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We routinely come across double cover- age for Premises Liability. Many aircraft owners are based outside of metropolitan areas at rural airports. In doing so, they may find there isn’t an adequate hangar to house their star player, so they work with the airport authority and build their own hangar. Like other property the aircraft owner has, they purchase an insurance policy to protect their asset against physi- cal damage and liability that may arise out of ownership, maintenance, or operation. Some owners may also find themselves contractually obligated to do the same, even if they are only involved in a long- term lease of a hangar, not as an owner. There are also FBOs that have attorneys create detailed contracts to protect the airport authority. We can usually differ- entiate the aviation-focused attorney from the generalist in the event property dam- age or negligence occurs, because of the coverage required and how it is described.
Generally, aircraft policies contain liability coverage for Airport Premises Liability. There is language within the policy that may be limiting or more inclu- sive for this coverage though. Such as, does the policy extend to premises you rent, occupy, use, and own? Or does it exclude property you actually own? Does your fixed wing aircraft policy that has prem- ises liability coverage extend to protect that exposure? It is important to review the wording buried in your multiple poli- cies to address your specific situation.
A few months ago, I met with a business owner that operates a twin-engine turbo- prop. I reviewed the two policies, one for the King Air, and the other for the hangar he owned. Then we had a conversation about his operation and ownership struc- ture. One of the items we discovered was double coverage for Premises Liability. There was $1 million of coverage under the property policy and $10 million under the aircraft policy. Which limit would you rather have protecting you?
I explained to the aircraft owner that he was paying more money to be in the undesirable situation of having two policies point at each other. Each policy says the other one is primary in the event of a simple “slip and fall” claim in front of his hangar. He was more than a little shocked. To alleviate this problem, we simply deleted the Premises Liability
February 2017
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