Aviation General Liability

For a Holistic Risk Management and Insurance Program

Many risks that airports face can be managed by insurance, risk management, or a combination of both. A General Liability Policy is the foundation of any business insurance program—it protects your business in the event a third party claims property damage or bodily injury against you because of your negligence. However, since most General Liability Policies have an airport and aircraft exclusion, it is critical that airports purchase their liability policy from an aviation specialty insurer.

Aviation General Liability (AGL) policies offer various coverages and options, including:

  • Premises Liability
  • Hangarkeeper’s Liability
  • Products and Completed Operations Liability
  • Personal and Advertising Injury Liability
  • Contractual Liability

Premises Liability

Airports can be liable for bodily injury and property damage arising from third party use of the airport premises. Premises Liability coverage forms the basis of an aviation general liability policy and will insure ordinary premises hazards.

EXAMPLE
If a person slips and falls on airport property, the airport could be held liable.

Hangarkeeper’s
Liability

Airports can be liable for damage to aircrafts that belong to others, but are in the custody of the airport for safekeeping, storage, refueling, or repairs. Hangarkeeper’s Liability coverage is essentially Bailee’s Coverage for the airport, and most often included within the AGL policy as an option.

EXAMPLE
If the airport’s hangar is used for third party aircraft rental and burns down, the airport could be held liable for damage to the aircrafts.

Products and Completed
Operations Liability

Airports can be liable for bodily injury and property damage to a third party arising out of the use, handling, or consumption of a product sold by the airport. Products and Completed Operations Liability coverage is intended to protect the airport from their negligent work or their sale and/or distribution of a faulty product. It protects the airport in the case that its product or work causes injury or damage after the aircraft leaves their business. It is most often included within the AGL policy as an option.

EXAMPLE
If an aircraft crashes after refueling at airport-operated gas pumps, the airport could be held liable.

Personal and Advertising
Injury Liability

Airports can be held liable for causing “personal injury” such as false arrest, malicious prosecution, wrongful eviction, libel, slander, violations of a person’s right of privacy, and infringement of copyright in advertisements. Personal injury as defined does not include bodily injury damages, but rather mental injury damages.

EXAMPLE
If the airport shares personal information online, blogs, or creates advertisements that trigger “personal injury” to a third party, the airport could be held liable.

Contractual Liability

This insurance provides coverage for the airport when it assumes, in an oral or written contract, the financial consequences of another’s negligence that results in bodily injury or property damage to a third party. This coverage may be limited to certain types of contracts or require full review of the contract within a certain number of days. It is important to be aware of how to take contractual precautions to protect your business against potential losses and to advise your insurance company of any contract as soon as possible.

EXAMPLE
It is a common practice to enter into contractual agreement with your tenants, fuel providers, maintenance contractors, and others to formalize the terms and responsibilities for all parties. These contracts often include an indemnity agreement, also known as a hold harmless agreement, as a means to transfer the risk of future losses or damages from one party to another. If the airport signs one of these contracts and takes on greater exposure or excludes its insurance company from subrogating, the airport could be held liable.

Conclusion

While the AGL policy is the foundation of any airport risk management and insurance program, similar attention needs to be directed to every exposure facing the airport in order to have a complete program. Your program needs to be reviewed with the assistance of a risk management professional to ensure you have proper protection and risk management strategies in place.

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