Aviation insurance concerns coverage for property damage to aircraft, liability of aircraft owners and operators to third parties, and liability of airport owners and operators to third parties. Aviation liability insurance, covering liability of aircraft owners and operators to third parties, may be likened to automobile liability coverage in its indemnification of aircraft owners and operators for liability to passengers and persons on the ground.

There is a standard aviation liability policy issued through Lloyd's of London that demonstrates the coverage available for the wide range of types of aircraft being operated commercially and non-commercially. The standard Lloyd's policy may have one or more of the following types of coverage included to meet the liability insurance needs of the aircraft owner or operator:

A. Third-party bodily injuries, excluding passengers;

B. Property damage;

C. Passenger liability;

D. Single limit liability for bodily injury, including passengers, and property damage;

E. Single limit liability for bodily injury, excluding passengers, and property damage; and

F. Medical payments.

Bodily Injury

Coverage for bodily injury may be separated into coverage for passengers and coverage for non-passengers in light of the practice in liability insurance policies for general aviation not to include liability to passengers. Owners of private or general aviation aircraft normally will obtain separate policies if there will be passengers on the aircraft.

For commercial aviation, passenger liability and medical payments coverage may be obtained separately or in the same policy with third party liability coverage. A typical third party or passenger bodily injury clause may broadly cover "bodily injury, sickness, disease, mental anguish or death" from an occurrence related to the ownership, maintenance, or use of an insured aircraft.

Property damage coverage normally is limited to damage to property of third parties. Coverage for damage to passengers' baggage transported by commercial aviation usually is provided separately.

Additional types of coverage to insure against risks to aviation industry interests may be obtained to meet the needs of specific policyholders. For example, a policy for the owner or operator of a corporate aircraft may include voluntary settlement coverage under which the insurer would pay up to a certain amount to an injured passenger or the passenger's estate in return for a voluntary settlement of any claim of the passenger or the estate against the insured.

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