A New Way of Flight Training… - American Bonanza Society

Insurance By John Allen
Premises Liability
As aircraft owners, when you think about liability you probably
think about aircraft insurance or passenger liability coverage.
But you also need to be aware of the potential liability issues
associated with owning or leasing a hangar. If you have signed
a lease for a hangar or tie-down space recently, you probably know what I am
talking about. Most hangar contracts require the tenant to carry coverage for
liability arising out of their use of the premises. This coverage is commonly
referred to as “Commercial General Liability,” “General Liability,” or “Premises
Liability.” Although each of these terms covers slightly different things, the
lessor is basically requiring the tenant to have coverage if someone is injured
(or something is damaged) while on the airport premises due to the
negligence of the tenant.
The reason for a landlord / lessor
to require this coverage is fairly
straightforward. Just as a high-rise
building owner cannot possibly be
responsible for everything its tenants
do, neither can an airport owner
(or manager) be responsible for the
actions or negligence of its tenants.
Airport managers should carry liability
insurance that will cover them against
liability arising from their negligence,
but if that protection were extended
to cover the actions of their tenants,
the likely frequency of claims would
drive their premium to a point where
the policy could no longer be afforded.
In order to manage this risk, their
attorneys and risk managers write
lease agreements that address this
problem. In these leases, the tenant
is usually required to carry premises
or general liability coverage that will
cover liability arising out of their use
of the airport. The lease will sometimes
require that the landlord be named as
an additional insured on the tenant’s
policy and might also include a hold
harmless and indemnity provision.
By taking these steps, the landlord
has 1) made sure you have liability
protection, and 2) made sure he
or she will be defended along with
you on your policy with respect to
liability arising out of your actions or
negligence. If they (landlords) are
found to be at fault, then it is their
insurance policy that should respond.
When confronted with this situation,
it is important that you send a copy of
the (unsigned) lease to your agent so
that they can make sure your coverage
is appropriate and issue the necessary
certificates. Generally, a copy of the
contract will be forwarded to the
underwriter, so they have a chance
to object to any wording that might
conflict with the policy.
We have seen many of these
contracts go past the point
of fairness. Many will require
blanket hold-harmless and
indemnification clauses that are
completely one sided and might even
apply to past pollution of the premises
that you did not know about. These
items can normally be negotiated out
of the contract, if you address them
before you sign the contract. Your agent
26 AMERICAN BONANZA SOCIETY JANUARY 2012