AVMG 5090 TEST 2 QUESTIONS WELL ANSWERED LATEST UPDATE2026
Aviation insurance is sold in what 3 ways? - Answers agents, brokers, and direct companies
True - Answers (T/F) There is no limitation of liability for your own torts.
Stages of insurance policy creation - Answers Insurance company- underwriter- agent -consumer
claims adjuster- consumer or agent
Lienholder's Endorsement - Answers when the insurance company will pay the bank the loan balance
if something happens to the aircraft that the insurance company won't insure the plane for, such as
an unqualified pilot flying a plane and crashing it, important when selling aircraft
True - Answers (T/F) The boss has the right to direct their employees but not the independent
contractors.
Lloyd's of London does what - Answers writes all insurance plans/forms
Assumption of Risk - Answers _____________ can't be used as a defense against suits brought by
injured passengers because they chose the known risk.
Insurance for workers who are injured on the job. - Answers What is Workman's Compensation?
1st Basic Principle of Insurance - Answers Spreading the Risk
exceptions to FTCA of 1946 - Answers - Claim arises in foreign country
- Combatant activity
- Activity related to military service
- Discretionary activity (opposed to operational activity)
Policy vs actions (ATC mess up)
- Intentional torts
US assumes liability for your torts on the job
If the employee gets injured on the job, then they cannot hold you liable and sue you for the accident.
- Answers What is the benefit of having Workman's Compensation for your employees?
- Spread the risk
- Minimize the risk - Answers What are the two basic principles of insurance?
Montreal Convention of 1999 - Answers Strictly liable for up to 100,000 SDRs for injury or death
Liable for the full economic value unless the airline proves NOT negligent
No punitive damages
Cargo - 17 SDRs/kg
2nd Basic Principle of Insurance - Answers Minimizing the Risk
What is Hull Coverage? - Answers damage to the airplane
Special drawing right - Answers conversion currency
- Liability = covers your liability for injuries and damage to others or their property.
- Hull = damage to your own aircraft. - Answers What are the types of aircraft insurance coverages
and their definitions?
types of hull coverage? - Answers - all risk
- all risk/ not in motion
- all risk/ not in flight
- "All risks" (expensive)
- "All risks except flight" (cheaper) = can save possibly 50% of the usual bills to insurance.
- "All risks with motion" (cheapest) = parked and not moved for any reason whatsoever. - Answers
List and describe the three forms of Hull coverages.
What is Liability Coverage? - Answers - damaging of property
- injury or death of someone
- Current Market Value
- Stated Value - Answers What are the two types of Valuation?
2 types of Valuation - Answers - current market value
- stated value
It is on the responsibility of the owner to tell the insurance company what the current value is for the
aircraft. Any modifications made that might increase or decrease the value should be understood by
the owner, in which case, it is up to the owner to tell the insurance company what the new value is, or
else it will not change. - Answers What is Stated Value?
What are the 6 types of purposes of use? - Answers - pleasure and business
- industrial aid
, - limited commercial
- commercial except instruction or rental
- commercial
- special use
True - Answers (T/F) It is more beneficial for the owner to choose Stated Value over CMV.
What is Pleasure and business purpose of use? - Answers only covers flying family and friends
Stated Value - Answers the exact dollar amount the insurance company will pay that is stated in the
policy, results in little litigation, responsibility to keep up with value of aircraft
Not going to argue unless it's obviously overvalued
True - Answers (T/F) You cannot buy a policy for more than the value that is worth.
- Pleasure + Business = business does not include any other individual with regards to said business
except for yourself.
- Industrial Aid = aircraft usage can include transportation of business execs, employees, guests, and
customers, all with no charge gained.
- Commercial Except Instruction/Rental = excludes commercial flight instruction or rental of the
aircraft to other pilots.
- Limited Commercial = excludes carrying passengers or cargo for hire.
- Full Commercial = covers every use of the aircraft.
- Special Uses - Answers What are the six "Purposes of Use"?
What is industrial aid purpose of use? - Answers transportation of business's executives, employees
and guests
What is commercial except instruction or rental purpose of use? - Answers transportation of
passengers and cargo for hire
- If the aircraft is destroyed for any reason, then the insurance company will pay back the loan
balance.
- Lien = any claim of a piece of property for payment.
- Will always be payed regardless of the presence of illegal activity by the recipient. - Answers
Describe Lienholder's Interest Endorsement.
What is limited commercial purpose of use? - Answers coverage of flight instruction and rental but
not for transporting cargo and people
- Aircraft Directives = FAR directives by which the pilot MUST adhere to with regards to their aircraft.
- Special Flight Permits can be granted by the FAA to disregard an AD for a specific purpose upon
request by the pilot. - Answers What are Aircraft Directives and what can be used to be disregarded
by them?
What is full commercial purpose of use? - Answers covers everything commercially
- Additional coverage that kicks in after the original policy coverage.
- It's a lot of risk for a little amount of money. - Answers What is Excess Liability Coverage (Umbrella
Policy)?
What is special uses purpose of use? - Answers anything the insurance company deems as high risk
- To pay up to the policy limits for losses incurred under said policy.
- To defend you in court at their total expense. - Answers What are your insurance company's duties
to you?
What is an endorsement? - Answers when you add something to a policy
-an agreement btw the a/c or a/c operator and participant in which the participant agrees not to sue
the operator of the a/c or airport if the participant is killed or injured - Answers What are Exculpatory
Contracts
What is an exclusion? - Answers when you subtract something from a policy
endorsements - Answers added to the policy (flying clients around, etc.)
True; if one airliner changes something to better improve safety for their customers, then the others
must follow or else they risk harm to their business. - Answers (T/F) All airlines have the duty of
highest care to their customers.
True - Answers (T/F) Punitive Damages are rare within airlines nowadays.
War Risk Endorsement - Answers covers damages when you fly to risky countries
What is a Leinholder's endorsement? - Answers will pay off loan if wrecked
What is an umbrella policy? - Answers liability insurance to cover after everything else has paid
Special Flight Endorsement - Answers go on ferry flight (sports team), crop dusting
True - Answers (T/F) Airlines can limit liabilities on luggage but not on lives.
Aviation insurance is sold in what 3 ways? - Answers agents, brokers, and direct companies
True - Answers (T/F) There is no limitation of liability for your own torts.
Stages of insurance policy creation - Answers Insurance company- underwriter- agent -consumer
claims adjuster- consumer or agent
Lienholder's Endorsement - Answers when the insurance company will pay the bank the loan balance
if something happens to the aircraft that the insurance company won't insure the plane for, such as
an unqualified pilot flying a plane and crashing it, important when selling aircraft
True - Answers (T/F) The boss has the right to direct their employees but not the independent
contractors.
Lloyd's of London does what - Answers writes all insurance plans/forms
Assumption of Risk - Answers _____________ can't be used as a defense against suits brought by
injured passengers because they chose the known risk.
Insurance for workers who are injured on the job. - Answers What is Workman's Compensation?
1st Basic Principle of Insurance - Answers Spreading the Risk
exceptions to FTCA of 1946 - Answers - Claim arises in foreign country
- Combatant activity
- Activity related to military service
- Discretionary activity (opposed to operational activity)
Policy vs actions (ATC mess up)
- Intentional torts
US assumes liability for your torts on the job
If the employee gets injured on the job, then they cannot hold you liable and sue you for the accident.
- Answers What is the benefit of having Workman's Compensation for your employees?
- Spread the risk
- Minimize the risk - Answers What are the two basic principles of insurance?
Montreal Convention of 1999 - Answers Strictly liable for up to 100,000 SDRs for injury or death
Liable for the full economic value unless the airline proves NOT negligent
No punitive damages
Cargo - 17 SDRs/kg
2nd Basic Principle of Insurance - Answers Minimizing the Risk
What is Hull Coverage? - Answers damage to the airplane
Special drawing right - Answers conversion currency
- Liability = covers your liability for injuries and damage to others or their property.
- Hull = damage to your own aircraft. - Answers What are the types of aircraft insurance coverages
and their definitions?
types of hull coverage? - Answers - all risk
- all risk/ not in motion
- all risk/ not in flight
- "All risks" (expensive)
- "All risks except flight" (cheaper) = can save possibly 50% of the usual bills to insurance.
- "All risks with motion" (cheapest) = parked and not moved for any reason whatsoever. - Answers
List and describe the three forms of Hull coverages.
What is Liability Coverage? - Answers - damaging of property
- injury or death of someone
- Current Market Value
- Stated Value - Answers What are the two types of Valuation?
2 types of Valuation - Answers - current market value
- stated value
It is on the responsibility of the owner to tell the insurance company what the current value is for the
aircraft. Any modifications made that might increase or decrease the value should be understood by
the owner, in which case, it is up to the owner to tell the insurance company what the new value is, or
else it will not change. - Answers What is Stated Value?
What are the 6 types of purposes of use? - Answers - pleasure and business
- industrial aid
, - limited commercial
- commercial except instruction or rental
- commercial
- special use
True - Answers (T/F) It is more beneficial for the owner to choose Stated Value over CMV.
What is Pleasure and business purpose of use? - Answers only covers flying family and friends
Stated Value - Answers the exact dollar amount the insurance company will pay that is stated in the
policy, results in little litigation, responsibility to keep up with value of aircraft
Not going to argue unless it's obviously overvalued
True - Answers (T/F) You cannot buy a policy for more than the value that is worth.
- Pleasure + Business = business does not include any other individual with regards to said business
except for yourself.
- Industrial Aid = aircraft usage can include transportation of business execs, employees, guests, and
customers, all with no charge gained.
- Commercial Except Instruction/Rental = excludes commercial flight instruction or rental of the
aircraft to other pilots.
- Limited Commercial = excludes carrying passengers or cargo for hire.
- Full Commercial = covers every use of the aircraft.
- Special Uses - Answers What are the six "Purposes of Use"?
What is industrial aid purpose of use? - Answers transportation of business's executives, employees
and guests
What is commercial except instruction or rental purpose of use? - Answers transportation of
passengers and cargo for hire
- If the aircraft is destroyed for any reason, then the insurance company will pay back the loan
balance.
- Lien = any claim of a piece of property for payment.
- Will always be payed regardless of the presence of illegal activity by the recipient. - Answers
Describe Lienholder's Interest Endorsement.
What is limited commercial purpose of use? - Answers coverage of flight instruction and rental but
not for transporting cargo and people
- Aircraft Directives = FAR directives by which the pilot MUST adhere to with regards to their aircraft.
- Special Flight Permits can be granted by the FAA to disregard an AD for a specific purpose upon
request by the pilot. - Answers What are Aircraft Directives and what can be used to be disregarded
by them?
What is full commercial purpose of use? - Answers covers everything commercially
- Additional coverage that kicks in after the original policy coverage.
- It's a lot of risk for a little amount of money. - Answers What is Excess Liability Coverage (Umbrella
Policy)?
What is special uses purpose of use? - Answers anything the insurance company deems as high risk
- To pay up to the policy limits for losses incurred under said policy.
- To defend you in court at their total expense. - Answers What are your insurance company's duties
to you?
What is an endorsement? - Answers when you add something to a policy
-an agreement btw the a/c or a/c operator and participant in which the participant agrees not to sue
the operator of the a/c or airport if the participant is killed or injured - Answers What are Exculpatory
Contracts
What is an exclusion? - Answers when you subtract something from a policy
endorsements - Answers added to the policy (flying clients around, etc.)
True; if one airliner changes something to better improve safety for their customers, then the others
must follow or else they risk harm to their business. - Answers (T/F) All airlines have the duty of
highest care to their customers.
True - Answers (T/F) Punitive Damages are rare within airlines nowadays.
War Risk Endorsement - Answers covers damages when you fly to risky countries
What is a Leinholder's endorsement? - Answers will pay off loan if wrecked
What is an umbrella policy? - Answers liability insurance to cover after everything else has paid
Special Flight Endorsement - Answers go on ferry flight (sports team), crop dusting
True - Answers (T/F) Airlines can limit liabilities on luggage but not on lives.
