Monday, May 12, 2008  [INTERNAL RELEASE]
Aero Alliance debuts new website look and feel with a more refined image and improved user interface.  This new site will add the capacity to access and complete insurance forms online, making the process more efficient and expedient.  The content will be more rich and user-friendly so as to become a primary channel for Aero Alliance to conduct business.

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Wednesday, October 5, 2005  [NBAA RELEASE]
While most corporate aviation insurance policies are comprehensive in coverage, they all contain a gap in coverage for environmental pollution liability. The “Absolute Pollution Exclusion” is designed to eliminate coverage for any pollution or contamination of any kind whatsoever, unless the pollution is a result of an insurable aircraft accident. Furthermore, the Airport Authority normally transfers all liabilities to their airport tenants by incorporating broad indemnities for Bodily Injury and Property Damage “from any cause” (which includes environmental liability) in their lease agreement. A Federal Regulation known as CERCLA (Comprehensive Environmental Response Compensation & Liability Act) legislation can also make a lessee 100% accountable for the entire cost of a cleanup, even if the contamination existed prior to the airport tenant leasing the property. The bottom line is that Airport tenants could face significant liability, legal defense and clean-up (remediation) expenses, which could easily reach six figures, from unseen ground and water contamination.

Historically, airports have health and ecological risks associated with tank farms, maintenance facilities, aircraft deicing and aircraft refueling operations. A major airport in New York reported two underground plumes of jet fuel, estimated to contain between 3-5 millions gallons of benzene (a carcinogenic), caused by leaking underground pipes. Many airports report the use of thousands of gallons of Ethylene Glycol to deice aircraft, another highly toxic chemical. Maintenance facilities use chemicals including Trichloroethylene, Toluene, Methylene Chloride and Glycol Ethers, which could cause serious health implications. Dade County, FL adopted a resolution to effectively carry out its “Environmental Cleanup and Cost Recovery Program” at Miami International Airport (MIA), estimated to cost over $400,000,000 to fully remediate the environmental conditions at this airport. Dade County identified over 100 Potential Responsible Parties to file lawsuits against to assure maximum recovery of the County’s environmental claims.
 

All the above pollutants have the potential to enter the drinking supply through discharges to receiving water or releases to ground water. State and Federal Regulators, responsible for assessing pollution impacts on the environment and water quality, are scrutinizing airports to determine if remediation is necessary.
 

How can an Airport Tenant cover themselves against environmental claims?

Not unlike aviation insurance, Pollution Liability is underwritten through a handful of specialized Insurers and Brokers. Ask your agent if they can provide you with a comprehensive environmental insurance program that will transfer your airport pollution risks to third-party insurers. The program should cover:

• Third-party legal liability, including on-site and off-site bodily injury and property damage arising from both unknown pollution and on-going operational exposures.
   

• Remediation expense from pollution conditions on, at, under or emanating from covered locations.
   

• Legal defense expenses arising from on-site and off-site loss or in connection with remediation expense.
   

• Claims made for pollution conditions arising from the insured’s product or waste during transportation by a third-party vehicle.
   

• Coverage for aboveground and under-ground storage tanks.
   

• On-site cleanup of pre-existing conditions and on-going pollution liability (as a separate policy).
   

• Cost of remediation expenses should government regulators make clean-up standards more rigorous, necessitating further remediation.

In summary, all aviation operations/risk managers need to reassess their Aviation Insurance Coverage and their airport environmental liability exposures. The airport lease agreement should be reviewed to determine if the Indemnity section of the contract transfers all liabilities to the airport tenant. Management should seriously consider adopting an environmental strategy should a pollution loss arise, including transferring the environmental risk to Insurers that will provide coverage for third-party bodily injury and property damage, remediation (clean-up) expense and legal defense.
 

Bill Soldan is the founder, President and CEO of Aero Alliance Insurance Services, Inc. His firm specializes in Aviation and Environmental Insurance products for airlines, corporate and commercial operations, manufacturers and financial institutions. Bill graduated from Embry-Riddle Aeronautical University where he earned his Pilot License and currently serves on the NBAA’s Airport/Heliport Standing Committee.

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Monday, June 23, 2008  [INTERNAL RELEASE]

AIRCRAFT ACCIDENT REPORTING

Greetings from Aero Alliance Insurance Services, Inc.  In this e-report, I wanted to discuss the subject of experiencing an aircraft accident and what is expected from your insurance company.  The idea here is to make you knowledgeable and avoid pitfalls if you have a loss.

Having an aircraft accident (occurrence) will obviously be a very traumatic event, especially if someone is injured.  There are do’s and don’ts, which I’ll briefly describe here for you.

Do 

• Protect your aircraft from further loss or damage after a hull loss.

• If anyone is injured, call for immediate medical aid, which is automatically covered by your aircraft insurance company.

• Promptly notify your insurance company claims department by phone and in writing.  There is someone available 24 hours a day, seven days a week in an emergency situation.

• Cooperate with the insurance company in providing pilot information, training documentation, medical certificate, and your aircraft maintenance log book.

• Permit the insurance adjustor to view the damage to your aircraft before any repairs or disposition.

• Write down the FAA Reg. No. and get pilot name(s), license and phone numbers, their insurance company and policy number, if another aircraft is involved in the accident.  Record any witness names and phone numbers. 

• Your insurance company will provide you with a Proof of Loss Statement, which you must sign within 60 days of the loss.

• In the event of theft, contact police and get a copy of the police report.

• Forward all legal documents to your aviation insurance company if you’re sued or someone files a claim against you.  Legal defense is covered under your policy.

• Cooperate with your insurance company and upon request, assist them in enforcing their legal rights of recovery or indemnity against a third party who may be held liable for damage or repair.

• Cooperate with your insurance company and upon request, assist them in obtaining and giving evidence, attending hearings and trials, and getting witnesses to testify.

• Do all things necessary to transfer title to any salvage, including your aircraft if it’s a total loss, to the insurance company.

Don’t

• Talk to reporters, make any statements, unless it’s to the FAA or police or your insurance company.

• Do not voluntarily make any payment, assume any obligation or incur any expense, other than first aid to others at the time of the accident.

• Do not authorize repairs until the claims adjustor inspects the damages and approves the estimate before repairs are made.

Aero Alliance has created a document for Aircraft Claims Reporting, to be kept on board your aircraft, should you experience an accident.  We can personalize this document to include your insurance contact information, if you would like to stop by our office with your policy.

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Monday, June 23, 2008  [INTERNAL RELEASE]

Insurance Pitfalls - Beware

All aircraft insurance policies contain policy declarations, coverage terms, conditions and exclusions which determine if the insurance company will pay for a hull and/or liability claim or not.  Aircraft policies have evolved over the years to provide their Insureds with a broad range of coverage, which may give a false sense that you’ll be covered for any aviation accident.  In the event of an aircraft claim, the Insurer determines the extent of the hull damage and liability claim and whether or not the policy (contract) will pay based on the terms, conditions and exclusions in the policy.  Aircraft owners could face significant liability and legal defense expenses, which could easily reach six or seven figures, if their Insurer denied a hull and liability claim.

Aviation Underwriters ask a lot of questions in the aircraft application and rely on the insurance broker to furnish additional information if they have questions or concerns regarding the “risk”.  In the event of a claim, the underwriter’s file is scrutinized to determine if the policyholder breached the contract in any of the following ways:

Pilot(s): The policy Pilot Section names approved pilot(s) and contains an Open Pilot Warranty for pilots not named in the policy who can fly your aircraft.  If the pilot’s qualifications listed in the Aircraft Application does not meet the specified pilot conditions, or the BFR or medical has expired, you’re breaching the terms of the policy and could invalidate coverage.  With turbine aircraft, most pilots are usually required to attend annual recurrency/simulator training in the same make and model aircraft from FlightSafety, Simuflite or Simcom.  If a pilot goes to FlightSafety for a Lear 60 and has a loss in a Lear 25, coverage could be denied since the pilot failed to meet the same model training requirement.

Aircraft:  The Insurer will investigate if the aircraft Airworthiness Certificate was in full force and review your aircraft logbook, prior to writing you a claim draft for the hull damage.

Purpose of Use:  The aircraft application is underwritten and premium rated on the purpose of use.  Corporate use (Part 91) is the most desired class of aircraft risk since you have non-revenue passengers flown by pro pilots; therefore underwriters charge a lower premium.  In the event the aircraft was used to train non-pro pilots and there was a loss, coverage could be denied since the aircraft is insured only for Corporate use.

Territorial Limitations:  While many corporate and commercial policies have worldwide coverage, personal aircraft policies have territorial limitations (U.S., Canada, Mexico).  If you have a claim outside the territorial limitation, coverage can be denied.  The aircraft application informs the underwriter about the aircraft operation and if the territorial limitation needs to be expanded if flown outside the 48 contiguous United States.  If you’re planning a trip to Mexico, your broker will need to place a separate Mexican Liability Insurance Policy, unless it’s automatically provided to you at renewal.  The European Union also has specific liability insurance war coverage limit requirements based on the weight of the aircraft to fly in this territory.

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Monday, June 23, 2008  [INTERNAL RELEASE]

Aircraft Risk Management

The airport environment today is extremely congested with aircraft and full of risks that may or may not impact you and your aviation insurance company.   Ramp accidents have cost the aviation insurance industry billions of dollars.  One underwriting company reported aviation insurers lost three dollars for every dollar they collected during 2001 and ramp accidents were the main source of claims.  During that time, underwriters made some tough decisions on whether or not they wanted to continue to insure FBO’s or not.  The companies that continued to write FBOs, delivered skyrocketing premiums while increasing deductibles, in some cases from deductible limit $5,000 to $50,000 per occurrence.   While this is a historical fact, ground losses continue to plague our industry and as we all know, rates will rise at some point in the future.

There are significant financial ramifications with damaging an aircraft.  An $80,000 claim for a dinged leading edge could be compounded by a $700,000 loss of use claim and diminution of value claim associated with the aircraft’s damage history/resale value.  The risk of an aircraft wing being struck by another aircraft, vehicle or tug increases when the ramp is congested; the weather is foggy or rainy; and at night.   Even if the FBO is responsible for damage to your aircraft, do they carry adequate ground hangarkeepers liability coverage to cover an aircraft worth millions of dollars? 

One solution to avoiding or minimizing an aircraft ground loss lies with the flight crew.  By being more conscientious of the ground risk exposures, the flight crew should be another set of eyes working together with the ground crew operation, while the aircraft is being moved.  Every aircraft manufacturer recommends having someone ride the brakes during towing operations. 

Based on the aircraft ground risk exposures, we recommend:

1. Pilots stay with the aircraft while it is being moved (riding the brakes), fueled or services;

2. If it’s not practical to stay with the aircraft, call ahead and ask the FBO to be directed to a space on the ramp where the aircraft won’t have to be moved;

3. The FBO should provide Wing Walkers during towing, however, if they are short of staff, the flight crew should assist the FBO with this task.

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