When aircraft owners experience a partial loss or total loss after an insured aircraft sustains physical damage, the aviation insurance provider’s claim handler begins preparing payment to the “name insured” (the policyholder and any loss payees endorsed under the policy).
As a part of that preparation of the claim payment process, claim handlers need to verify the aircraft’s ownership status with the Federal Aviation Administration (“FAA”) Aircraft Registry. If there is a total loss, a title search may also be ordered.
These steps are taken to ensure that the policyholder and all other parties with financial interest in the aircraft are accounted for in the loss payment. There are several scenarios that can create challenges for claim handlers when preparing loss payments and there is a problem in ownership determination, including:
- An individual is the named insured, but the FAA Registry lists a corporation as the owner.
- A corporation is the named insured, but the FAA Registry lists an individual as the owner.
- The aircraft was recently sold and the names of the insured and registered owner are different.
- An additional party is shown in the title report as having financial interest in the aircraft. This is typically due to a lien not having been properly released by the financial institution.
Scenarios such as those can delay the payment of the claim, which is why having the proper documentation ready is so important.
Be Prepared to Prove Aircraft Ownership
If you have an aircraft owners insurance policy, having your documentation ready before a loss can help you avoid these types of issues when making a claim. There are several simple things aircraft owners can do to get prepared in advance, such as:
- Early Documentation – Do not wait until a loss occurs to get started. Documentation of ownership should begin as early as the purchase of the aircraft and sometimes even earlier. You can order a title search to bring to light any potential title issues prior to purchase of an aircraft. Even if you have already owned the aircraft for a while, a title search now will allow you to uncover any issues.
- Maintain Contacts – If at all possible, you should keep the contact information of the previous owner of your aircraft, and ensure that your aviation insurance broker is aware of any party besides the named insured that also has financial interest in the aircraft.
- Keep Financial Records – Keeping financial records and copies that prove aircraft ownership is paramount. As a general rule, you should keep copies of the following: bill of sale, application for registration, copies of communications with the FAA’s Aircraft Registration Branch, lien release documents from financial institutions, and any other corporate documents.
Aviation Insurance Resources
Proper preparation can give you peace of mind in the unfortunate event of an aircraft accident or incident. At AIR, we have a team of highly skilled aviation insurance specialists in our corner ready to help. Contact us today to learn more about aircraft owners insurance, loss payments, proving ownership, and more.
