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Insurance and the HangarBy Sandy OdebunmiI have been an aviation insurance broker for over 30 years now and have seen aircraft hangars incorrectly insured by non-aviation brokers as barns, garages, and out-buildings. There are a handful of general insurance companies in Canada that are able to provide proper coverage at affordable rates.Over the last few years we have all seen increasingly catastrophic examples of when something goes wrong and a hangar burns to the ground, sometimes taking its neighbouring units and aircraft with it.
Sometimes it’s awful but with quick and tidy results. All aircraft are insured, the hangar owner has a good policy and the payouts are made fast enough to get everyone back to regular operations as soon as possible.
But more and more frequently we are seeing tragically messy results. Hull coverage isn’t purchased, equipment and tool limits are insufficient and hangars aren’t even insured. A dozen aircraft can be destroyed in a fire and the poor soul who inadvertently started the fire didn’t even have Premises Liability.
Insurance companies, brokers, and victims have to scramble to figure out who is paying what as interruptions to businesses stretch longer and longer. This is always a particular shame as hangars aren’t even that hard to insure.
Insurance Coverage for your Property
Most hangars are not complex buildings. They are built of sheet metal siding with concrete floors and wouldn’t be too costly to rebuild. This allows insurers to charge their minimum premiums (different for every company, but usually under $1,000) to provide full coverage for the building and your equipment.
Your tools and equipment, including spare parts, can easily be added to a property insurance policy, just make sure to review the exclusions on your policy so they won’t be excluded due to aviation usage.
An Aviation General Liability policy can even have coverage for your tools and spares added, up to a certain limit.
It is extremely important to review your limits every renewal. Consider what has changed in the last year and calculate the value of everything you need to have insured. Have you installed a new door on your hangar? Did you upgrade to a new, more expensive tool kit? Did you remember to add that unlicensed pickup to your equipment coverage?
Consider all of this when you receive your renewal quotes and policies and have the limits adjusted to satisfy your needs.
I highly recommend keeping your broker updated throughout the year on changes to your equipment so they can advise you if you have enough coverage and adjust it if necessary.
If you’re not sure what exactly is covered call your broker, they should be able to take you through what coverages you have and what you may need to add.
Damage to the Property of Others
While you do have the option to pay to repair your own property, it’s usually not possible to pay for the damages to the property of others that you may be held responsible for.
This is what Premises Liability does. It even covers you while driving airside in licensed and unlicensed vehicles.
This coverage is extremely important if you own a hangar. If storm winds blow part of your hangar’s roof off and the roof hits a tied down aircraft, it’s Premises Liability that will cover the damage to the aircraft.
If a tenant in your hangar slips on ice and breaks their leg or is struck by a closing hangar door, Premises Liability will step in to pay for the damages, leaving your property insurance policy to cover repairs to the roof.
These concerns extend to hangar tenants too. If you damage another person’s aircraft, car, or boat while in the hangar Premises Liability would respond. Luckily, if you are a tenant and just have a private aircraft policy, you don’t need to buy a separate policy to cover this exposure. Many insurers already have Premises Liability imbedded in their policies or can add it for a nominal fee. Some policies will even have some coverage for your tools, avionics, and handhelds. ‘T-Hangars’
Hangars that are attached to form one structure, but are still, from occupants’ perspective, separate hangars are what we call ‘T-hangars’, and they’re where things can get a little complicated as far as insuring the building goes.
It’s a little like a condominium corporation building, with one building but multiple owners. To properly insure a T-hangar you’re going to need co-operation between the owners of each individual unit and joint property and liability insurance policies.
This is both the simplest and most cost effective method, allowing all the owners to split the premium for a ‘single’ building between them.
It is important to ensure all unit owners are listed as named insureds and loss payees with respect to their unit to ensure there is no confusion in the event of a loss.
Building a hangar
If you are building a new hangar, you still have options to get coverage. The best way is to use a builder who specializes in aviation and hangars.
They should have the right coverage in place until the construction is complete and you can purchase the required policies for yourself.
If you aren’t using an aviation focused builder, their Commercial General Liability policy may not apply if the construction is on an airport or if damage is done to an aircraft.
A standard Aviation General Liability policy, with Premises Liability, can be purchased in your name before the construction to cover any potential damages done. You can also insure the hangar itself while it is in construction. A Builders Risk Policy covers a building and materials during the building process. These policies can also be extended for the unforeseen delays that always seem to pop up.
An airport may need to be added as Additional Insured to your policy. This is a common request that can be done quickly.
This just means that if you are held responsible for damage but the airport is also named in a suit, your policy will extend to cover them as well.
Occasionally, if the airport has more conditions, such as requiring a waiver of subrogation, there could be a small fee.
If you are the hangar owner it’s also a good idea to be named as additional insured with respect to your tenant’s premises liability so you aren’t held liable for any damage they may be responsible for while in your hangar.
Non-Aviation Operations on Airports
If you are a non-aviation operation on an airport, it is vital to review your insurance policy with your broker checking the property and liability exclusions with respect to aviation.
They are there and need to be amended or deleted by endorsement to your policy. If you are held responsible for damage to anything aviation related and do not have property coverage you may personally be on the hook. Despite not operating an aviation business, you can still purchase and Aviation General Liability policy for operations as a ‘Hangar Owner’ to be sure you’re covered.
It may seem taxing to purchase new policies and coverage, but I assure you; it will be much easier and less costly in the long run if you’re faced with a catastrophic loss to have the right insurance in place.
I encourage everyone to reach out to an aviation insurance broker to discuss their options, what coverage they may already have on their policies, and if they should be an Additional Insured on someone else’s insurance.
You can also talk to your Airport Manager; they can advise on any insurance requirements the airport or city may have. That way you’re not buying unnecessary coverage.
We cannot stop fires, hurricanes, and human error, but we can make sure everyone is properly insured against them. Sandy Odebunmi has been an aviation insurance broker for over 30 years during which time she has specialized in general aviation and creating affordable solutions for her clients and aviation associations across Canada. She is now the Vice President of Aviation at Sound Insurance Services in Toronto. 416-642-6360 firstname.lastname@example.org