As you progress through life, your personal wealth increases as does your risk to lose it all. Fortunately, various types of insurance exist to protect your physical and monetary assets. Your insurance portfolio may begin with a small life insurance policy that was purchased for you by a grandparent. As the years tick by, that policy will be joined by auto insurance, renter’s insurance, health insurance, life insurance, home insurance, and possibly a complementary spread of other policies designed to protect you, your family, and livelihood. Add an airplane and hangar and perhaps an aircraft service center into the mix and it’s just another layer of the onion you have to manage and protect.
Managing your aviation insurance needs are not all that complicated but there exist some subtleties you should be made aware. We will take a quick look at three simple scenarios that will help you define what layers of protection you may require to protect the hangar that protects your plane.
Let’s review three scenarios where hangars are constructed on land owned by the airport authority.
- Cessna 172 owner/operator renting a hangar from an airport authority.
- Cessna 172 owner/operator who owns a large hangar with enough room to hangar transient aircraft, visiting friends’ aircraft, and/or rent space to other aircraft owners/operators.
- Small business owner who performs aircraft maintenance services in a hangar he/she owns or leases.
Surprisingly, hangar property insurance may be required even if you are renting a hangar from an airport authority. If you aren’t required to carry the policy your hangar rental rates may be higher to reflect the cost of the premiums paid by the airport authority.
This basic property insurance protects the structure from all covered causes of loss. This means the policy covers all perils except those excluded (read the fine print.) Hal Hunt, Program Manager for the National Hangar Insurance Program, states “I estimate approximately 60% of renters renting a hangar from an airport authority are required to provide insurance coverage on the building.” In addition, Hunt said “almost all” authorities require their renters to have General Liability (GL) insurance in place to protect from lawsuits based on negligence.
There exist two ways to acquire this general liability coverage. The first is through an endorsement on your property policy. The second is through an endorsement on your aircraft policy. Some caveats exist here that must be understood. In the case of an endorsement on your aircraft policy, this endorsement may only be valid wherever the aircraft is geographically located at any given moment. Hunt discussed the scenario in which a spouse is preparing the hangar for a surprise party while the other was on a trip. If during preparations, someone fell and broke their hip in the hangar, the policy would not be in effect because the airplane was not at the hangar.
All insurance recommendations in Scenario 1 should also serve as a minimum baseline for those that own hangars on airport property. Here again, the airport authority will have a direct interest in ensuring the airport’s assets are protected and land lease contracts will normally require you to name the airport authority as “additional insured.”
If you are fortunate enough to have a hangar large enough for friends to fly in for a weekend or even rent space out to other aircraft owners at the airport, then you should review your General Liability coverage and ensure you have Hangar Keepers Liability Insurance. This will ensure that you are protected if your friends’ aircraft should be damaged while being stored in your hangar (in your possession).
If you own or lease a hangar for the purposes of aircraft maintenance, all of the policies listed in Scenario 1 and 2 apply at a bare minimum. In addition, you should heavily consider three additional tiers of coverage that include the following:
- Content Coverage
- Products & Completed Operations Insurance
- Personal Property Of Others (PPO)
Content Insurance covers your tools, testing equipment, and other hardware. Products & Completed Operations Insurance covers you from lawsuits that may result from aircraft maintenance work that may be or was considered negligent. A possible example is that of faulty or negligent work performed on an aircraft that later crashed as a result. Finally, Personal Property of Others (PPO) complements “Hangar Keepers Insurance” as PPO will cover losses incurred when a customer’s aircraft component (starter/generator, governor, engine, battery, avionics, etc) is lost, damaged, or stolen while left in your care, custody, and control.
Again, this serves as a baseline and other insurances must be considered specific to your operation’s size and scope. At the end of the day, having the proper insurance in place will help you sleep better at night, and most importantly, protect your personal and business interests.
A special “thank you” to Hal Hunt, Program Manager for the National Hangar Insurance Program. He was a tremendous asset in helping deliver this content in a short and concise manor. He can be reached at Hal_hunt@ajg.com