Hangarkeepers Liability - a powerful coverage but one most aircraft owners are not familiar with. Having a general working knowledge of this coverage is a tool you should have in your arsenal.
A definition of Hangarkeeper’s Liability (HKL) is in order. In layman’s terms it covers an insured’s legal liability for damage to a non-owned aircraft in the insured’s care, custody, or control. Generally this coverage is carried by commercial aviation businesses such as FBO’s, Aircraft Repair Facilities, and Airport Operators but is also carried by corporate flight departments (you allow a board member to store their aircraft in your hangar while in town).
A recent loss will help illustrate. A pilot called to report a large dent he had discovered during pre-flight on the vertical stabilizer of his King Air 350. The flight was cancelled and a charter flight had to be arranged for the owner. The aircraft was housed in a large community hangar operated by a brand name FBO. The pilot notified the FBO the damage had to have occurred in their hangar since the damage was not there during their last flight. The FBO stated they would investigate but suggested the pilot also turn the claim into their own insurance company. The FBO interviewed their linemen and service personnel and lo and behold, none recalled any scenario where they could have damaged this aircraft. After some sleuthing of his own, our pilot discovered the horizontal stabilizer of another aircraft that lives in the same hangar, happened to intersect at the exact height of the dent in the vertical stabilizer of his KA350. His theory: a lineman pushing the other aircraft into the hangar banged it into his. Unfortunately it remained a theory without proof. His insurance company paid for the damage with the following negative consequences: 1. The loss now resides with the aircraft owner’s loss history potentially impacting his future insurance program. 2. The aircraft owner does not get paid for any loss of use or diminution of value. 3. Lost time dealing with the aircraft repair process.
In fairness to FBO’s and Repair Facilities, many aircraft owners are also some of their best based customers and they are motivated to make them happy. When one of these customers “notifies” the FBO they have discovered damage to their aircraft and expect the FBO to take care of it, many well-meaning but uninformed facilities manager tell the customer they have insurance coverage that will respond - which is true - but remember its liability coverage. If it cannot be shown the FBO’s negligence caused the damage while it was in their care, custody, or control, it will not respond. How does the FBO know the aircraft wasn’t damaged at another airport while on a trip?
Neither party wants their insurance to be responsible because of the impact to their insurance programs. Unless, there is clear liability on the part of the FBO, it is considered best practice for both parties to turn the claim into their respective insurers for action. Generally the aircraft owner’s insurance company will pay to repair the direct damage and then subrogate (or go back against) the FBO’s insurance if they feel the FBO’s negligence caused the damage. The FBO’s insurer will then either agree and reimburse the owner’s insurer for the repair cost, or if they don’t feel their client (FBO) was negligent, deny liability and refuse to pay. That puts the ball back in the aircraft owner’s court whose insurance company must now decide whether it make sense economically to sue the FBO for damages and let a court of law decide, or drop it. This will all depend on how compelling the evidence against the FBO and how large the claim amount to potentially be recovered.
Perhaps the biggest elephant in the room is the diminution of value to the aircraft due to damage history, and loss of use claims. If the FBO is found to be negligent and their insurance responds, their hangarkeeper’s liability typically covers diminution of value/loss of use claims (assuming you didn’t sign away your rights in a hangar agreement). Otherwise, the owner’s insurance policy must respond and as mentioned previously, there is no coverage for diminution of value or loss of use under an aircraft hull & liability policy.
Neither party wants these losses to occur. Many FBO’s now utilize cameras on their ramps & shop areas for protection. The pilots for aircraft owner’s must remain keenly vigilant in every pre-flight looking for any damage to their aircraft or run the risk of having to eat a claim that wasn’t really theirs. Contact your AssuredPartners Aerospace team for guidance if you find yourself in this situation.
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