Welcome back to the Aviation Insurance Blog! Today we are going to talk about the three most common reasons that aircraft claims are denied. This information may prove helpful in the future if you’re ever filing a claim under your policy. The three reasons can be related to the pilot requirements, policy territory, and purpose of use. These “three p’s” are the exclusions that we should be looking out for in aircraft insurance policies.
When it comes to aircraft, insurance companies want to ensure that a properly qualified pilot is at the controls. In order to do this, they approve pilots by one of two methods; either by specifically reviewing their pilot experience forms or by providing an open pilot warranty (also known as an open pilot clause). This clause states that pilots who meet or exceed those written requirements can pilot the aircraft, and coverage would still be in effect. In addition to those requirements, for many high-performance aircraft, there are also training requirements. An individual could be approved, named on the policy, and meet all the open pilot warranty requirements but not have the necessary training within the last twelve months. It is critical to ensure that anyone piloting your aircraft meets the pilot requirements and training requirements at the date of the flight. Pilot requirements being violated are one of the top reasons aircraft insurance claims are denied.
The second reason is the policy territory. Aircraft have an allowed territory in which they are covered. Some of those territories are worldwide (excluding those countries that are on the OFAC list), some just say the United States, and some say the United States, Mexico, Canada, and the Caribbean. So, if you’re flying anywhere outside of the United States, you need to make sure that you know what the policy territory is for your aircraft insurance in order to avoid getting a denied claim.
The third most common reason for denied claims lies in the purpose of use. Each aircraft insurance policy has a defined purpose of use. A very common purpose is pleasure and business use. Each insurance company has a slightly different definition of pleasure and business use described in their policies. Some include any personal or incidental business where no charge is made. Some may say the same thing; however, they indicate that no charges are made other than reimbursement for the direct fuel and oil and hangering. This application of pleasure and business use provides some reimbursement, but only for those costs directly related to the flight. It’s always important to know that how you’re operating the aircraft meets the definition of the purpose of use within the policy. Just because you have an aircraft insurance policy doesn’t mean every activity will be covered. So, with every policy, you must be sure that the purpose of use is clear and that the things you are using the aircraft for are covered.
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