Page 6 - Feb17TNT

Multiple Policies = Multiple Problems?
Ensure your various policies do not overlap, or worse, conflict with each other. by Kyle White
Do you own or operate an aircraft? Or maybe you own or lease a hangar? If you are reading this, chances are you do one or both. Additionally, you probably purchase insurance to protect against your perceived exposures. Most people think insurance policies operate individually
and without overlap among multiple policies. If there is overlap in the coverage, what’s the big deal? It just means you have that much more coverage, right? Unfortunately, that common perception is false, so let’s learn how to better manage the money spent on a product you hope to never use.
If you have coverage for something in one policy, and that same coverage is in another policy, instead of double coverage, what you will likely have is an expensive problem. Over the last decade, insurance premiums have plummeted, and ancillary coverages have expanded. This coverage expansion has created a more complicated buying environment.
An insurance company does not want to provide you with coverage if you are already buying it via another insurance policy. To avoid this, they put a clause in the policy that states, “if you have coverage available to you under another policy, this policy is excess and the other policy is primary.” Those who lease aircraft may have signed a contract that has wording that assumes or allocates certain liabilities to either the lessor or lessee. Did you put this contract on file with your insurance company? Was a certificate of insurance issued that acknowledges, not just the contract, but the specific indemnification and other clauses you agreed to on the certificate? What about wording on the certificate that states, “primary and non-contributory?” It is very important that
all parties understand which and whose policy pays first.
Imagine you have two policies, both of which have this wording regarding a particular peril. If both policies say the other is “primary” and theirs is “excess,” who pays first? Who has two insurance policies you ask? I would venture to say nearly everyone I know has two insurance policies (or more)! Home, auto, boat, aircraft, and many more. For this article, we’ll
keep it aviation related.
Many people reading this article are involved in a management function of a business. The company you support may have an aircraft policy to protect the aircraft and the liability associated with owning, operating and maintaining the aircraft. Additionally, the company may have a property policy to protect against physical damage of a hangar you own or lease. Or, you may have a corporate property policy that protects all buildings the business owns and premises liability associated with those properties. There may also be an auto
policy that does not exclude aviation exposures.
It is imperative you evaluate all of your policies to find the coverage overlaps and the “if you have coverage somewhere else” terminology. If you fail to do this, you may find yourself in an expensive battle while your lawyers convince the insurance companies to cooperate with each other and settle your claim. There are many coverage overlaps our industry fails to address. For the purpose of brevity, we will address a few of the most common: Premises Liability, Non-Owned Aircraft Liability, and Contents. But
remember, there are many more!
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