Let’s imagine you have the unfortunate experience of a loss, incident or accident in which your insured aircraft suffers physical damage. Whether the claim is “total loss” or “partial loss,” it is common for the aviation insurer’s processor, after the property damage insurance claim has been settled and settled, to prepare to disburse its property damage payment to policyholders (the “designated Insureds”) and any additional claims payees endorsed under the aviation insurance policy, unless otherwise noted.
As part of the process of preparing for the claims payment, the claims processor will also likely verify the aircraft’s ownership status via an internet query of the Federal Aviation Administration’s (“FAA”) aircraft registry. A title search can also be ordered, particularly in the case of “total loss”.
These steps are taken to enable the aviation insurance provider to ensure that the named insured has an insurable interest in the insured aircraft and to ensure that all parties with a financial interest in the aircraft are included in the claims payment. According to the International Risk Management Institute, Inc. (“IRMI”), insurable interest means “an interest of the insured person in the value of the subject matter of insurance, including any legal or financial relationships.”
An example of wording in the DECLARATION of an aviation insurance policy is, for example:
Item 5. PROPERTY AND ENQUIRIES. The named Insured is and remains the sole and unconditional owner of the aircraft described in Clause 4, except as otherwise provided herein.
“Other information herein” generally refers to a supplement to the policy, such as B. those for “Physical Damage Additional Interest” or “Owner/Lessor”.
Loss Payments and Property Determination
With some frequency, aviation insurance claims processors encounter ownership scenarios that present claims payment challenges, such as:
- The named…
