Resources & Insights

Are You Carrying Enough Aviation Liability Insurance?

August 8, 2017

No one likes regulatory overreach, but the fact that Colorado doesn’t require general aviation aircraft owners and operators to buy liability insurance just doesn’t make much sense.

aviation liability insurance
CCIG’s Jeff Parent.

Colorado, it’s important to note, isn’t alone.

A recent General Accounting Office survey of state aviation officials and analysis of state statutes and regulations found that the vast majority of states do not have liability insurance requirements for GA aircraft owners and operators.

As of April 2015, the GAO said in its report, just 11 states had some variation of a liability insurance requirement or aircraft financial-responsibility requirements requiring GA aircraft owners to show their financial ability to cover potential losses incurred in an accident.

Minnesota was the only state that required almost all GA aircraft owners to have a liability insurance policy. The required minimum was $100,000 per passenger seat.

The problem isn’t that owners and pilots don’t carry liability coverage. In fact, the majority of GA aircraft owners in Colorado have it. Liability coverage is often required by any GA airport where a pilot might want to hangar their plane. And finance companies tend to require both hull and liability insurance from anyone wanting to buy an aircraft. But even those who do have liability coverage are often simply not carrying enough of it.

The GAO interviewed nearly a dozen leading aviation attorneys who said that, based on their experience, accidents involving underinsured owners or pilots are more prevalent than those where there is no liability insurance.

In other words, the aircraft owner or pilot involved in an accident had liability insurance; however, the liability insurance’s limit – often $100,000 per passenger — was frequently inadequate to compensate victims or their families in accidents involving death or serious injury.

The two most common types of liability insurance policies purchased by GA aircraft owners are those with coverages of:

  • $1 million per occurrence with a $100,000 per passenger sublimit, or;
  • $1 million per occurrence with no sublimit, aka “$1 million smooth.” (This is the policy you want, by the way, because it means you’ll have $1 million to pay any and all liability claims, no matter how many or how few people are injured.)

Premiums on these policies can start at as little as a couple hundred dollars annually, depending on a number of factors including a pilot’s experience and, of course, the type and size of the aircraft.

Whether Colorado will ever adopt a liability insurance requirement – with appropriate limits – for GA aircraft owners is, pun intended, up in the air. What is clear is that the costs borne by victims, not to mention the public, argue in favor of it.

Adequate liability coverage means victims receive compensation for at least some of their medical expenses and property damage. It also shifts the costs that now fall on society to insurers instead. And, of course, it protects the owner of the plane from court judgments that can easily climb into the millions of dollars.

Requiring GA liability insurance won’t eliminate accidents, of course. But it’s easy to imagine that pilots wanting to keep their premiums lower would take part in extra safety training. And that’s never a bad thing.

Jeff Parent is an Insurance Advisor at CCIG. He can be reached at or at 720-330-7918. CCIG’s Aviation Practice specializes in providing risk management and insurance solutions to a wide range of businesses with aviation exposures.

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