DEFINITION of 'Aircraft Insurance'

Insurance that provides liability and property coverage for aircraft. Aircraft insurance, also called aviation insurance, can be purchased for a number of different types of aircraft, including standard, experimental, and vintage aircraft, as well as seaplanes.

BREAKING DOWN 'Aircraft Insurance'

Just as boat owners may purchase a boat owner insurance to protect against damages to their boat or watercraft, so too can aircraft owners protect their property from damage.

The type of coverage and the amount of premium depends on the type of aircraft that is being covered by the policy. Insurers may find aircraft that the owner has built at home (referred to as home built aircraft) to carry more risk than aircraft purchased already assembled. Some policies provide first flight coverage for aircraft that are built at home.

Aircraft insurance policies may provide coverage for a variety of different risks that an aircraft owner and operator may face. The policy may provide coverage for the personal items of passengers, as well as liability indemnification for the hangar that the aircraft is stored in. Insurance policies may provide for injuries sustained while operating the aircraft, the cost of emergency landings, as well as the costs associated with search and rescue operations.

Insurance companies may provide different levels of coverage depending on whether the aircraft is being used for pleasure or for commercial purposes. An aviation business may need coverage if it provides flight training services. A financial company may purchase aircraft insurance for its fleet of corporate jets.

Some insurance companies will also provide insurance coverage for aircraft that is rented by the operator rather than owned, since the operator could be liable for thousands of dollars in damage if something were to happen to the aircraft. Aircraft insurance is also available to organizations, such as flying clubs, in which members may share in the use of one or more aircraft.

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