Glossary

Advertising Injury Liability
Coverage that protects against claims arising from certain offenses committed in the course of advertising your business. This may include libel, slander, copyright infringement, or violation of privacy through oral or written publication.

Aggregate Policy Limit
The maximum total amount an insurer will pay for all covered losses during a single policy term. This limit may apply to one or more types of coverage and can impact the availability of coverage for future claims within that policy period.

Aircraft Liability Insurance
Insurance that provides coverage for bodily injury (excluding passengers) and property damage resulting from the ownership, maintenance, or use of the Named Insured’s aircraft. Coverage applies to claims arising from a covered occurrence.

Aircraft Non-Ownership Liability
Liability coverage for the Named Insured while using aircraft that are not owned by or regularly provided to them. Often referred to as “renter’s insurance,” this coverage protects against liability claims arising from the operation of borrowed or leased aircraft.

Airport Premises Liability
Coverage designed to protect airport owners or operators against claims for bodily injury or property damage arising out of the ownership, maintenance, or use of airport premises.

Air Taxi and Charter Operators
Non-scheduled air carriers that provide on-demand commercial flight services for passengers and cargo.

Blanket Insurance
A single insurance limit that covers property located at multiple locations or of different types, rather than insuring each item or location separately.

Bodily Injury
Physical harm to a person, including sickness, disease, or death resulting from an insured occurrence.

Breach of Warranty (Lienholder’s Interest)
Coverage that protects a lender’s interest in an aircraft by extending physical damage (hull) insurance through endorsement. It applies when the insured breaches the policy conditions, and the insurer would otherwise not be obligated to pay.

Business and Pleasure
Use of an aircraft for personal, family, or business purposes, excluding any flights conducted for hire or compensation.

Business Auto Policy
A commercial auto insurance policy that provides coverage for physical damage to owned or leased vehicles, and liability for bodily injury and property damage that the insured becomes legally obligated to pay.

Business Income Coverage
Coverage that reimburses a business for lost income during periods when operations are suspended due to covered property damage. This includes time needed for repair or replacement of damaged property.

Cancellation, Pro Rata
The cancellation of an insurance contract, usually at the request of the insurer, prior to its expiration. The insured normally receives a refund of that portion of the premium coinciding with the percentage of the unexpired term of the policy.

Cancellation, Short-rate
When the insured requests early cancellation of a policy, a penalty is applied and the refunded premium is less than the amount that would be returned under a pro rata cancellation.

Charter (135)
The commercial operation of an aircraft in exchange for compensation, such as carrying passengers or cargo, or performing other services under a written or verbal agreement. These operations fall under FAA Part 135 regulations.

Chemical Liability
Coverage for liability claims against aerial applicators resulting from chemical releases, such as pesticides or fertilizers, during flight operations.

Coinsurance Clause
A policy provision requiring the insured to maintain coverage equal to a specified percentage (commonly 80% or 90%) of the property’s value. Failure to do so may reduce the amount paid on a claim.

Collision
Physical impact between a covered vehicle and another object or vehicle, or the upset (overturning) of the insured vehicle.

Commercial Use
Use of an aircraft for compensation, including flight instruction, rental, charter services, or other revenue-generating activities.

Completed Operations
Liability coverage for damages arising after the completion of aircraft repairs, maintenance, or installation of parts and accessories — typically part of products liability.

Consequential Loss
An indirect loss resulting from a covered event. For example, economic losses suffered by customers due to a power outage caused by damaged utility lines.

Contractual Liability
Liability assumed under a contract to pay for damages for which another party is legally responsible. This coverage extends to certain obligations agreed to in writing.

Conventional Landing Gear (tailwheel)
A landing gear configuration where two main wheels are positioned forward of the aircraft’s center of gravity, with a small tailwheel in the rear. The aircraft rests in a nose-up position when on the ground.

Declarations Page
A section of the insurance policy that lists key details about the coverage — including the insured party, policy period, coverage amounts, aircraft description, and any special conditions.

Deductible
The amount the insured must pay out-of-pocket before the insurance company pays for a covered loss.

Degree of Risk
The likelihood that a loss will occur, based on how predictable or uncertain the exposure is.

Earned Premium
The portion of the total premium that corresponds to the amount of time the policy has been in effect — essentially, the premium the insurer has “earned” for the coverage already provided.

Employers’ Liability
Coverage included in a workers’ compensation policy that protects the employer if an employee sues for work-related injuries under certain conditions, such as gross negligence.

Fixed Base Operators
Businesses operating at an airport that provide services like fuel, maintenance, flight instruction, aircraft rental and charter, hangar space, and pilot amenities.

Flying Club
An organization — typically made up of three or more members — that shares ownership or access to an aircraft to reduce individual costs. Clubs may be formal corporations or informal groups.

Fractional Ownership
A shared ownership model where multiple companies or individuals co-own an aircraft. A management company typically handles operations, staffing, maintenance, and insurance.

General Damages
Non-economic losses awarded in a lawsuit, such as pain and suffering, emotional distress, or loss of companionship and support.

Grounding Coverage
Insurance for aircraft manufacturers or product suppliers that protects against financial losses if aircraft are grounded by regulatory authorities due to a product defect.

Guest
Someone who receives transportation without payment or compensation.

Guest Statutes
Laws in some states that limit a guest’s ability to sue a vehicle or aircraft operator for injuries unless gross negligence can be proven.

Guest Voluntary Settlement
Optional coverage that offers a pre-set settlement amount for bodily injury to passengers, even if the insured is not legally liable. A signed release from the injured party is required before payment is made.

Hail Insurance
Coverage for damage caused by hail. In aviation, this is typically included as part of all-risk hull insurance.

Hangarkeepers’ In-flight
Protects a hangar keeper from liability for loss or damage to non-owned aircraft while the aircraft is in flight and in their care, custody, or control.

Hangarkeepers’ Liability
A type of bailee insurance covering a hangarkeeper’s liability for damage to aircraft owned by others while those aircraft are stored, maintained, or otherwise under their supervision.

Hazards
Conditions or activities that increase the likelihood of a loss occurring (e.g., poor weather, pilot fatigue, mechanical failure).

Hold-harmless Agreement
A contract where one party agrees to assume the liability of another. In aviation, agreements between pilots and passengers rarely hold up in court when it comes to waiving liability for injuries or damages.

Hull Insurance
Insurance that covers physical damage to the aircraft itself — including engines, avionics, and permanently installed equipment. Hull coverage may be limited to when the aircraft is on the ground (not in motion), in motion on the ground, or in flight. All-risk hull insurance provides the broadest protection.

Indemnity
The promise to compensate for damage or loss — restoring the insured to their original financial position.

Industrial Aid
Refers to corporate-owned aircraft used to transport company personnel, customers, or guests. These aircraft are typically flown by professional pilots.

Inflation Guard Endorsement
An optional policy add-on that automatically increases your insurance coverage limits over time to keep up with inflation, usually on a quarterly basis.

In Flight
The period starting from the aircraft’s takeoff roll until the end of its landing roll.

Ingestion Deductible
A special deductible applied to turbine aircraft engines for damage caused by ingesting foreign objects, such as birds or debris.

Inland Transit Policy
Covers loss or damage to your personal property while it is being transported over land by a third party.

In Motion
Refers to when an aircraft is moving under its own power or is in flight. For helicopters, this includes any time the rotors are turning.

Insurable Interest
The financial interest a person or organization has in something being insured. You must stand to lose something (like money or property) in order to insure it. In life insurance, an insurable interest must exist at the start of the policy.

Interchange Agreement
An arrangement where one company leases its aircraft to another in exchange for equivalent usage time on the other company’s aircraft. No money is exchanged — just time.

Key-person Insurance
Insurance designed to financially protect a business from the loss (by death or disability) of a crucial employee. The policy can pay benefits to the company, the individual, or their heirs, depending on how it’s set up.

Liability Insurance, Bodily Injury
Covers legal responsibility for bodily injury or death of people other than the insured. In aviation, this often includes a per-person limit and a separate per-occurrence limit, though some policies use a combined single limit.

Liability Insurance, Property Damage
Covers claims for damage caused to someone else’s property — such as buildings, vehicles, or other aircraft.

Limited Commercial Use
Refers to aircraft usage that generates income through flight instruction or rentals. This is different from full commercial use and typically has stricter limitations.

Limit of Liability
The maximum amount an insurance company will pay for a covered loss, as defined in the policy.

Lloyd’s of London
A marketplace where individual and group underwriters come together to issue insurance policies. Lloyd’s itself doesn’t insure risks — its member underwriters do, and they assume liability individually or in groups.

Loss of Use
Coverage that reimburses the insured for income lost due to not being able to use their aircraft for business purposes because of damage or a covered event.

Loss Payable Provision
A clause in an insurance policy allowing a third party — who has a financial interest in the insured property — to receive payment in the event of a loss.

Loss Ratio
A measure of an insurer’s profitability. It’s the ratio (expressed as a percentage) of claims paid and expenses to the premiums earned.

Named Insured
The person or entity specifically named on the insurance policy as the covered party.

Negligence
A failure to act with the level of care that a reasonable and responsible person would use. In aviation, this can relate to pilot decisions, maintenance lapses, or operational errors.

Non-Owned Hull (Aircraft Damage Liability)
Covers pilots who fly aircraft they don’t own — such as rented, borrowed, club-owned, or flight school aircraft — for damage to the aircraft itself. This policy typically covers the cost of repairing or replacing the aircraft.

Non-Ownership Liability
See Aircraft Non-Ownership Liability — liability insurance for pilots flying aircraft they don’t own.

Occurrence
An accident or repeated exposure to harmful conditions that causes injury or property damage, as long as it wasn’t expected or intended by the insured.

Peril
The specific cause of a loss — such as fire, theft, windstorm, negligence, or collision.

Personal Injury Liability
Covers liability from non-physical injuries like libel, slander, false arrest, or invasion of privacy.

Personal Injury Protection (PIP)
No-fault insurance coverage that pays for certain medical expenses for the insured, household family members, passengers (not family), or licensed drivers using the car with permission — regardless of who caused the accident. (More common in auto insurance than aviation.)

Physical Damage
Refers to direct, accidental damage or loss to property (like an aircraft). Does not include loss of use or reduced value after repairs.

Premium, Earned
The portion of the insurance premium that covers the expired time of the policy period. The insurer has “earned” this portion by providing coverage for that time.

Premium, Return
A refund to the policyholder of unused premium. If the insured cancels, the refund may be on a short-rate basis (with a penalty). If the insurer cancels, it’s typically on a pro-rata basis (no penalty).

Premium, Unearned
The portion of the premium that corresponds to the remaining time on the policy — essentially held on deposit to cover future risk.

Private Use Airports
Airports restricted to the owner and their invited guests. Not open to public aviation traffic.

Proof of Loss
A formal statement from the insured to the insurer with all facts needed to determine the validity and value of a claim.

Public Use Privately Owned Airports
Airports open to the public but owned by private individuals or companies. Commonly found near cities and serving general aviation.

Public Use Publicly Owned Airports
Airports owned by a government entity (local, state, or federal) and open to public use. Can range from large commercial hubs to small rural strips.

Replacement Cost
The cost to replace damaged property today with materials of similar kind and quality, without deducting for depreciation.

Risk Management
The process of identifying risks to a business and deciding the best way to manage or reduce those risks — often includes purchasing insurance.

Risk Transfer
Shifting the financial burden of a loss to another party — often an insurer — by buying insurance coverage or forming agreements.

Single Limit Legal Liability
Liability coverage that combines bodily injury and property damage into one total maximum limit for a single accident or occurrence, regardless of how many people or properties are involved.

Subrogation
The doctrine of subrogation gives the insurer whatever rights the insured possessed against third parties responsible for a loss. The insurer’s right is limited to the amount paid to the insured. To recoup the loss, the insurer must prove the wrongdoer’s liability and financial ability to pay.

Supplementary Payments
A policy provision where the insurer agrees to pay all costs incurred in preparing a legal defense for the insured in the event of a loss.

Temporary Use of Substitute Aircraft
A clause that allows the insured to use a non-owned aircraft of similar type, horsepower, and seating capacity while the insured’s aircraft is being repaired or serviced.

Territorial Limits
The geographical boundaries defined in an aviation insurance policy within which coverage is provided.

Third Party
Someone not directly involved in a contract or event but who may be affected by it.
A person other than the plaintiff or defendant brought into a legal case.

Time Sharing Agreement
The lease of an aircraft with flight crew to another party, where only specified direct operating expenses are charged—no profit is made.

Transportation Costs
A policy provision that, in the event of a partial loss, the aircraft must be transported to a repair station by the least expensive method. Some policies limit this coverage to a percentage of the insured value.

Tricycle Landing Gear
An aircraft landing gear configuration with two main wheels located behind the center of gravity and a third wheel under the nose.

Umbrella Liability Insurance
Excess insurance that provides higher limits above primary policies and may cover risks not included in basic coverage. Usually includes a large deductible.

Underwriting
The process of evaluating and selecting risks for insurance based on their profitability potential. Involves determining rates and acceptability.

Unearned Physical Damage Premium
A pro-rata refund of the unused portion of the hull insurance premium if the aircraft is a total loss.

Uninsured / Underinsured Motorists Insuring Agreement
Provides coverage to the insured for amounts they would have received from a negligent driver if that driver had adequate liability insurance.

Vicarious Liability
Liability imposed on one person for the actions of another, such as an employer being liable for the acts of an employee.

Waiver
The voluntary relinquishment of a known right, benefit, or privilege.

Waiver of Premium
A life insurance provision allowing the policy to remain in force without premium payments if the insured becomes totally and permanently disabled.

Warranty
A statement of fact made by one party and accepted as true by the other in a contract.
An agreement to compensate for damages resulting from a false statement of fact.

Workers’ Compensation Insuring Agreement
Provides insurance coverage for an employer’s legal responsibility to pay benefits and medical care to employees injured (or their dependents if killed) during the course of employment.