Insurance Basics

Insurance is a formal means of protection from a loss. It is considered risk management to ensure losses incurred do not result in detrimental damage to your organization. When a policy is purchased, the provisions of the policy will dictate what is covered, the deductible amount, and the costs or premium of the policy. Insurance brokers should be consulted prior to purchasing any coverage.

Airports should strive to be self-insured when possible. This involves having either cash or liquid assets set aside to cover losses. A cost-benefit analysis should be conducted to see which is more economical. ^[1] Kenton, W. (2021, February 07). Self-insure definition. Retrieved February 24, 2021, from https://www.investopedia.com/terms/s/self-insure.asp ^[2]Airport Cooperative Research Program., National Research Council (U.S.)., & United States. (2011). ACRP report 30: Airport Insurance Coverage and Risk Management Practices. Washington, D.C: … Continue reading

Common Risks to Airports

In a litigious society, protection from loss includes liability and lawsuits in addition to accidents and losses. Airports are unique operations but feature many common threats and risks. In terms of risk management, most airports face the same general risks.

• Natural disasters
• Destruction of vital information
• Cybersecurity
• Accidents and Death
• Crime and Theft
• Terrorism
• Safe and secure facilities

Risk Mitigation

To mitigate risks to patrons, employees, and tenants, airports should strive to reduce the threats through programs to offer better protection, policies, and through securing insurance coverage. Some of the greatest ways to mitigate the risks involve complying with federal regulations. This includes meeting the FAA Title 14 CFR 139 for certificated airports and TSA Title 49 CFR 1542 for security. Other methods that can be used for risk mitigation include risk analysis, inspections, training, communication, and requiring all tenants to have coverage in their contracts.

Coverage Types

Honestly, someone will insure anything you’re willing to pay for. Common insurance coverage for aviation includes:

• Commercial General Liability (CGL)
• Hangar Keepers Liability
• Premises Liability
• Product Liability
• Automobile Coverage
• Cybersecurity
• Professional Liability
• Travel Accident
• Crime and Theft
• Workers Compensation

Tenants

Airports should ensure that their tenants have adequate coverage to operate within the airport. This includes general liability, but also for other applicable issues that the tenant may face. It is common for the airport to be named on the policy as well to ensure coverage and protection. In some situations, the airport may seek coverage for protection in the event that the tenant’s insurance doesn’t fully cover a loss. This is typically addressed in the tenant’s lease agreement.

Insurance Premiums

Premiums have several factors that affect their costs. According to Chubb, four leading factors include what you do, where you are, where you operate your business, and your claim history. ^[3] https://www.chubb.com/us-en/businesses/resources/4-factors-that-affect-how-much-youll-pay-for-business-insurance.html

Conclusion

Insurance is a necessary expenditure to an extent. When able, you should consider self-insurance options by conducting the cost-benefit analysis to ensure it makes financial sense. Always seek professional guidance from an insurance broker and attorney before agreeing to a policy.