A key initial step in setting up an aircraft insurance policy is paying attention to the Named Insured. While it may seem like an innocuous detail, getting it right and making sure the Named Insured properly understands the extent of their obligations is important. So much so that we included it as part of our “PUNC” checklist in a previous article.
As we’ll demonstrate by outlining the various duties of the Named Insured below, there’s a huge difference between a “Named Insured” and an “Additional Insured.” These terms get intermingled by parties who don’t quite grasp the nuances of this business with requests to add an entity as an “additional named insured” rolling into our office quite frequently. (For our article “Who Needs to be Additional Insured?,” click here.)
So here’s a list of the Named Insured’s rights and responsibilities under an aircraft hull and liability insurance policy.
- Bind coverage and complete the application (aka sign the “contract” with the carrier) at inception and each subsequent renewal.
- Accept or reject TRIA coverage.
- Pay the premium.
- Designated recipient of all official insurer notifications.
- Cancel the policy.
- Request policy changes.
- Approve pilots and comply with any pilot warranties.
- Control and approve aircraft use, including any non-owned aircraft and relevant reporting requirements.
- Advise of aircraft modifications.
- Advise of newly-acquired aircraft.
- Advise in advance of aircraft expected to qualify for lay-up credit.
- Submit contracts for insurer review.
- Report claims.
- Notify police for claims involving criminal activity such as thefts.
- Actively participate in the claims process (provide documentation, approve repairs, attend trials and hearings, arbitration proceedings, etc.).
- Notify insurer of anticipated extra expenses.
- Decide on any voluntary settlement offers.
- Pay any deductibles.
- Sign proof-of-loss for claims payment.
- Advise of any material changes in operations that might affect underwriting and respond to insurer suits for any failure to uphold policy terms.
As you can see, the Named Insured is not a minor detail in an aircraft insurance policy. Interestingly, “Additional Insureds” get a ton of policy protection without having to be responsible for any of the above policy provisions. Something to think about the next time someone asks to hop on your policy coverage as an additional insured.
Having a proper awareness of the Named Insured’s responsibilities goes a long way towards better understanding how your aircraft insurance policy actually works.