legal liability insurance in respect of personal or bodily injury in New Zealand whether it be a privately owned aircraft or one operated on Air Transport, except where the carriage is a continuation of an International Ticket Coupon (which seldom if ever is applicable to non- scheduled GA aircraft or helicopters).

The definition section of the policy also contains important aspects of what is and what is not covered. A few samples of what you can learn follows:-

Material damage coverage on the insured ‘aircraft’ may also apply to aircraft components that are normally attached to but temporarily detached for overhaul, repair or the like. Should, as an example however, a "loaner" or substitute engine be installed, cover will then apply to the loaner or installed engine.

Occasions do arise when components of an insured aircraft or helicopter need to be sent overseas for repair or overhaul. Because the items could move outside the geographical limits mentioned under the policy, the parts should be insured separately under a marine/transit cover. For shipments in and around NZ, cover will continue as if the parts still form part of the insured aircraft or helicopter. When however, an engine or component is replaced with a loaner or borrowed/ hired engine or component, insurance then ceases on the removed item and separate cover should be put into effect either by the owner or the repairer.

We cannot over stress the importance of complying with any pilot restrictions or limitations. Underwriters offer quite good premium concessions if pilots are restricted to named pilots or subject pilots to minimum flying experience. This may appear an attractive alternative but be warned that if there is a slip up and someone flies the insured aircraft outside the parameters, it is a sure way to have a claim denied. Some Underwriters are ruthless about this.

Be sure to fully understand the popular express in aircraft policies "Private Business and Pleasure".

It is really quite straight forward but it does not allow use for hire or reward or the carriage of revenue passengers, but more importantly it does not include RENTAL which is defined as:-

Also be advised that the ‘standard industry uses’ including Private Business Commercial and Rental does not automatically extend to include:-

If you are sure you understand the application and answers to all these questions and feel comfortable with your understanding of these issues, then you are well on your way to effectively gauging the adequacy of your insurance policy. This has just been a quick look at the general structure of the typical aviation insurance policy in New Zealand. Understanding how competitors policies differ from each other and meeting the requirements of your policy can be the difference between a satisfactory claim settlement or a disaster.