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Insurance Policy Territory; Where You Are Covered – Third In A Series

By Terry Miller

Aircraft move around the world. People that operate aircraft move around the world. UAS are often put in cases and moved around the globe. It’s important that the insurance policy covering them for their activities move around with them. Transport Risk Management only issues policies that provide coverage Worldwide and with the Worldwide Territory policy provision. That means coverage will be provided anywhere in the world without any standard geographic exclusions.

Where you are covered and When you are covered are two of the most important conditions in any insurance policy. The loss must occur within the policy period and the loss must occur within the policy territory in order for coverage to be valid.

Every insured must read and understand each insurance proposal they receive and determine if the policy will provide them with the coverage they need. Not all insurance policies are the same. The fact is, they are very different. Even different policy forms issued by the same insurance company can vary greatly in their levels of coverage, conditions and coverage exclusions. It is important that all policy variables be clearly defined and understood by you -- the Insured. Ignoring details can lead to disappointing and expensive lessons after a loss has occurred.

There is no policy detail more important, and perhaps more confusing, than the covered territory of operation. Likewise there are few insurance policy details more poorly defined by the aviation insurance industry than the territory of operation and how to determine if you are operating within that territory. Recent UAS hourly insurance offerings have made that determination even more difficult.

So, Where Are You Covered Under A Policy Issued In The United States?

If you operate your aircraft only within the 48 contiguous United States, you are covered by every basic policy issued by domestic aviation insurance underwriters except the hourly insurance policy recently offered by Global Aerospace. This is where the universal similarities end.

If, you are getting ready to head to the Caribbean for your next aerial filming gig, you should stop and read your aviation insurance policy carefully. If you have changed underwriters recently, or have never paid attention to where you are covered, you may be surprised to find out that the territory your policy covers has changed, or that it differs from what you expected and does not cover you in the area you intend to operate. Different underwriters provide

different territorial coverage and the designations they use for the same geographical location may vary among them. By examining each individual policy and the actual territories covered, you can obtain a better understanding of the geographical scope of your coverage.

Worldwide Coverage – The Broadest Coverage Available

Worldwide coverage is the broadest coverage available and follows an Insured anywhere in the world without standard geographic exclusions.

Hourly One-Quarter Statue Mile UAS Coverage – The Most Limited Coverage Available Coverage is provided within one quarter mile of the place you started the flight or chose when placing coverage and no indoor operations are covered regardless of where you started the flight. No warning is given when extending your flight beyond that territorial limit and no extension is available without renewing the policy for another hour at the new location. The exact policy language is as follows: “POLICY TERRITORY: only UAS operations that take place within ______0.25 statute mile _____ of (coordinates) example: 39.490210,-105.351915 which is shown at the center of the map below:”

COVERAGE A - BODILY INJURY AND PROPERTY DAMAGE LIABILITY

(a) We will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage that occurs during the policy period and is caused by an occurrence that takes place in the coverage territory arising out of the ownership, maintenance, or use of a scheduled aircraft.

Special Exclusion Endorsements – Significantly Narrow Coverage Many insurance policies issued through Lloyds markets, Surplus Lines or Non-admitted insurers may contain the following special geographic exclusion endorsement. Geographic Areas Exclusion Clause (LSW 617G) Notwithstanding any provisions to the contrary and subject to clauses 2 and 3 below, this Section excludes any loss, damage or expense howsoever occurring within the geographical limits of any of the following countries and regions: Algeria, Burundi, Cabinda, Central African Republic, Congo, Democratic Republic of Congo, Eritrea, Ethiopia, Ivory Coast, Liberia, Mauritania, Nigeria, Somalia, The Republic of Sudan, South Sudan. Colombia, Ecuador, Peru. Afghanistan, Jammu & Kashmir, Myanmar, North Korea, Pakistan. Georgia, Nagomo-Karabakh, North Caucasian Federal District. Iran, Iraq, Libya, Syria. Yemen. Any country where the operation of the insured Aircraft is in breach of United Nations sanctions. However coverage pursuant to this Policy is granted: for the over flight of any excluded country where the flight is within an internationally recognised air corridor and is performed in accordance with I.C.A.O. recommendations; or in circumstances where an insured Aircraft has landed in an excluded country as a direct consequence and exclusively as a result of force majeure. Any excluded country may be covered by the Insurer at terms to be agreed by the Insurer prior to flight.

Standard U.S. Policy Territory - The 48 Contiguous United States and Mexico The normal aviation insurance policy applies within the 48 contiguous United States and Mexico. We know of no exceptions to this statement. There is one word of caution, however. When traveling to Mexico, the Mexican government does not recognize your policy issued by a U.S. aviation insurance underwriter. As a result, you must have proof of Mexican liability insurance in your possession, issued through a Mexican insurance company. Some U.S. underwriters purchase these certificates from a Mexican insurance company and include them with your U.S. issued policy at no additional cost to you. Some underwriters will sell this certificate to you at a premium that will just cover their cost. Others do not provide the service at all. Check with your agent if you are not sure about Mexican liability coverage.

Common U.S. Policy Territory – Non-standard But Is Becoming More Common

The basic policy territory extends to the "United States, its territories and possessions, Canada, Mexico, Bahama Islands, or while en route between these places." You can theoretically fly your aircraft from the west coast of California, to Hawaii, Wake Island, the Northern Marianas, and on to Guam on the other side of the International Date Line, because you are covered for the United States, its territories, and possessions

Canada

If you are planning a trip to Canada, your policy's coverage territory should be examined a little more closely. Nearly all aviation insurers provide blanket territorial coverage for Canada. Some underwriters do limit specific locations within Canada or Northern, Alaska

Alaska and Hawaii

If you desire to travel further north to Alaska, or west to Hawaii, you must not assume you have coverage just because these are a part of the United States. Some companies include Alaska and Hawaii in their basic policy forms, while others offer coverage only if your insurance is written on their broadest policies or by specific endorsement.

Caribbean

One of the most confusing territorial extensions is the Caribbean. This extension is now being offered more frequently now because of its popularity with many aircraft owners and its close proximity to the United States. Although most underwriters will include the Caribbean, many only do so through endorsement at the request of the Insured for each trip.

The Caribbean; What Is Included?

When it comes to the Caribbean, the policy coverage territory can become confusing and is often poorly defined. Several underwriters extend coverage in the basic policy, and others through endorsement, to include the "Caribbean" or "Islands of the Caribbean." The problem with the wording of such a coverage territory is that the geographic definitions in most policies are vague or non-existent. In common usage, "Caribbean" is used to refer to a large geographic area or culture. The Caribbean area can be construed to be any geographic entity bordering on the Caribbean Sea. Does this include just the islands, or is the coast of Central America or South America included as well?

It is obvious that underwriters do not intend for the policy coverage territory to be so vague as to allow you to island hop your Cessna 182 or drone all the way to Venezuela. By many textbook definitions, however, Venezuela and Columbia are in the Caribbean, although they are geographically part of South America.

A policy that lists a coverage area as the "Islands of the Caribbean" is more defined. Obviously, the underwriter in this instance intends for the coverage territory to include only those islands that border on, or are in, the Caribbean Sea. This coverage territorial definition, if taken literally, would exclude the Bahamas, which are technically in the Atlantic Ocean. As a result, if not included in the basic policy, the Bahamas must be specifically included. Many underwriters, do include the Bahamas as a specific territory covered in their basic policy keeping in mind that it may not be automatic.

Central and South America or Western Hemisphere

For trips to Central America or South America, a territorial extension for the Western Hemisphere is usually required. The textbook definitions of a hemisphere may differ from what the insurance underwriters designate as a hemisphere. Geographically and geometrically, passing a plane through the center of a sphere creates a hemisphere. A plane passing through the center of the earth at the Prime Meridian (0 degrees longitude, at Greenwich, England), creates the Eastern and Western Hemispheres.

Geographically, the Western Hemisphere covers an area from 0 degrees to 180 degrees west longitude, or the International Date Line. The Eastern Hemisphere is from 0 degrees to 180 degrees east longitude. When an underwriter unwittingly includes a territorial extension for the Western Hemisphere without a definition, technically they are including part of Europe in the territorial extension. Some large, well-known cities, such as London, Madrid, Dublin, and Belfast, as well as a large portion of eastern Africa, lie west of the Prime Meridian. As a result, the more astute underwriters that issue coverage for the western hemisphere usually outline what constitutes the area of coverage, and most do not consider Europe or eastern Africa to be in the Western Hemisphere. As an example, U.S. Specialty Insurance Company expands coverage to the Western Hemisphere with the following wording: "Western Hemisphere means North America, Central America, South America, Hawaii, Bermuda, West Indies (Greater and

Lessor Antilles), and all other islands and waters which are within 500 miles of the shore line thereof, and Greenland or while enroute between these points, but excluding Cuba." As you can see, this endorsement excludes coverage for Europe.

Confused?

If you are unclear as to the exact definition of the territory included in your policy, you should request confirmation of coverage to specific locations before flying your aircraft anywhere outside of your country of domicile.