Aircraft Hull Insurance vs Liability Insurance: What Is the Difference?
Aircraft hull insurance and aviation liability insurance protect different parts of an aviation risk. Hull cover is concerned with insured physical loss or damage to the aircraft. Liability cover generally responds to covered legal liability arising from bodily injury or property damage involving other people.
Aircraft owners and operators commonly review them together because an incident can damage the aircraft and also create liability to passengers, property owners, airports or other third parties.
For a related check, read an aircraft owner’s cover checklist. You can also discuss your cover through ABS’s aircraft hull and liability service.
Speak with an aviation insurance specialist
Discuss your aircraft, operations, pilots, uses and current insurance arrangements with ABS at Bankstown Airport.
Request an aviation insurance review
Ask ABS to compare your current policy with the aircraft and operations you need to protect.
Aircraft hull insurance and liability: which risk does each cover?
Aircraft hull insurance may cover accidental physical loss or damage to the insured aircraft, subject to the agreed or insured value, excess and wording. Aviation liability may cover specified legal liabilities to third parties and, where arranged, passengers.
Some commercial passenger operations have particular carrier-liability requirements. CASA states that relevant operators must hold compliant insurance for the aircraft types and models used and provide evidence in specified circumstances. See CASA’s carrier-liability guidance.
What Aircraft Hull Insurance Can Address
Hull cover is generally arranged on an agreed-value or stated-value basis for the aircraft described in the policy. Depending on the wording, cover may apply while the aircraft is flying, taxiing, parked, stored or being transported.
Important details include:
- aircraft make, model, year, registration and insured value;
- engines, avionics, modifications and permanently fitted equipment;
- deductibles or excesses for ground and in-flight loss;
- approved pilots and minimum experience;
- permitted uses and geographical limits;
- open-pilot provisions, training and endorsements; and
- salvage, recovery and repair arrangements.
An outdated insured value can create practical problems after a major loss. Review market conditions, upgrades and equipment rather than automatically repeating last year’s figure.
What Aviation Liability Insurance Can Address
Aviation liability cover can include liability to people or property outside the aircraft, passenger liability and other sections appropriate to the operation. The schedule and wording determine the parties insured, limits, territory and permitted activities.
Questions should include whether the aircraft carries passengers, operates commercially, lands away from licensed aerodromes, uses leased hangar space, undertakes training or aerial work, or is subject to contractual insurance requirements.
Liability limits should be considered against the nature of the operation—not selected only because they matched a previous policy. CASA’s guidance for commercial flying also emphasises using properly approved operators with the correct licences, personnel and insurance.
Why Hull and Liability Should Be Reviewed Together
A runway excursion, hard landing or ground-handling accident might damage the aircraft while also damaging airport property or injuring another person. Separate sections may respond to different parts of the event.
Check that the legal owner, operator, financiers, lessors and other relevant interests are accurately described. Where an aircraft is leased, borrowed or operated through a company, ownership alone may not identify every exposure.
Tell the broker about new pilots, changes in use, longer flights, different bases, training, charter or aerial-work activity and material modifications before they create a coverage issue.
Frequently Asked Questions About Hull and Liability Insurance
Is aircraft hull insurance compulsory in Australia?
Requirements depend on the operation, finance, lease and contracts. Certain passenger-carrying operations have statutory carrier-liability requirements. Confirm the rules for your operation.
Does hull insurance cover mechanical breakdown?
Not automatically. Policies commonly distinguish accidental damage from wear, deterioration or mechanical failure. Resulting damage may be treated differently.
Does liability insurance cover passengers?
Passenger liability may need to be specifically included and can be subject to separate limits and legal requirements. Check the actual schedule.
What aircraft value should be insured?
Use a carefully considered value reflecting the aircraft, equipment and current market. Discuss agreed-value implications with the broker.
Can any licensed pilot fly the insured aircraft?
No assumption should be made. Policies may name pilots or impose licence, hours, recency, training and endorsement requirements.
Can ABS arrange hull and liability together?
Yes. ABS can review the aircraft, owners, pilots, use and liability requirements and approach suitable aviation insurers.
Review the Aircraft, Pilots and Operation Together
Send ABS the aircraft details, current schedule, pilot information and intended uses. Our Bankstown Airport aviation team can help identify the questions that should be resolved before renewal or a change in operation.
Important information: This article provides general information only and does not consider your objectives, financial situation or needs. Aviation insurance is subject to policy terms, conditions, pilot requirements, limits and exclusions. Operational and regulatory requirements can change. Confirm current requirements with CASA and obtain advice appropriate to your circumstances.
