Contract Out of Scope? We Can Help
What if I sign a contract that obligates me to things outside the scope of my insurance policy?
As commercial operations go, it’s part of the day-to-day business to bid on jobs. For every job, there inevitably exists a laundry list of insurance requirements with which the vendor wants you to comply. Often compliance with said requirements means coverage modifications are necessary. We’ve seen a significant increase in the need for contract/insurance provision review, and it’s something we don’t mind doing at all. In some cases, we can even negotiate the requirements down, so you don’t have to incur any additional cost to comply!
Most contracts relating to your aircraft contain insurance and/or hold harmless/indemnification clauses. Signing these agreements contractually obligates you to comply with the provisions they contain. If the insurance-related stipulations fall outside the scope of your coverage, the assumed risk becomes yours. Not good. All agreements, including purchase agreements, bank loan agreements, maintenance/FBO contracts, hangar agreements, charter agreements, etc., should be reviewed by appropriate legal counsel with a copy sent to your insurance agent to review from an insurance perspective. Hold harmless agreements can be particularly troublesome. Part of our jobs as agents is to make sure that your coverage is compliant and, if it’s not, to point out the deficiencies so there aren’t any unknowns, gaps, or gray areas. As always, it is best to send a copy of every lease and contract to your agent. The last thing anyone wants is voided coverage on a technicality.