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Insurance and liability

  • arrow-right Cape Town Convention chevron-down
    • arrow-right Ratification and implementation
    • arrow-right Compliance with the Cape Town Convention
    • arrow-right CTC economics
    • arrow-right The International Registry
  • arrow-right GATS chevron-down
    • arrow-right GATS timing
    • arrow-right GATS guidance, e-terms and instruments
    • arrow-right GATS transitional forms
    • arrow-right Transitioning from a Wells Fargo trust to a GATS trust
    • arrow-right Other historic documentary projects on facilitating aircraft transfers and standardization of aircraft financing documents
  • arrow-right Cross border transferability chevron-down
    • arrow-right AWG objectives and contributions to XBT-related improvements
    • arrow-right ICAO XBT task force
    • arrow-right Working relations with others on XBT
  • arrow-right Export credit chevron-down
    • arrow-right AWG Principles on Export Credit
    • arrow-right Main Features of the 2011 Aircraft Sector Understanding
    • arrow-right Submissions to the OECD
    • arrow-right Current Pricing under the 2011 Aircraft Sector Understanding
  • arrow-right Banking regulation (capital requirements) chevron-down
    • arrow-right Historic positions
  • arrow-right Air navigation and airport charges chevron-down
    • arrow-right Risk allocation
    • arrow-right Risk mitigation
    • arrow-right Risk management
  • arrow-right Accounting
  • arrow-right Environmental
  • arrow-right Insurance and liability chevron-down
    • arrow-right General principles
    • arrow-right War-risk and aviation terrorism
    • arrow-right Historical documents

Insurance and liability

AWG monitors, and assess the effect of, liability rules and insurance practices that may adversely affect aviation financing and leasing.

AWG has been a main driver behind efforts to improve insurance cover for financiers and lessors and works to ensure that they are not liable for damages caused by other parties in the aviation sector. 

General principles

AWG’s work on liability and insurance is based on these principles:

  • airlines operate aircraft on a ‘net’ basis, meaning that they, rather than lessors / financiers, assume operational risk, which they are best positioned to control and insure
  • lessors / financiers are entitled to the proceeds of insurance in connection with physical loss of, and other damage to, the aircraft (typically above a de minimis threshold)
  • lessors and financiers benefit from insurance cover related to the airline’s underlying insurance policy

AWG has prepared a memorandum on the topic. It is titled, ‘Memorandum on Aviation Insurance in the context of Financing and Leasing’. 

AWG has submitted legal briefs, including to the US Supreme Court, on questions of liability of lessors and financiers.

War-risk and aviation terrorism

AWG has been a leader in the development of thinking and policy in the field of terrorism liability (and insurance) since the events of September 11. 

The economics of the aviation sector, the role of governments in the approval of anti-terrorist aircraft design, and general principles, collectively require that aircraft owners/lessors, financiers and manufacturers bear no legal liability for losses resulting from acts of aviation terrorism and other war risks. 

AWG was actively in securing government cover for war-risk and aviation terrorism when markets restricted insurance.  It also was a principal negotiator of post 9/11 liability rules, which moved away from strict liability towards systems that reflect the economics surrounding these risks and exposures.

Historical documents

In 2 May 2009, a diplomatic conference adopted the final text, as well as a related text on general third party liability . AWG published an article prepared by the AWG secretariat that provides a lessor, manufacturer and financier’s perspective on the final texts.  Should the text on general third party liability gain support, AWG will revise and review its position on the matter.

Neither of these instruments, however, has gained support to date. The terrorism / unlawful interference treaty may prove useful in due course. 

Our projects

Cape Town Convention (CTC)
Global Aircraft Trading System (GATS)
Cross-border transferability
Export credit
Banking regulation
Air navigation and airport charges
Accounting
Environmental
Insurance and liability

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