What is Aviation Professional Services Liability Insurance and How is it Used?
Aviation Professional Services Liability insurance (APS) affords protection for a wide range of aviation and aerospace professionals including engineers, auditors, consultants, maintenance providers, safety experts, FBOs, and aircraft sales dealers from liability stemming from allegations of professional misconduct. The APS policy does not duplicate policies that cover bodily injury and property damage, but complements them. It responds when a claim is made that the policyholder committed a “wrongful act” that arose out of rendering or failing to render professional services in connection with the policyholder’s product or work in connection with its aviation operations. The APS policy responds to economic losses other than those arising from bodily injury or property damage.
This type of insurance fills a coverage gap that has long been a source of concern for aviation and aerospace professionals. We work in a fast-paced business world where mistakes can and do happen. Unlike other professional liability policies, the APS policy pays defense costs in addition to the limits of liability, making the product even more valuable to policyholders. Many are pleased to hear that this product is available and are interested in learning about the specific protection it provides.
APS policies are not designed to afford insurance for:
- Breach of employment contracts or other contracts
- Fraudulent, dishonest, or intentional acts
- Insolvency, bankruptcy, or liquidation of the Insured
- Most loss, distortion, or erasure of computer records
Aviation Professional Services Liability Insurance Sample Scenarios
Aviation professional services liability insurance policies are among the newest types of offerings in the aviation and aerospace industry. Consequently, many aviation professionals are unfamiliar with the product. To help clarify, some commonly discussed scenarios are presented below.
Engineering Firm’s Error Results in Loss of Use Claims
An engineering firm is retained to review an airport commission’s design of a bridge over part of a taxiway at its airport. The engineering firm approves the design. The bridge is constructed in accordance with the design, but because of its height, certain aircraft cannot pass beneath it.
The engineering firm’s approval of the improper design of the bridge is a wrongful act arising out of the rendering of or failure to render professional services. The insurance afforded by the APS Policy will apply to sums that the firm becomes legally obligated to pay as damages arising from claims made by certain third parties, such as:
- owners of large aircraft who have to alter their routes while taxiing, using more fuel than in the past, and
- the airport commission, for expenses incurred by reassigning gates in an attempt to accommodate some airlines.
Note that the insurance afforded by the APS Policy will not apply to property damage suffered by an aircraft due to an unsuccessful attempt to pass under the bridge. Property damage is excluded under the APS Policy.
Inaccurate Repair Assessment Causes Claim
An aircraft dealer performs pre-purchase inspections of aircraft not in its inventory and makes service, repair, and other recommendations, but does not perform any of the work. The dealer does an inspection but fails to notify a client of an Airworthiness Directive relating to an aircraft’s landing gear. The client purchases the aircraft and soon learns of the Airworthiness Directive. The client decides to sell the aircraft but receives less than was paid.
The failure of the aircraft dealer to notify the client of the Airworthiness Directive is a wrongful act arising out of the rendering of or failure to render professional services. The insurance afforded by the APS Policy will apply to sums that the dealer becomes legally obligated to pay as damages arising from a claim made by the client for financial loss resulting from the sale of the aircraft.
Engineering Firm’s Failure to Secure Confidential Information Causes Claim
An engineering consultant provides aerodynamic calculations and CAD work related to the design and development of a new jet aircraft for a manufacturer. An employee of the engineering company leaves a folder containing confidential documents in a taxi during his journey to work. Extracts of these documents appear on a blog on the internet, forcing the manufacturer to publicly respond. The manufacturer, in turn, makes a claim against the engineering company for commercial loss stemming from the leak of confidential information.
The failure of the engineering consultant to protect confidential material is a wrongful act arising out of the rendering of or failure to render professional services. The insurance afforded by the APS Policy will apply to sums that the engineering company becomes legally obligated to pay as damages arising from a claim made by the manufacturer for financial loss resulting from the wrongful disclosure.
These are just a few examples of the exposures that aviation professionals face. Your broker or a Global Aerospace insurance expert can talk with you about your particular situation.
Learn how Aviation Professional Services Liability Insurance can Protect You
As the first company in the industry to offer this type of aviation professional services liability insurance, Global Aerospace can offer APS Policies with Limits of Liability ranging from $250,000 to $10,000,000. Multiple deductible options are available. To learn more about this innovative and important coverage, please contact us at your convenience.