The insurance industry took its first steps into aviation just a few years after the airplane was invented. Arrangements for insuring early airline operations sometimes were in place even before client airlines existed because of insurers’ experience with the risks of other transportation modes. More than 90 years later, however, aspects of aviation insurance that are familiar to an airline’s financial risk manager may not be as familiar to its operations risk manager, although both face challenging demands to quantify the economic value of making specific investments in safety.
The main coverages in 21st century aviation insurance policies — excluding those related to war, hijacking and other perils, including terrorism — are for partial, major partial or total hull loss, meaning damage to the aircraft; liability for injury or death of passengers; and third-party liability, meaning liability for bodily injury, death and property damage external to the aircraft. Hull losses …
