What happens if an aircraft is damaged while in the care of a third party?
Whether it’s your friend renting space in your hangar or a national FBO leasing space to a large corporation (and everything in between), there are certain responsibilities that come with being a “landlord.” Along with those responsibilities, certain risks and exposures are inherited as well. It’s important to know where the coverage lines are drawn in a tenant/landlord relationship. Many operators assume that because their aircraft is in the care of another party, their coverage is completely off the hook. By contrast, FBOs and service companies may think the operator’s coverage will respond to any damage to the aircraft. These respective lines of thinking beg the question — what happens if an aircraft is damaged while in the care of a third party?
The answer is rooted in the cause of the damage. It shouldn’t be assumed that if the aircraft is hangared at a rented or leased facility that the liability is always going to fall on the lessor of premises (the landlord). Likewise, the landlord shouldn’t assume that since each aircraft has its own coverage, the aircraft’s coverage will respond to repair all damages. Therefore, it’s imperative to pinpoint the origin or cause of the damage. For example, if the damage is work or service related, it will fall back on the shop performing the work. If a hangar roof collapses due to disrepair or if there’s a fire as a result of faulty wiring, the fault could lie with the landlord. What most folks don’t realize is that in virtually every other cause of loss, responsibility falls on the aircraft owner’s policy. There are several key coverages required based on which category you fall in (service/mechanic, landlord, or operator) so it is imperative to understand your exposures. Many conclusions can be drawn from this, but among the most important are the following suggestions:
- thoroughly vet your maintenance and/or service provider
- never cancel your coverage when your aircraft is grounded
- always ask for certificates of insurance from anyone who touches your aircraft
- review the insurance language in your lease agreement
If you’re a service provider or mechanic, a landlord, or an operator and feel that you may have a coverage gap, please give us a call. We’re happy to review your policy with you.