Paracfiuln tquipmnnt Industry ilssnuiatiun - Parachute Industry ...

Parachute Eguipment Industry Associ.rtionr Inc.
September 10, L982
Page TVo
milllon dollars coverage for the entire year. Al though the policy
Iirnit applies only to amounts which you become tegally obligated
to pay others as danages, and does not incLude the coit of legal
,lefense which Avemco 1s obligated to provide, a single accident
within the poliey year courd easily resul t in one rnillion clollars
in Carnages, exhausting the policy limits for the enLire year.
As 1n virtually alI insurance policies, products Iiabllity and
othervrise, Ccndition 13 on page 4 of the policy emphasizes the
importance of a compleEe and aceurate application. Avemco is
issuing the policy based on data provided by the applicant in the
Applicatlon and Risk Analysis, and nay deny:overage if the applicant
conceals or misrepresents any materlal fact. It is thereEore
extrernely lmportant Eor coverage purposes that pEIA members provide
a EuIl and accurate description of Eheir products in the application.
This description of the named insured's products apFears as iten
f3 on the Polley Data Page, and is essentiaily the basis Eor
coverage in a products Iiability policy. In that yorr and ohher
PgIA members are involveC with some non-aviation products in
addir-ion to aircraft products, the policl' s11eu16 contain a speciEic
entlorsenenE, such as your endorsement PLE-21 (I2-80), extending
coverage t.o include non-aviation products.
As with any insurance policy, the Exclusions should be reviewed
c.losely. Exclusion 117 regarding punit.ive damages is of oarticular
eoncern, and can significantJ.y conrpl icate Iegal proceetJings and
Ehe relationship between Avemcrr and the insured.
whereas :omgensatcry damages can l're awarded in produets I iabiJ, i ty
cases on the basis of strict liabiLiEy, without any neglioence or
mlsconduet on the part oE the manuEacturer or supplier of a product-,
punlt.ive damages are awarded onIT for intentional nisconrluet,
fraud or reckless disregard for an injured person's safety.
Compensatory damages are designecl to cornpensate the injured person
for actual damages, but punitive d.-rmages are intended to punish
the wrongdoer and need not. bear any actual relationship t.o the
injuries, Because o€ Ehe underlying social F,heor], of punishment,
many staLes prohibit payment of punitive darnaqes by insurance Ecr
public policy reasons. Exclusion *17 in youE policy is typicaJ.,
but can indeed result. in complications and should be oiscussed
!r i th Avemco .
lf
PIA
l-ho
is not,-rncommon in a personal i.njur'/ case for'-i:': injtlgqd
intiEf to inclucle a clain fcr e,rniF-i'/e,lamages. In such':ase,
insurance company "riI1 have a:r)ntract'ral oblic,rtron l-c le!--nci
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