AVMG 5090 TEST #2 QUESTIONS WITH VERIFIED
ANSWERS
Umbrella Policy - Answers - additional coverage after the policy limit is reached
1) spread the risk
2) minimize the risk - Answers - What are the 2 basic principles for insurance?
agents, brokers, and direct companies - Answers - Aviation insurance is sold in what 3
ways?
to demonstrate an attitude of "protecting the policy," taking care to avoid accidents -
Answers - What do insurers expect from the insured parties?
Endorsement - Answers - adding something to an insurance policy
Exclusion - Answers - taking something out of an insurance policy
1) pay up to their policy limits
2) defend your claim in court at their cost - Answers - What are the 2 duties of an
insurance company?
Pleasure and Business - Answers - type of insurance policy that covers flying any family
or non-customer friend without charging them; covers only personal business flying
Industrial Aid - Answers - type of insurance policy that covers the previous type plus
includes anybody associated with business who isn't paying, such as taking your boss
with you on a trip
Commercial Except Flight Instruction or Rental - Answers - type of insurance that
covers the previous types plus the transportation of passengers or cargo for hire, but
excludes commercial flight instruction or rental of the aircraft to other pilots
Limited Commercial - Answers - type of insurance that covers the previous types plus
commercial flight or rental, but excludes carrying passengers or cargo for hire
Commercial - Answers - type of insurance that covers all the previous types but
includes carrying passengers or cargo for hire; needed by full-service FBO
Special Uses - Answers - type of insurance that covers flight operations that insurance
companies believe are higher risk, such as forest fire flight, hot-air balloons, or crop
dusting planes
, inversely - Answers - Insurance premiums vary ____________ with minimum
qualifications of the pilot.
Fair Market Value - Answers - one type of coverage that the insurance company will pay
you, which is the average cost based on the current market; leads to controversy over
the "value"
Stated Value - Answers - the exact dollar amount the insurance company will pay that is
stated in the policy; puts the responsibility on the owner to keep up with the value; this is
the ideal coverage you would want
so that you aren't over-insured - Answers - Why do insurance companies require
appraisal on things that you aren't sure about the value of?
the "lower 48" - Answers - Aviation insurance policies typically cover which U.S. states?
after you completely close the sale - Answers - When should you cancel your insurance
when you sell your airplane?
Hull Coverage - Answers - type of insurance that covers the aircraft itself
1) All Risk Coverage
2) Non-Flight Coverage - Answers - What are the 2 types of Hull Coverage?
All Risk - Answers - hull coverage that covers anything that happens to the aircraft
Non-Flight Coverage - Answers - hull coverage that covers anything that happens to the
aircraft while not in flight
Lienholder's Interest 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
War Risk Exclusion Clause - Answers - broad exclusion, relieving the insurance
company from losses from war, invasion, hostile weapon detonation, hi-jacking, etc.
FAR Violation Exclusion Clause - Answers - exclusion that says if operation was in FAR
violation, it is excluded from coverage; don't accept this!
1) pre-paid legal coverage
2) loss-of-license insurance - Answers - What are 2 things you should have as a
business owner?
ANSWERS
Umbrella Policy - Answers - additional coverage after the policy limit is reached
1) spread the risk
2) minimize the risk - Answers - What are the 2 basic principles for insurance?
agents, brokers, and direct companies - Answers - Aviation insurance is sold in what 3
ways?
to demonstrate an attitude of "protecting the policy," taking care to avoid accidents -
Answers - What do insurers expect from the insured parties?
Endorsement - Answers - adding something to an insurance policy
Exclusion - Answers - taking something out of an insurance policy
1) pay up to their policy limits
2) defend your claim in court at their cost - Answers - What are the 2 duties of an
insurance company?
Pleasure and Business - Answers - type of insurance policy that covers flying any family
or non-customer friend without charging them; covers only personal business flying
Industrial Aid - Answers - type of insurance policy that covers the previous type plus
includes anybody associated with business who isn't paying, such as taking your boss
with you on a trip
Commercial Except Flight Instruction or Rental - Answers - type of insurance that
covers the previous types plus the transportation of passengers or cargo for hire, but
excludes commercial flight instruction or rental of the aircraft to other pilots
Limited Commercial - Answers - type of insurance that covers the previous types plus
commercial flight or rental, but excludes carrying passengers or cargo for hire
Commercial - Answers - type of insurance that covers all the previous types but
includes carrying passengers or cargo for hire; needed by full-service FBO
Special Uses - Answers - type of insurance that covers flight operations that insurance
companies believe are higher risk, such as forest fire flight, hot-air balloons, or crop
dusting planes
, inversely - Answers - Insurance premiums vary ____________ with minimum
qualifications of the pilot.
Fair Market Value - Answers - one type of coverage that the insurance company will pay
you, which is the average cost based on the current market; leads to controversy over
the "value"
Stated Value - Answers - the exact dollar amount the insurance company will pay that is
stated in the policy; puts the responsibility on the owner to keep up with the value; this is
the ideal coverage you would want
so that you aren't over-insured - Answers - Why do insurance companies require
appraisal on things that you aren't sure about the value of?
the "lower 48" - Answers - Aviation insurance policies typically cover which U.S. states?
after you completely close the sale - Answers - When should you cancel your insurance
when you sell your airplane?
Hull Coverage - Answers - type of insurance that covers the aircraft itself
1) All Risk Coverage
2) Non-Flight Coverage - Answers - What are the 2 types of Hull Coverage?
All Risk - Answers - hull coverage that covers anything that happens to the aircraft
Non-Flight Coverage - Answers - hull coverage that covers anything that happens to the
aircraft while not in flight
Lienholder's Interest 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
War Risk Exclusion Clause - Answers - broad exclusion, relieving the insurance
company from losses from war, invasion, hostile weapon detonation, hi-jacking, etc.
FAR Violation Exclusion Clause - Answers - exclusion that says if operation was in FAR
violation, it is excluded from coverage; don't accept this!
1) pre-paid legal coverage
2) loss-of-license insurance - Answers - What are 2 things you should have as a
business owner?
