It’s a common scenario: Your company has a major deal in the works, and you want to get your executives out to meet the client ASAP. If your firm doesn’t own its own aircraft, you have essentially two options: Fly commercial or charter a jet.
That second option—chartering—is becoming increasingly popular. A report by Aviation International News noted the U.S. charter industry saw notable increases in the number of flights, and flight hours, in 2017. In a Bombardier Business Jets report, the aircraft maker cited emerging markets, the globalization of trade and wealth creation as the three top economic drivers for business-jet demand.
But if your company charters third-party-owned aircraft—whether a corporate jet to make a meeting or a helicopter to a golf outing—there are unique potential exposures to account for. Who, for example, is ultimately responsible if an aircraft is damaged, or if someone is injured, while operating your company’s flight? What happens if one of your employees damages the aircraft? And, in a worst-case scenario, what happens if a helicopter crashes and the charter company’s insurance isn’t enough to settle all claims?
These are all important questions to answer before chartering a business jet or helicopter. Luckily, they all have the same answer: Non-owned aircraft liability insurance.
The basic form of this insurance covers your company for bodily injury and property damage when chartering third-party-owned aircraft. But there are a few other steps to consider before anyone from your firm boards a plane or helicopter:
Ask for additional insured status: Non-owned aircraft liability insurance is a very good idea, but consider asking the charter company or fixed-base operator (FBO) to list your company as an additional insured. That means their insurance policies would protect your corporation up to the limits of liability, before your own non-owned aircraft insurance policy kicks in. The minimum limit of liability should be $5 million per seat.
Getting additional insured status reduces the potential burden your company would face if any incident occurs while you’re renting the aircraft. With that in mind, we also recommend that your company have an approved list of charter operators along with certificates of insurance naming your company as an additional insured at the ready.
It’s also a good idea to ask for a waiver of subrogation, which in this case would prevent the charter company’s insurance provider from “stepping into the shoes” of the insured and suing you. A signed waiver goes a long way toward minimizing claims and lawsuits.
If you have a pilot on staff: Employees flying owned or non-owned aircraft on business without their employer’s knowledge or consent is the most common aviation-related liability exposure to a business when it comes to corporate aviation.
If you have a pilot on payroll, maintain an up-to-date pilot history form, as well as a highly detailed outline of their experience and possible exposure. You should also get a certificate of insurance from them, with additional insured status in favor of your firm. Having this on hand when calling insurance underwriters will make you look proactive and organized and possibly put you in a better negotiating spot.
Get organized before reaching out: An underwriter will want a lot of information before making a quote, so assemble as much of it as possible before contacting a broker. Among the questions you’ll have to answer:
- How many hours each year does your firm use non-owned aircraft?
- Does your company allow employees to pilot owned or non-owned aircraft on company business? If so, how many hours a year and in what type of aircraft?
- If employees are flying owned or rented aircraft: Do you have a current pilot history form so the underwriter can review the pilot’s qualifications? What type of training does the employee have in operating the make(s)/model(s) in question?
- Does the firm get additional insured status from its charter vendor, FBO and/or employees flying on company business?
- What underlying limits of liability are maintained by the charter company or employee?
- Does your company have a policy restricting the number of executives flying on any single flight or aircraft?
Your underwriter will take this information and formulate a quote, sometimes with requirements attached, e.g., evidence of underlying insurance or recurrent training. Liability limits can span $5 million to $100 million or more, depending on the exposure.
From ride-hailing apps to private jets, on-demand air travel is the future. But before taking to the skies, organizations should thoroughly review their insurance coverage and be sure they have the right policies in place for chartering aircrafts.
Lou Timpanaro is senior managing director of the aviation practice at Crystal & Company.
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