The world of aviation fascinates by its technology and its ability to connect people and continents. But behind this image of modernity and efficiency lies a complex environment, where risks are omnipresent and the financial stakes are considerable. Whether it's a minor technical incident, an unforeseen weather event or a major disaster, the consequences can be devastating. Against this backdrop, aviation insurance appears to be an absolute necessity, the keystone enabling the various players to sector players - airlines, manufacturers, infrastructure managers, maintenance professionals, pilots, passengers and shippers - to manage these risks and ensure the continuity of their activities. A good understanding of the mechanisms of this insurance is therefore essential. This article provides an overview of the fundamental aspects: the specific risks covered, the legal framework within which it operates, and the main insurance solutions available to the various stakeholders.
Specific risks and the legal framework for aviation insurance
Airline insurance must respond to a range of very specific risks. Firstly, there is the risk of damage to the aircraft itself, a very valuable asset. Then, and this is a central point, there is the civil liability of the various parties involved: the carrier's liability to its passengers for personal injury, to its customers for loss or damage to baggage and freight, and also liability to third parties on the ground in the event of an accident. In addition to these 'ordinary' risks, there are also exceptional risks, such as those linked to acts of war, terrorism or hijacking, the coverage of which has become a major and complex issue in the market.
This aviation insurance market is itself highly specific: highly internationalised due to the colossal sums involved, it requires massive recourse to reinsurance and is dominated by a few large specialist players, particularly in London.
The legal framework is just as complex, resulting from the interweaving of several sources of law. International and national aviation law imposes very strict safety standards (airworthiness, licences, etc.) which are a prerequisite for insurability. International conventions (Warsaw, and above all Montreal) largely dictate the carrier liability regime. National insurance law, although not directly concerned with aviation insurance in the French Code, applies in practice and imposes its public policy rules. Finally, European law has reinforced the obligation for carriers and operators operating in Europe to have civil liability insurance (Regulation 785/2004).
Insuring airlines: the essentials
For airlinesInsurance is vital. They need to cover two main types of risk. Firstly, the value of their fleet: this is the purpose of "hull" insurance, which covers material damage, theft or disappearance of the aircraft. Extensions are available to cover war risks and spare parts. Secondly, their civil liability: specific guarantees cover their legal and contractual liability for damage caused to passengers (bodily injury), baggage and goods transported (material damage), as well as to third parties on the ground. Mechanisms such as "admitted" liability can make it easier to compensate passengers.
Passenger and cargo insurance
Air service users can also take out insurance to supplement the cover provided by the carrier's liability. Passengers can opt for individual accident insurance, which will pay them a lump sum in the event of death or disability resulting from an air accident, irrespective of the airline's liability. This insurance can be taken out individually or sometimes collectively by the operator on behalf of the occupants ("insurance in lieu").
For transported goods, "cargo" insurance is essential if their value exceeds the carrier's liability limits. Taken out by the sender or recipient, it guarantees the real value of the goods against transport risks (loss, damage) and provides full compensation, with the insurer then taking recourse against the carrier if it is held liable.
Covering other players in the aeronautical world
Airline insurance is not just for airlines and their customers. Many other professionals have specific needs. Aerodrome operators need to cover their liability in connection with the management of airport infrastructure and services. Maintenance, repair, aeronautical construction and ground handling companies must take out professional indemnity insurance tailored to the risks associated with their activities (damage caused during or after operations, damage to goods entrusted to them). Aeroclubs have specific policies covering their training and leisure activities, with special rules for compensation between members. Finally, organisers of air events are legally obliged to take out civil liability insurance to cover the risks inherent in these events (spectators, participants, third parties).
Aviation insurance is a technical field with many facets. For a personalised analysis of your situation and cover requirements, our team is at your disposal.
Frequently asked questions
What are the main types of risk covered by aviation insurance?
It mainly covers damage to the aircraft itself ("hull insurance"), the operator's civil liability (towards passengers, freight, third parties), and sometimes bodily injury to occupants or exceptional risks (war, terrorism).
Is civil liability insurance compulsory for all aircraft operators in Europe?
Yes, European regulation 785/2004 requires air carriers and aircraft operators operating in European airspace to have minimum liability insurance to cover passengers, baggage, freight and third parties.
Does the French Insurance Code govern all aviation insurance contracts?
Not formally, as aviation insurance comes under the heading of "large risks". However, in practice, most policies refer to it and are subject to its public policy rules; a law passed in 2011 also made the Code applicable to certain contracts (flying clubs, light aircraft).
What is aircraft hull insurance?
This is the insurance that covers material damage to the aircraft itself (following an accident, fire, etc.), as well as its theft or disappearance.
How does an airline cover its liability towards passengers in the event of an accident?
It takes out specific civil liability insurance that compensates passengers for bodily injury, within the framework and limits set by international conventions (such as the Montreal Convention).
How does the airline insure its liability for damage to baggage or cargo?
It also has civil liability insurance covering loss of or damage to checked baggage and goods entrusted to it, up to the liability ceilings provided for in the applicable agreements.
As a passenger, what insurance can I take out for my own bodily injury?
You can take out individual accident insurance (temporary or annual), which will pay you a lump sum in the event of death or disability, in addition to any compensation payable by the carrier.
How can you guarantee the real value of expensive goods transported by air?
You must take out cargo insurance, which covers the declared value of the goods against the risks of transport, regardless of the air carrier's liability limits.
Are flying clubs subject to specific insurance obligations?
Yes, they are generally required to take out civil liability insurance tailored to their activities (instruction, recreational flying), which has its own special features, particularly for compensation between members. The Insurance Code is directly applicable to them.
Who is responsible for ensuring safety and damage at an airshow?
The organiser of the aerial event is legally obliged to take out civil liability insurance to cover potential damage caused to spectators, third parties and participants.
Does an aeronautical maintenance company need to take out professional indemnity insurance?
Yes, it is essential for a company of this type to take out aviation professional liability insurance covering any damage that may result from its services (during or after intervention) or affect the property entrusted to it.
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