Risk management

Aircraft liability

​​Contractor shall obtain at contractor’s expense, and keep in effect during the term of this contract, aircraft liability insurance with a combined single limit for bodily injury and property damage including passengers (if carrying passengers other than crew members) of not less than $________ per occurrence/aggregate.

Use when the contract involves the operation of an aircraft (including helicopters). If the contract involves the aerial application of any chemical, fertilizer, seed, or bait, add aircraft aerial application liability coverage.

Aircraft liability covers liability for bodily injury and property damage to others (i.e., injury to, or death of persons outside the aircraft as well as property damage or destruction done with the aircraft), arising out of the ownership, maintenance, or operation of an aircraft​.

Aircraft liability generally does not cover the crew. Passenger bodily injury liability is usually only required when carrying passengers other than crew members. If carrying state passengers on behalf of the state, make sure that (1) the pilot is certified to carry passengers and (2) the aircraft liability provides coverage for the passengers. Check the qualifications and certifications of the pilot.

Aviation excess liability coverage is available. It can be purchased to "follow form" (provide the same coverage) of a primary insurance policy.

Aircraft liability has a medical coverage option. If chosen, this pays regardless of fault. There is no deductible. It is intended to pay medical, surgical, hospital and funeral expenses up to the applicable limit for occupants of the airplane. Crewmembers may be included in this coverage.

Unlike many other forms of insurance, most aviation insurance is negotiated. The price for the contractor´s premium isn´t read off a chart. It is a rate arranged through a broker and underwriter. Insurance coverage is underwritten based on many guidelines, including but not limited to, claims experience, financial stability, length of time in business, length of time with current insurer, size and type of aircraft, etc.

In some cases, an excess limit of aviation liability combined with the proper primary limit can provide higher limits of protection for the contractor. This coverage relies on the underwriting already performed by the primary insurance carrier.

Helicopter insurance is more expensive than fixed-wing aircraft insurance. Helicopters represent only about 8% of the worldwide general aviation fleet, making it difficult for underwriters to "spread the risk." Also, helicopters statistically present a higher number of accidents and fatalities per flight hour than the general aviation fleet as a whole. As a result, a higher premium is required to cover the expected losses from this market segment. Helicopters operate in a unique environment (low altitude VFR with birds, wires and poles), are often used for hazardous missions (law enforcement, news gathering, sling loading) and, arguable, have a greater propensity for human error due to maintenance and flight proficiency issues.

  • Limit definitions:

If the limit of aircraft liability has no sub-limits, it is considered a "smooth" limit. A smooth limit is a limit of liability that offers a combined single limit of coverage that applies to all bodily injury and property damage claims. A specified maximum amount can be paid out for a covered occurrence in any combination - passenger bodily injury, or other person´s bodily injury and/or property damage.

When the limit has a sub-limit, the coverage is usually a combined single limit of coverage that applies to all bodily injury and property damage claims. However, a reduced or limited amount of coverage, i.e., a sub-limit, from the combined single limit of coverage is available to pay for claims resulting from passenger bodily injury

Assess the risks of the particular contract and use the Risk Assessment tool​ to determine appropriate insurance limits and risk control measures.

Ask questions such as, but not limited to: Is the area populated or rural? Are there any adverse conditions that may apply? Will all flights be conducted during daylight hours under FAA visual flight rule conditions? Or, will the activity be done at night and require instrumental flying certification? Do all of the airport lighting systems, at a minimum, have runway boundary and threshold lights? Will water dropping activities (bucket work), external (sling) transportation, or similar work be involved? Will the operations involve only crewmembers or other employees of the contractor onboard the aircraft? Or, will this activity include the carrying of passengers other than those of the contractor? Will there be state employees, other subject workers of the state, state volunteers or any other third party on the aircraft? Will all of these passengers be carried on behalf of the state? If not, at whose risk will they ride? Will the transportation of passengers be allowed at night in single engine aircraft? Is the pilot certified to carry passengers?

Aircraft aerial application liability

Contractor shall obtain, at contractor’s expense, and keep in effect during the term of this contract, aircraft aerial application liability insurance covering claims arising from spraying operations.   Coverage shall not be less than $__________________ combined single limit (alternate language if combined single limit cannot be provided: $ ____________ per person and $______________ per occurrence for bodily injury and $___________ for property damage).  This insurance requirement can also be met with an endorsement to the aircraft liability coverage.

Use in addition to Aircraft Liability whenever a contract involves the aerial application of seeds, fertilizers, or chemicals, as for agricultural purposes. Chemical coverage for aerial application may be added as an endorsement to aircraft liability coverage

Aircraft aerial application liability covers liability for bodily injury and property damage to others, caused directly by aerial application by an aircraft of seeds, fertilizers or chemicals.

The chemical application operation has specific hazards. Over spray, spraying the wrong field or area, improper application of the chemicals, use of the wrong chemicals and improper mixture of the chemicals are a few of the many concerns. Consider adding risk control measures (doc) to minimize these exposures, i.e., what controls are in place to make sure that the field or property being sprayed is contained and human access is restricted during spraying?

Aerial operators do not normally carry passengers. Therefore, aircraft liability passenger bodily injury coverage is not required. However, insure that the contractor will not carry, and the contract does not require the carrying of passengers.

Aircraft aerial application liability or chemical liability coverage is tailored to the aerial operator´s business activities. Ensure that the aerial operator has the appropriate chemical category of coverage for your activity.

  •  Chemical categories include:

XC - Seeds and fertilizers only

RC - Restricted chemica

CC - Comprehensive chemical

  •  Extensions of liability coverage for CC include:

Adjacent fields

Crops being treated. (The wrong chemical on the right field, or the right chemical on the wrong field)


Picloram (Tordon)

It is a good business practice to require pollution liability coverage for aerial application activities. Aviation coverage excludes many pollution exposures such as actual or threatened discharge, seepage, migration, release or escape of pollutants.

Assess the risks of the particular contract and use the Risk Assessment tool​ to determine appropriate insurance limits and risk control measures. ​