When it comes to your aviation insurance policy, you have probably heard the terms “Named Insured” and “Additional Insured.” Although these terms can mistakenly be used interchangeably, it is important to understand how to differentiate them when it comes to your aviation insurance coverage.
So, who is actually a “Named Insured?” Essentially, a “Named Insured” is the entity that owns the insurance policy. A “Named Insured” is based on which parties have insurable interest in the risk presented. These can include one or multiple entities, which will be listed on the Declarations page of the insurance policy.
For example, the “Named Insured” can include one or more of the following:
- The Owner of the Aircraft or Aviation Operation (Individuals, Limited Liability Companies, Corporations, Government Entities, etc.)
- Stockholders
- Subsidiaries
- Affiliated Companies
- Parties that have financial interest
The entity and/or entities that are listed as a “Named Insured” will have the broadest form of protection in the insurance policy, and will also have the responsibilities of a “Named Insured,” which includes completing all applications, choosing coverage types, paying premiums and deductibles, reporting claims and advising of any changes that occur within the policy period.
An “Additional Insured” is an entity that may be added to your insurance policy via endorsement. Commonly, there is a contractual agreement in place that requires them to be listed as an “Additional Insured” under your policy.
Examples of entities that may ask for this coverage under your insurance policy include:
- The owner of the hangar where you store your aircraft
- The airport owner that owns the airport where your aircraft is hangared
- A charter customer, charter operator, or charter broker
- A flight school that provides pilot services for you or your pilots
- A Lessee of your aircraft
An “Additional Insured” does not share the responsibilities of the “Named Insured” mentioned above, however, they share some of the liability coverages under your policy, which is why it is important to limit the additional insured entities listed on your policy. Understand that you are sharing your liability limit with additional insureds noted on your policy.
In the event of a loss, it is crucial to understand and be able to differentiate a “Named Insured” vs. an “Additional Insured,” so that you can better understand your aviation insurance coverage and be better prepared for the conversations that will arise. To learn more about protecting your aircraft, contact the AssuredPartners Aerospace
