Aviation insurance is one of the most technical branches of insurance law. Unlike land or marine insurance, it does not have an autonomous legislative body in French law. Its regime is constructed at the crossroads of several sources: European Regulation 785/2004 which imposes minimum obligations, international conventions which frame carrier liability, and the Insurance Code which applies in practice despite its formal silence on aviation. This article details the rules, coverage, and contentious issues involved.

The legal framework of aviation insurance

The insurance obligation (Regulation EC 785/2004)

Regulation (EC) No 785/2004 of 21 April 2004 constitutes the foundation of the insurance obligation in aviation matters within the European Union. Directly applicable in Member States since 2005, it requires air carriers and aircraft operators operating in European airspace to take out third-party liability insurance covering four categories of risk: passengers, baggage, cargo, and third parties on the ground.

The Regulation goes further than general insurance law on one essential point: it explicitly requires the policy to cover risks related to acts of war, terrorism, hijacking, sabotage, and civil disturbances. This requirement is directly linked to the lessons learned from the 11 September 2001 attacks, which had caused the massive cancellation of terrorism cover by market insurers.

Minimum insurance amounts vary according to the weight of the aircraft for third-party liability. For passengers, minimum coverage is aligned with the liability levels provided by the Montreal Convention. Under French law, the Order of 29 July 2005 specifies the minimum coverage applicable to non-commercial operation of aircraft with a maximum take-off mass of 2,700 kilograms or less.

Sanctions for non-compliance are severe. Article R. 6231-1 of the French Transport Code authorises the Minister for Civil Aviation to impose administrative sanctions that may extend to withdrawal of the operating licence for a European carrier, or refusal of landing for a third-country carrier. Upstream, Article R. 6412-10 of the same code makes the issuance and validity of the operating licence conditional on compliance with the insurance requirements of Regulation 785/2004.

The Regulation excludes certain aircraft from its scope: State aircraft, model aircraft, certain microlights, and light gliders in non-commercial use.

The Chicago Convention and air sovereignty

The Chicago Convention of 7 December 1944 does not directly address insurance, but it lays the foundations of international aviation regulation on which the insurability of all aeronautical activity depends. Airworthiness standards, aircraft certification, crew training and licensing – implemented at the national level by the French civil aviation authority (DGAC) – constitute the technical foundation on which insurers assess risks. Policies systematically condition their cover on the validity of the airworthiness certificate and crew licences.

The Insurance Code and French law

The silence of the French Insurance Code (Code des assurances) on aviation insurance is one of the curiosities of French law. Article L. 111-1 specifies that the general rules of the insurance contract (Titles I, II, and III of Book I) cover, except for specified exceptions, only land insurance. Marine insurance has its own regime (Title VII). Aviation insurance is mentioned only incidentally – for example, Article L. 125-5 excludes it from the natural disaster compensation regime.

In practice, this gap is filled by usage. Supervisory authorities have historically required that aviation insurance policies marketed in France refer to the Insurance Code. This practice has become so institutionalised that it constitutes a genuine professional custom. The vast majority of aviation insurance contracts stipulate that they are governed by the Insurance Code, which de facto subjects these contracts to the mandatory provisions of the Code – including those designed for mass land insurance.

Ordinance No. 2011-839 of 15 July 2011 and its implementing Decree No. 2012-850 of 4 July 2012 partially clarified the situation. These texts created specific chapters in the Insurance Code for aviation and aeronautical risks. The general rules of land insurance contracts now apply mandatorily to contracts taken out by aeronautical associations (flying clubs) and, optionally, to those of professionals using exclusively certain light aircraft (less than 5,700 kg for non-jet aircraft, less than 2,700 kg for others). For major airlines, the legal uncertainty persists, tempered by the conventional reference to the Code which remains the dominant practice.

Aviation insurance coverage

Third-party liability of the carrier and operator

Third-party liability insurance is the cornerstone of aviation insurance. It covers the legal and contractual liability of the operator for damage caused to passengers (bodily injury), to baggage and transported goods (material damage), and to third parties on the ground.

The regime of this liability is largely dictated by international conventions. The 1999 Montreal Convention, which replaced the 1929 Warsaw Convention, imposes strict liability on the carrier for bodily injury suffered by passengers, without the victim having to prove fault. For damage to goods, the Cour de cassation confirms that the carrier is liable as a matter of law once the harmful event occurred during the custody period (Cass. com., 8 February 2023, No. 21-17.932).

This liability is however subject to caps on compensation. Article 22 of the Montreal Convention sets these limits, notably per kilogram for goods. The Cour de cassation has specified that even an act by the carrier committed with intent to cause damage or recklessly does not exclude the application of these caps (Cass. com., 30 June 2015, No. 13-28.846). This is a crucial point for insurers: the carrier’s third-party liability cover remains bounded by these conventional limits, even in cases of proven fault.

As for the notion of air transport, case law interprets it broadly. A sightseeing flight, even one carried out by a private individual free of charge with an identical departure and arrival point, constitutes air transport subject to the Warsaw Convention (Cass. crim., 10 September 2019, No. 18-83.858). The practical consequences are considerable: the conventional liability rules – and therefore the insurance obligations that flow from them – apply well beyond commercial transport alone.

Hull insurance

Hull insurance covers material damage suffered by the aircraft itself: ground or in-flight accidents, fire, explosion, theft, or disappearance. The value of aircraft – from tens of thousands of euros for a touring aircraft to several hundred million for an airliner – requires massive co-insurance and reinsurance mechanisms.

Extensions allow coverage of war risks and spare parts. The hull insurance market is historically concentrated around Lloyd’s of London and the International Underwriting Association (IUA). No single national insurance company could bear alone the commitments linked to a commercial fleet; recourse to co-insurance and reinsurance is systematic.

Passenger and third-party insurance

Beyond carrier liability, personal insurance policies complement the coverage. The individual « per seat » insurance (known as « Convention Annexe D ») has an original feature: it is taken out by the aircraft operator for the account of all occupants, in accordance with the mechanism of Article L. 112-1 of the Insurance Code (insurance for the account of whom it may concern). The operator insures a number of seats, and any person occupying one of them at the time of an accident benefits from the cover.

The cover extends to accidents occurring on board, during boarding and disembarkation, but also those caused by the aircraft after the insured has left it. This is a fixed-sum insurance: the capital paid in the event of death or disability is set in advance, independently of the actual loss. The insurer cannot exercise subrogation against the liable party (Article L. 131-2 of the Insurance Code), and the indemnity is cumulative with that obtained under the carrier’s third-party liability. In the event of excess occupants beyond the number of insured seats, indemnities are reduced pro rata.

For goods, « cargo » insurance – a term inherited from maritime law – covers the actual value of the goods against the risks of transport, independently of the carrier’s liability limits. Taken out by the sender or recipient, it operates as « all risks » cover: any harmful event is covered, except for express exclusions. The insurer who indemnifies is then subrogated in the rights of the insured against the carrier.

The aviation insurance contract

Formation and particularities

The aviation insurance contract is a consensual contract. The Cour de cassation confirmed this in a case involving the Reunion aerienne: the contract is formed upon the meeting of minds of the insurer and the insured, regardless of the existence of a clause stipulating that the contract would be perfected upon formal signature of the policy (Cass. 1st civ., 9 March 1999, No. 96-20.190). The policy has only evidentiary value.

Aviation insurance falls under « large risks » within the meaning of Article L. 111-6 of the Insurance Code, which in principle implies greater contractual freedom. In reality, the quasi-systematic reference to the Insurance Code in policies subjects these contracts to the mandatory provisions of the Code, including the requirement of prominent characters for exclusion clauses (Article L. 112-4).

Obligations of the insured (declaration, premiums, claims)

The obligation to declare risks borrows from Articles L. 113-8 and L. 113-9 of the Insurance Code for sanctions (nullity in the case of intentional misrepresentation, proportional reduction in the case of unintentional inaccurate declaration). But aviation policies retain a particularity: they generally require a spontaneous declaration of all risk circumstances, thus resembling marine insurance (Article L. 172-19) rather than land insurance, where the insured is only required to answer questions posed by the insurer since the law of 31 December 1989.

The rules on premium payment, the consequences of non-payment (formal notice, suspension of cover, termination), and the two-year limitation period of Article L. 114-1 apply classically. The obligation to declare aggravations of risk during the contract follows the procedures of Article L. 113-4.

In claims matters, protest deadlines are short. The consignee of goods must make immediate reservations in the case of apparent damage and send written protest to the carrier within the Montreal Convention deadlines for non-apparent damage, failing which the insurer’s subrogation claim may be compromised.

Common exclusions and limitations

Exclusions reflect the close link between insurance and aviation regulation. Typically excluded are:

  • Use of an aircraft without a valid airworthiness certificate or piloted by a person without a valid licence.
  • Use of an unauthorised terrain for take-off or landing, except in cases of force majeure.
  • Intentional flight below regulatory minimum safe altitudes.
  • Use of the aircraft outside prescribed weight or balance limits.

For personal insurance, standard exclusions are added: intentional harm, active participation in acts of violence, intoxication or drug use as the determining cause of the accident, participation in speed competitions or record attempts.

War, terrorism, and hijacking risks are historically excluded from basic policies. They may be « bought back » for an additional premium, and Regulation 785/2004 mandates their coverage for carriers operating in Europe. The contract sets a « maximum limit » – the maximum value covered per shipment and per aircraft – which constitutes the ceiling of the insurer’s commitment.

Insurance and aircraft users

General aviation and flying clubs

Flying clubs benefit from policies adapted to their instruction and leisure activities. Since the 2011 Ordinance, the Insurance Code is directly applicable to them, which strengthens the protection of their members. Third-party liability insurance is a condition of activity, with particularities for compensation between members of the same club.

The individual « aircraft-related accidents » policy allows private pilots and flying club members to cover their practice. The policy may be adjusted according to the types of aircraft used (touring aircraft, microlight, helicopter, glider, hang-glider, hot air balloon) and practitioner profiles (passenger, private pilot, instructor, aerobatics pilot). The accuracy of the initial declaration is determinative: the activities practised and the types of aircraft must be precisely described, under penalty of refusal of cover or reduction of indemnity.

Organisers of air shows are subject to a legal obligation of third-party liability insurance to cover potential damage caused to spectators, third parties, and participants.

Drones and unmanned aircraft

The development of civil drones has extended the scope of aviation insurance. Implementing Regulation (EU) 2019/947 and Delegated Regulation (EU) 2019/945 frame the operation of unmanned aircraft. Regulation 785/2004 applies to drone operators once the aircraft exceeds certain mass thresholds, as confirmed by the Orders of 3 December 2020 relating to model aircraft and national standard scenarios.

In practice, drone insurance combines a mandatory third-party liability component (damage to third parties) and an optional component covering the aircraft itself. Exclusions relate to use outside authorised zones, failure to comply with maximum flight heights, and lack of registration with the DGAC.

Litigation and compensation

Claims declaration and management

The claims procedure in aviation insurance borrows from both general insurance law and maritime law practices. For damage to goods, the consignee must have damage immediately assessed by an average adjuster (an independent accredited expert) and preserve recourse against liable third parties by making precise reservations.

Indemnity for goods is calculated on the basis of the insured value. In the case of partial damage, the depreciation percentage (sound value / damaged value at the place of destination) is applied to the insured value. In extreme cases – presumed total loss with no news after three months, or damage reaching three-quarters of the insured value – the insured may exercise abandonment, transferring ownership of the goods to the insurer in exchange for full payment of the insured sum.

For bodily injury, the two-year limitation period of the Warsaw Convention (carried over by the Montreal Convention) applies. However, the Plenary Assembly of the Cour de cassation specified that this period is not a forfeiture period: it is susceptible to interruption and suspension according to the principles of French domestic law (Cass. ass. plen., 1 July 1977, No. 75-15.443). This decision protects victims who may have been prevented from acting within the initial period.

Insurer’s subrogation

Legal subrogation (Article L. 121-12 of the Insurance Code) applies fully: the insurer who has indemnified its insured is automatically substituted in the insured’s rights against the liable third party. If the insured compromises this subrogation – by giving a release to the liable party without the insurer’s consent – they risk losing their right to indemnity.

The victim has a direct action against the insurer of the liable party (Article L. 124-3). Forfeitures for the insured’s post-loss breach, contractual deductibles, and proportional reduction are not enforceable against the victim, even though the insurer retains recourse against its own insured.

In fixed-sum personal insurance (individual accident insurance), Article L. 131-2 prohibits any subrogation: the fixed-sum indemnity is cumulative with compensation obtained under third-party liability. For indemnity-based benefits included in certain policies (reimbursement of medical expenses), subrogation remains possible (Article L. 121-12).

Frequently asked questions

Is third-party liability insurance mandatory for all aircraft operators in Europe?

European Regulation 785/2004 imposes minimum third-party liability insurance on air carriers and aircraft operators operating in European airspace, covering passengers, baggage, cargo, and third parties. Certain aircraft (State aircraft, model aircraft, certain microlights, and light gliders in non-commercial use) are excluded from the Regulation’s scope.

Does the French Insurance Code apply to aviation insurance contracts?

Not formally, as aviation insurance falls under « large risks. » In practice, the vast majority of policies refer to it and are subject to its mandatory rules. The 2011 Ordinance made the Code directly applicable to contracts taken out by flying clubs and, optionally, to professionals using light aircraft.

What does hull insurance cover?

Hull insurance covers material damage suffered by the aircraft (accident, fire, explosion), as well as its theft or disappearance. Extensions cover war risks and spare parts. The amounts involved require systematic recourse to co-insurance and reinsurance.

Can a passenger combine their individual insurance indemnity with that of the carrier?

Yes. Individual accident insurance (« per seat » or nominative) is a fixed-sum insurance. Article L. 131-2 of the Insurance Code prohibits insurer subrogation, which allows the victim to combine the fixed-sum capital and the compensation obtained under the carrier’s third-party liability.

How can the actual value of goods transported by air be guaranteed?

One must take out « cargo » insurance (transported goods insurance), which covers the declared value of the goods against transport risks, independently of the carrier’s liability limits. The insurer, after indemnification, exercises a subrogation claim against the carrier within the limits of the carrier’s conventional liability.

Are drones subject to an insurance obligation?

Drone operators operating in European airspace are subject to Regulation 785/2004 once the aircraft exceeds certain mass thresholds. Third-party liability insurance (damage to third parties) is mandatory. Insurance for the aircraft itself remains optional.

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