If someone operates an aircraft that is insured by another party (e.g. a lessee leasing the aircraft from the aircraft owner or another operator of the aircraft where that lessor has an existing policy insuring the aircraft) and the lessee doesn’t obtain its own insurance coverage, one option is to be added to the existing policy as an “additional insured.” In this situation, the lessee typically receives a “certificate of insurance” that identifies the applicable insurance policy, the policy limits, coverage, that the lessee is an additional insured and other provisions that the lessee expects are included in the insurance policy.
One issue that has recently become more common than I would like arises when the certificate of insurance does not always identify the coverage the lessee/additional insured expects and needs. For example, the certificate will state that the additional insured is covered for operations by the “insured.” However, the “insured” is usually the aircraft owner or lessor who purchased the insurance policy. This means that the additional insured is covered for the aircraft owner’s or lessor’s operation of the aircraft. It does not say that coverage is extended to the lessee for its operation of the aircraft and, unfortunately, could leave the lessee without coverage.
In order to ensure that the lessee has the appropriate coverage, the certificate should also state the the insurance policy extends coverage to the lessee for its own operation of the aircraft. This way the insurance underwriter will know that the lessee will also be operating the aircraft and that the policy should cover the lessee for its operations, as well as for operations conducted by the aircraft owner or lessor.
Finally, it is important to understand that the certificate of insurance is NOT an insurance policy. Rather, it is for informational purposes to confirm information that should be in the actual insurance policy issued by the insurer. Certificate holders should always get a copy of the actual insurance policy to ensure that the information on the certificate matches what is actually in the policy. But since it takes an insurer time to issue a new or updated policy including the new additional insured, the certificate of insurance is a good place to make sure the necessary coverage will be in place once the policy is issued.
Insurance coverage is critical when you are operating aircraft. Don’t simply rely on an insurance broker’s promises that you are covered. Review the certificate to confirm that it states the terms you need included in the policy. And if you are unsure whether the certificate/policy includes what you need, contact me and I will be happy to review the certificate/policy and work with your insurance broker/insurer to make sure you are covered.
