A practical guide to real-world scenarios where errors, misrepresentation, and missed regulatory requirements led to claims against aviation professionals.
By Melanie Daglish, Director of Aviation at ITIC
In the first edition of this blog the idea that professional indemnity (“PI”) insurance should be seen as essential cover for the aviation sector was introduced. It was explained that any party who acts in a professional capacity owes a duty of care to their clients, and that should the services provided fall short of the tortious duty to exercise reasonable skill and care, the law will hold the services provider accountable for any consequential losses.
You may be thinking that this is all great in theory, but in practice, you just don’t see it happening. The aircraft is insured, and the remaining matters should be resolved accordingly, correct? Well, if this is you, continue reading. ITIC currently insures over 300 aviation professionals worldwide. The types of claims we see will vary depending on what the assured does and where they are based, although there are some questions that come up time and time again. Did a technical oversight cause the AOG, and if so, does that make the surveyor or CAMO liable for the lost charter revenue? Did the broker use their best endeavours to represent faithfully the aircraft and manage client expectations?
Whilst the aircraft’s insurance is there to deal with claims stemming from the operation of the aircraft, a PI policy will respond to claims for lost revenue, additional costs and reputational damage when these are alleged to have resulted from an error on your part. It’s important that any matters that do arise are dealt with swiftly, and properly. As the insurer, ITIC is there to fight the assured’s corner. It’s not sufficient for a claimant to show that our assured acted negligently. They must also show that the losses that are being claimed stem from this negligence and that those losses are reasonable in the circumstances.
For example, an air charter broker arranged the transport of cargo on behalf of a freight forwarder; however, when outlining the options to the forwarder they mistakenly quoted the aircraft’s total cargo hold volume rather than the usable volume. The result was that the forwarder tried to move more cargo on the aircraft than was actually loadable, and they then had to arrange alternative air transport for the excess cargo at short notice. The exporter sued the freight forwarder, and the freight forwarder sued the broker for negligent misrepresentation of the aircraft’s carriage capacity. ITIC settled the matter at an amount of US$85,000, which covered the exporter’s additional transport costs. The costs of the assured’s legal defence were also covered. The matter was settled swiftly and discreetly outside of legal proceedings; had these been commenced, both the losses being claimed and the defence costs would have increased significantly.
However, it’s not only the charter brokers who can get it wrong. A Challenger 850ER missed critical wiring checks during its 96-month inspection, as the CAMO had failed to include these tasks in its maintenance tracking system. The aircraft was then repositioned and grounded for corrective work. Once completed, owners claimed against the CAMO for ferry flight costs (€19,000), inspection costs (€130,000) and consequential lost revenue. ITIC negotiated a settlement limited to the missed inspection costs, and once the CAMO had paid this amount to the owner, we reimbursed them in accordance with policy terms and conditions.
So, what can you take away from these examples of things going wrong? Firstly, as with most things in life, the devil is usually in the detail, therefore, verify technical specifications and confirm regulatory compliance before you commit to your clients, even if you are 99% sure that you are correct and pressured for time. Dealing with the consequences of it going wrong will be far more costly in terms of both money and time (and your own sanity). Secondly, where issues arise, deal with them properly and get some distance from the matter; sometimes it’s better for there to be a third party involved in the dispute resolution process to ensure objective handling and resolution. Having appropriate PI cover can make a tangible difference here; after all, situations like these are why you are insured. If you want to find out more about real-world case studies and learn how PI insurance can protect your business from costly errors, email itic@thomasmiller.com
E&O claims in general aviation – and how to avoid them
A practical guide to real-world scenarios where errors, misrepresentation, and missed regulatory requirements led to claims against aviation professionals.
By Melanie Daglish, Director of Aviation at ITIC
In the first edition of this blog the idea that professional indemnity (“PI”) insurance should be seen as essential cover for the aviation sector was introduced. It was explained that any party who acts in a professional capacity owes a duty of care to their clients, and that should the services provided fall short of the tortious duty to exercise reasonable skill and care, the law will hold the services provider accountable for any consequential losses.
You may be thinking that this is all great in theory, but in practice, you just don’t see it happening. The aircraft is insured, and the remaining matters should be resolved accordingly, correct? Well, if this is you, continue reading. ITIC currently insures over 300 aviation professionals worldwide. The types of claims we see will vary depending on what the assured does and where they are based, although there are some questions that come up time and time again. Did a technical oversight cause the AOG, and if so, does that make the surveyor or CAMO liable for the lost charter revenue? Did the broker use their best endeavours to represent faithfully the aircraft and manage client expectations?
Whilst the aircraft’s insurance is there to deal with claims stemming from the operation of the aircraft, a PI policy will respond to claims for lost revenue, additional costs and reputational damage when these are alleged to have resulted from an error on your part. It’s important that any matters that do arise are dealt with swiftly, and properly. As the insurer, ITIC is there to fight the assured’s corner. It’s not sufficient for a claimant to show that our assured acted negligently. They must also show that the losses that are being claimed stem from this negligence and that those losses are reasonable in the circumstances.
For example, an air charter broker arranged the transport of cargo on behalf of a freight forwarder; however, when outlining the options to the forwarder they mistakenly quoted the aircraft’s total cargo hold volume rather than the usable volume. The result was that the forwarder tried to move more cargo on the aircraft than was actually loadable, and they then had to arrange alternative air transport for the excess cargo at short notice. The exporter sued the freight forwarder, and the freight forwarder sued the broker for negligent misrepresentation of the aircraft’s carriage capacity. ITIC settled the matter at an amount of US$85,000, which covered the exporter’s additional transport costs. The costs of the assured’s legal defence were also covered. The matter was settled swiftly and discreetly outside of legal proceedings; had these been commenced, both the losses being claimed and the defence costs would have increased significantly.
However, it’s not only the charter brokers who can get it wrong. A Challenger 850ER missed critical wiring checks during its 96-month inspection, as the CAMO had failed to include these tasks in its maintenance tracking system. The aircraft was then repositioned and grounded for corrective work. Once completed, owners claimed against the CAMO for ferry flight costs (€19,000), inspection costs (€130,000) and consequential lost revenue. ITIC negotiated a settlement limited to the missed inspection costs, and once the CAMO had paid this amount to the owner, we reimbursed them in accordance with policy terms and conditions.
So, what can you take away from these examples of things going wrong? Firstly, as with most things in life, the devil is usually in the detail, therefore, verify technical specifications and confirm regulatory compliance before you commit to your clients, even if you are 99% sure that you are correct and pressured for time. Dealing with the consequences of it going wrong will be far more costly in terms of both money and time (and your own sanity). Secondly, where issues arise, deal with them properly and get some distance from the matter; sometimes it’s better for there to be a third party involved in the dispute resolution process to ensure objective handling and resolution. Having appropriate PI cover can make a tangible difference here; after all, situations like these are why you are insured. If you want to find out more about real-world case studies and learn how PI insurance can protect your business from costly errors, email itic@thomasmiller.com
