Do I need aircraft insurance for private business and pleasure aircraft?


If you are applying for a loan to purchase a private business and pleasure aircraft, yes, the bank will most certainly require proof that you are carrying aircraft insurance. Even if you have the necessary funds at your disposal, buying a policy to cover the aircraft is highly advisable, since flying a jet is an activity full of hazards.

Why You Need Aircraft Insurance

Whether you own an aircraft that you operate for your private business, or for pleasure, you are equally exposed to the hazards involved in owning a plane. If the jet is not adequately insured and it crashes, sustaining as a result physical damages, you as an owner will have to cover the expenses for repairing the jet or lose the money you have invested in buying it, if it is beyond repair.

Similarly, if as a result of an aviation accident involving your plane somebody sustains bodily injury or dies, you will be held liable for the accident, regardless of negligence or fault, and will have to pay a considerable compensation to the injured party or their dependents.

Characteristics of Insurance for Private Business and Pleasure Aircraft

Aircraft insurance contains two major clauses:

  • The Physical Damage provision is specifically designed to cover the physical damage of a private business or pleasure aircraft. The owner of a jet can choose between three insuring agreements:
    • a coverage on an "all-risks basis" protects all losses to the jet, caused by physical damage;
    • a coverage on an "all-risks basis except in flight" covers all losses that occur while the plane is on the ground;
    • and a coverage on an "all-risks basis except in motion" only protects the insured jet while it is still.
  • The Liability provision provides protection against liability arising out of property damage, bodily injury or passenger bodily injury caused by an accident involving the insured jet. Each coverage has separate liability limits specified in the insuring agreement and determined by the insured. Alternatively, the insured can choose a single liability limit for all three types of coverage.
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