After exploring the specific risks, market and general legal framework of aviation insurance, it is time to turn to the heart of the matter: the insurance contract itself. How is this essential agreement between insurer and insured built in the aeronautical sector? Far from being a monolithic block, the aviation insurance contract is in fact a complex assembly, a kind of crossroads where several legal disciplines meet and influence each other. Understanding its general structure and the rules that shape it is essential to grasp the real scope of the coverage purchased. We will see how general French non-marine insurance law, transport law and aviation law each contribute, in their own way, to defining the contours of these contracts.

The imprint of non-marine insurance law

Although the French Code des assurances (Insurance Code), as we saw in our previous article, does not formally cover aviation insurance (treating it as a « large risk » with greater contractual freedom), its influence is in practice omnipresent. Insurers operating in France refer almost systematically to its provisions in their policies, partly through habit and under the historical impetus of supervisory authorities. This reference largely shapes the general economy of contracts and imports specific rules, particularly in the areas of liability and personal insurance.

A general contractual economy largely inspired by non-marine insurance

A reading of the general conditions of aviation insurance policies reveals a structure very close to that of non-marine insurance contracts. Contract formation, for example, although insurance is a consensual contract formed by the mere exchange of consent, often sees aviation policies stipulate that the agreement is only complete upon formal signature of the document by the policyholder. The Cour de cassation (French Supreme Court for civil and commercial matters) has nevertheless reminded us that such clauses do not call into question the principle of consensualism and that the contract is formed as soon as wills are in agreement, the policy having only evidentiary value (written proof) (Cass. 1re civ. 9 March 1999, no. 96-20.190). Similarly, the effective date of coverage is often tied to the actual payment of the first premium, a common practice in insurance.

The insured’s duty of disclosure at the time of subscription is another pillar inherited from general law. Aviation insurers explicitly refer to articles L. 113-8 and L. 113-9 of the Code des assurances regarding sanctions for intentional misrepresentation (nullity of the contract) or unintentional misrepresentation (proportional reduction of the indemnity, known as the RPP rule). One subtlety remains, however: whereas the loi Evin of 1989 abolished, for ordinary non-marine insurance, the insured’s duty to spontaneously declare all circumstances of the risk and required only accurate answers to the insurer’s questions, aviation policies often retain the requirement of a « spontaneous declaration ». In this respect, they approach marine insurance (article L. 172-19 of the Code des assurances), where the insured must communicate all information known to them and useful for the insurer’s assessment of the risk. The duty to declare aggravations of risk during the contract follows, for its part, the arrangements of article L. 113-4 of the Code des assurances.

The rules concerning premium payment, the consequences of non-payment (formal notice, suspension of coverage, then termination of the contract), the arrangements for termination (at expiry, after a loss, upon change of circumstances…) and the limitation period for actions arising from the contract (two-year period in principle, article L. 114-1) are also directly transposed from general law. The same goes for the rules on territorial jurisdiction, which generally designate the court of the insured’s domicile in the event of a dispute.

Finally, on the formal level, aviation insurers strive to comply with the protective requirements of the Code des assurances, notably article L. 112-4, which requires that clauses establishing nullity, forfeitures or exclusions of coverage be mentioned in very apparent characters to draw the insured’s attention. This is an interesting example of the voluntary (or at least accepted) application of public policy rules whose sanction for non-compliance would remain uncertain if one stuck to the letter of the Code, which does not directly contemplate aviation insurance.

Application of rules specific to liability insurance

Civil liability insurance constitutes a very important part of aviation insurance. Here again, the mechanisms are largely borrowed from general law (Book I, Title II, Chapter IV of the Code des assurances). The right for the victim of damage to act directly against the insurer of the person liable (the direct action, implicitly provided for by article L. 124-3 of the Code des assurances) is a cornerstone of the system, offering a guarantee of solvency to the victim.

To protect the insurer, policies classically stipulate that no acknowledgement of liability or amicable settlement reached between the liable insured and the victim without the insurer’s agreement is enforceable against the insurer. This must be nuanced: the admission of a simple material fact or the fact of having come to the victim’s aid (a legal or moral obligation) does not constitute an acknowledgement of liability.

In return for its coverage, the insurer often reserves the right to conduct the lawsuit brought against its insured, i.e. to take charge of the defence, since it will potentially have to bear the financial consequences. It may also reserve the exclusive right to settle with the victim.

For the victim’s protection, the Code des assurances provides that certain defences or forfeitures, although valid between the insurer and the insured, are not enforceable against the victim exercising the direct action. This is the case in particular for forfeitures for the insured’s failure to comply with obligations after the occurrence of the loss (for example, late notification of the loss — see article L. 113-11). Similarly, contractual deductibles and the proportional reduction of indemnity (RPP) in the event of initial misrepresentation of the risk are not enforceable against the victim, even though the insurer may subsequently seek recovery from its insured to recoup those sums.

Finally, the mechanism of legal subrogation (article L. 121-12 of the Code des assurances) applies: the insurer that has indemnified its insured (or the victim via the direct action) is automatically substituted in the rights and actions that the latter had against the third party potentially liable for the damage (another party involved, a defaulting supplier, etc.). If the insured, through its own actions, prevents this subrogation (for example by giving a release to the liable party without the insurer’s agreement), it risks losing its right to indemnity.

The transposition of personal insurance mechanisms

Individual insurance against accidents that may occur during a flight is also very strongly inspired by non-marine personal insurance (governed by Book I, Title III of the Code des assurances). The usual exclusions are found there: damage intentionally caused or provoked by the insured, the consequences of active participation in riots or acts of terrorism, manifest drunkenness or the use of narcotics as a determining cause of the accident, or the practice of particularly dangerous sports or activities that have not been disclosed. Specific exclusions relevant to the aeronautical context may be added, such as participation in speed competitions or record attempts.

The definition of the insured accident is classic: any unintentional bodily injury to the insured, resulting from the sudden and unforeseeable action of an external cause.

The principal characteristic of these insurances is that they are lump-sum. Unlike liability insurance, which aims to fully repair the prejudice suffered, personal insurance pays a capital sum or annuity the amount of which is fixed in advance in the contract, regardless of the actual economic loss. This is the case for the capital paid in the event of death or the indemnities provided in the event of permanent incapacity (often calculated according to a contractual scale).

As a consequence of this lump-sum nature, these benefits are not, in principle, indemnity-based. The insurer that pays them cannot therefore exercise a subrogation recourse against the third party liable for the accident, as specified by article L. 131-2 of the Code des assurances. The insured (or their beneficiaries) can thus combine the lump-sum indemnity from their individual insurance with the compensation obtained from the liable party (or its liability insurer). Exception: if the individual insurance contract provides indemnity-based benefits, such as the reimbursement of medical or hospitalisation expenses, the insurer is subrogated to the insured’s rights for those specific sums.

The specific contribution of transport law

While non-marine insurance provides the general framework, transport law gives a particular colour to aviation insurance contracts, especially when they concern the movement of goods. So-called « cargo » insurance (covering the goods themselves) is an important branch of the activity of aviation insurers.

The air transport contract as a foundation

The existence of an air transport contract is obviously the prerequisite for insuring goods during that transport. This contract is defined by article L. 310-1 of the Code de l’aviation civile (Civil Aviation Code) as the fact of conveying by aircraft, from a point of origin to a point of destination, passengers, cargo or mail. Case law has clarified its application in various situations, sometimes far removed from classic commercial transport (training flights, first-flight experiences, ultralight flights, etc.).

The legal regime of this contract blends the general rules of transport (article L. 521-1 of the Code de l’aviation civile refers to the rules of land and water transport, save for exceptions) and the specific provisions of aviation law, notably international conventions (Warsaw and especially Montreal). The carrier has precise obligations: compliance with packaging rules, duty of care (particularly for live animals), notice of arrival to the consignee, and above all the obligation to deliver the goods (mere unloading is not sufficient). In return, it enjoys a certain freedom, justified by the constraints of air navigation: it generally does not commit to strict deadlines or to a precise itinerary.

Compensation for damage in air transport

Here, the influence of maritime law is palpable. The consignee of the goods has an active role to play on arrival. They must check the condition of the packages and immediately issue specific reservations in the event of shortages or damage observed. These reservations are an essential condition for subsequently being able to engage the carrier’s liability. In the event of non-apparent damage, a written protest must be sent to the carrier within very short deadlines set by the international conventions.

The liability of the air carrier is, as indicated above, governed by the international conventions (even for a purely internal French transport, according to article L. 321-3 of the Code de l’aviation). This regime is generally based on a presumption of liability: the carrier is liable for damage occurring during transport, unless it proves that it took all necessary measures to avoid it or that it was impossible to take them (an exoneration difficult to obtain). However, this liability is most often capped in amount, according to ceilings set by the conventions (per kilogram for goods, or per passenger).

It is precisely because of these liability caps that cargo insurance takes on its full meaning. Taken out by the shipper or the consignee on their own account, it aims to guarantee the real value of the goods, independently of the (capped) liability of the carrier. It constitutes property insurance, subject to its own rules (calculation of the indemnity based on the insured value and depreciation), distinct from the civil liability insurance taken out by the carrier.

Constraints imposed by aviation law

Finally, aviation law itself imposes direct constraints on the content and application of insurance contracts.

Mandatory compliance with safety requirements

The insurability of an aeronautical activity is fundamentally linked to compliance with the safety standards laid down by aviation law. Insurance policies systematically remind us of this: coverage is conditional on the aircraft being fit to fly, holding a valid certificate of airworthiness and being used within the limits provided for by that certificate and the operating authorisations. Likewise, flight crew must hold the required licences and qualifications and keep them valid.

Non-compliance with these fundamental rules generally constitutes an exclusion of coverage. Policies often list precise cases of exclusion linked to dangerous or unlawful behaviour:

  • Use for take-off or landing of an unauthorised terrain (save in cases of force majeure).
  • Intentional flight below the regulatory minimum safety altitudes (« hedge-hopping »), save in cases of force majeure.
  • Use of the aircraft outside the prescribed weight and/or balance limits.

These clauses aim to ensure that the insured takes all reasonable precautions and complies with applicable regulations, a sine qua non condition for the mutualisation of risk.

Adapting coverage to the diversity of activities

Aviation law does not only govern commercial transport. It regulates a multitude of activities: operation of aerodromes, aeronautical construction and maintenance, flight schools, recreational aviation, aerial work, air shows… Each of these activities presents specific risks and is subject to particular regulation (sometimes including a compulsory insurance requirement). Insurers have therefore had to develop a range of coverage adapted to this diversity, going beyond the standard policies for airlines. These specific policies (Aerodrome Operator Liability, Aeronautical Professional Liability, Flying Club Insurance, etc.) incorporate the regulatory constraints specific to each activity.

Navigating between the rules of the Code des assurances, transport law and aviation law to build a solid insurance contract requires sharp expertise. If you wish to review your current policies or negotiate new coverage, our firm can assist you.

PRENDRE RENDEZ-VOUS