CHAPTER II--OFFICE OF THE SECRETARY, DEPARTMENT OF TRANSPORTATION (AVIATION PROCEEDINGS)

[Code of Federal Regulations]

[Title 14, Volume 4]

[Revised as of January 1, 2004]

From the U.S. Government Printing Office via GPO Access

[CITE: 14CFR205]

[Page 17-21]

                     TITLE 14--AERONAUTICS AND SPACE

   CHAPTER II--OFFICE OF THE SECRETARY, DEPARTMENT OF TRANSPORTATION 

                         (AVIATION PROCEEDINGS)

PART 205_AIRCRAFT ACCIDENT LIABILITY INSURANCE

Sec.

205.1 Purpose.

205.2 Applicability.

205.3 Basic requirements.

205.4 Filing of evidence of insurance.

205.5 Minimum coverage.

205.6 Prohibited exclusions of coverage.

205.7 Cancellation, withdrawal, modification, expiration, or replacement 

          of insurance coverage.

205.8 Cargo liability disclosure statement.

    Authority: 49 U.S.C. Chapters 401, 411, 413, 417.

    Source: ER-1253, 46 FR 52577, Oct. 27, 1981, unless otherwise noted.

[[Page 18]]

Sec.  205.1  Purpose.

    This part contains the rules for aircraft accident liability 

insurance coverage needed by U.S. direct air carriers to obtain or to 

exercise authority from the Department to operate in interstate or 

foreign air transportation, and by foreign direct air carriers to 

operate under permit or other authority in foreign air transportation. 

It further requires a disclosure statement to shippers about cargo 

liability limits and insurance coverage for U.S. and foreign direct air 

carriers.

[ER-1253, 46 FR 52577, Oct. 27, 1981, as amended by Docket No. 47939, 57 

FR 40100, Sept. 2, 1992; Doc. No. OST-96-1269, 61 FR 19165, May 1, 1996]

Sec.  205.2  Applicability.

    These rules apply to all U.S. direct air carriers, including 

commuter air carriers and air taxi operators as defined in Sec.  298.2 

of this chapter, and foreign direct air carriers, including Canadian 

charter air taxi operators as defined in Sec.  294.2(c) of this chapter.

[Docket No. 47939, 57 FR 40100, Sept. 2, 1992]

Sec.  205.3  Basic requirements.

    (a) A U.S. or foreign direct air carrier shall not engage in air 

transportation unless it has in effect aircraft accident liability 

insurance coverage that meets the requirements of this part for its air 

carrier or foreign air carrier operations. The minimum amounts of 

coverage required by this part may be provided either by insurance 

policies or by self-insurance plans. The currently effective policy of 

insurance or complete plan for self-insurance shall be available for 

inspection by the Department at the carrier's principal place of 

business. The current certificate of insurance or a summary of the 

complete self-insurance plan on file with the Department, as required by 

Sec.  205.4, shall be available for public inspection at the carrier's 

principal place of business.

    (b) For purposes of this part, a certificate of insurance is one or 

more certificates showing insurance by one or more insurers (excluding 

reinsurers) of currently effective and properly endorsed policies of 

aircraft accident liability insurance in compliance with this part. When 

more than one such insurer is providing coverage, the limits and types 

of liability assumed by each insurer (excluding reinsurers) shall be 

clearly stated in the certificate of insurance. Insurance policies and 

self-insurance plans named in a certificate of insurance that 

accompanies an application for initial registration or for operating 

authority shall become effective not later than the proposed starting 

date for air carrier operations as shown in the application.

    (c) The certificate of insurance shall list the types or classes of 

aircraft, or the specific aircraft by FAA or foreign government 

registration number, with respect to which the policy of insurance 

applies, or shall state that the policy applies to all aircraft owned or 

operated by the carrier in its air transportation operations. With 

respect to certificates of insurance that list aircraft by government 

registration number, the policy or self-insurance plan shall state that, 

while an aircraft owned or leased by the carrier and declared in the 

policy is withdrawn from normal use because of its breakdown, repair, or 

servicing, such insurance as is provided by the policy or plan for that 

aircraft shall apply also to another aircraft of similar type, 

horsepower, and seating capacity, whether or not owned by the insured, 

while temporarily used as a substitute aircraft.

    (d) Each certificate of insurance shall be signed by an authorized 

officer, agent, or other representative of the insurer or the insurance 

broker.

    (e) Insurance coverage to meet the requirements of this part shall 

be obtained from one or more of the following:

    (1) An insurer licensed to issue aircraft accident liability 

policies in any State, Commonwealth, or Territory of the United States, 

or in the District of Columbia;

    (2) Surplus line insurers named on a current list of such insurers 

issued and approved by the insurance regulatory authority of any State, 

Commonwealth, or Territory of the United States or of the District of 

Columbia; or

    (3) Insurers licensed or approved by a foreign government.

[[Page 19]]

This requirement may be waived by the Department in the public interest.

[ER-1253, 46 FR 52577, Oct. 27, 1981, as amended by Docket No. 47939, 57 

FR 40100, Sept. 2, 1992]

Sec.  205.4  Filing of evidence of insurance.

    (a) A U.S. or foreign air carrier shall file a certificate of 

insurance or a complete plan for self-insurance with the Department's 

Office of Aviation Analysis. Each carrier shall ensure that the evidence 

of aircraft accident liability coverage filed with the Department is 

correct at all times. The Department will normally notify the carrier 

within 20 days of receipt if the certificate or plan does not meet the 

requirements of this part. The two Certificates of Insurance (OST Form 

6410 for U.S. air carriers, including commuter air carriers and air taxi 

operators, and OST Form 6411 for foreign air carriers, including 

Canadian charter air taxi operators) are available from the Office of 

Aviation Analysis. The Department may return the certificate or self-

insurance plan to the carrier if it finds for good cause that such plan 

or certificate does not show adequate evidence of insurance coverage 

under this part.

    (b) If the coverage is by type or class of aircraft or by specific 

aircraft, endorsements that add previously unlisted aircraft or aircraft 

types or classes to coverage, or that delete listed aircraft, types, or 

classes from coverage, shall be filed with the Department's Office of 

Aviation Analysis not more than 30 days after the effective date of the 

endorsements. Aircraft shall not be listed in the carrier's operations 

specifications with the FAA and shall not be operated unless liability 

insurance coverage is in force.

    (c) When the insured air carrier is a U.S. air taxi operator 

operating in the State of Alaska, certificates and endorsements shall be 

filed with the Department's Alaska Field Office, 801 B Street, Suite 

506, Anchorage, Alaska 99501-3657.

(Approved by the Office of Management and Budget under control number 

2106-0030)

[Docket No. 47939, 57 FR 40100, Sept. 2, 1992, as amended by Doc. No. 

OST-96-1269, 61 FR 19165, May 1, 1996]

Sec.  205.5  Minimum coverage.

    (a) Insurance contracts and self-insurance plans shall provide for 

payment on behalf of the carrier, within the specific limits of 

liability in this section, of all sums that the carrier shall become 

legally obligated to pay as damages, excluding any deductible in the 

policy, for bodily injury to or death of a person, or for damage to the 

property of others, resulting from the carrier's operation or 

maintenance of aircraft in air transportation provided under its 

authority from the Department.

    (b) U.S. and foreign direct air carriers, including commuter air 

carriers but excluding U.S. air taxi operators and Canadian charter air 

taxi operators, shall maintain the following coverage:

    (1) Third-party aircraft accident liability coverage for bodily 

injury to or death of persons, including nonemployee cargo attendants, 

other than passengers, and for damage to property, with minimum limits 

of $300,000 for any one person in any one occurrence, and a total of 

$20,000,000 per involved aircraft for each occurrence, except that for 

aircraft of not more than 60 seats or 18,000 pounds maximum payload 

capacity, carriers need only maintain coverage of $2,000,000 per 

involved aircraft for each occurrence.

    (2) Any such carrier providing air transportation for passengers 

shall, in addition to the coverage required in paragraph (b)(1) of this 

section, maintain aircraft accident liability insurance coverage for 

bodily injury to or death of aircraft passengers, with minimum limits of 

$300,000 for any one passenger, and a total per involved aircraft for 

each occurrence of $300,000 times 75 percent of the number of passenger 

seats installed in the aircraft.

    (c) U.S. air taxi operators registered under part 298 shall maintain 

the following coverage:

    (1) Third-party aircraft accident liability coverage for bodily 

injury to or death of persons, including nonemployee cargo attendants, 

other than passengers, with minimum limits of:

    (i) $75,000 for any one person in any one occurrence, and a total of 

$300,000 per involved aircraft for each occurrence, and

[[Page 20]]

    (ii) A limit of a least $100,000 for each occurrence for loss of or 

damage to property.

    (2) U.S. air taxi operators carrying passengers in air 

transportation shall, in addition to the coverage required in paragraph 

(c)(1) of this section, maintain aircraft accident liability insurance 

coverage for bodily injury to or death of aircraft passengers, with 

minimum limits of $75,000 for any one passenger, and a total per 

involved aircraft for each occurrence of $75,000 times 75 percent of the 

number of passenger seats installed in the aircraft.

    (d) Canadian charter air taxi operators registered under part 294 of 

this chapter shall maintain the following coverage:

    (1) Third-party aircraft accident liability coverage for bodily 

injury to or death of persons, including nonemployee cargo attendants, 

other than passengers, and for damage to property, with a minimum 

coverage of $75,000 for any one person in any one occurrence, and a 

total of $2,000,000 per involved aircraft for each occurrence, except 

that Canadian charter air taxi operators operating aircraft of more than 

30 seats or 7,500 pounds maximum cargo payload capacity, and a maximum 

authorized takeoff weight on wheels not greater than 35,000 pounds shall 

maintain coverage for those aircraft of $20,000,000 per involved 

aircraft for each occurrence.

    (2) Canadian charter air taxi operators engaging in passenger 

charter air service under part 294 of this chapter shall, in addition to 

the coverage required in paragraph (d)(1) of this section, maintain 

aircraft accident liability coverage for bodily injury to or death of 

aircraft passengers, with a minimum coverage of $75,000 for any one 

passenger and a total per involved aircraft for each occurrence of 

$75,000 times 75 percent of the total number of passenger seats 

installed in the aircraft.

    (e) Notwithstanding paragraphs (b), (c) and (d) of this section, the 

carrier may be insured for a combined single limit of liability for each 

occurrence. The combined single-limit coverage must be not less than the 

combined required minimums for bodily injury and property damage 

coverage plus, if the aircraft is used in passenger service, the 

required total passenger coverages stipulated in paragraph (b) of this 

section for U.S. and foreign direct air carriers and commuter carriers, 

paragraph (c) of this section for U.S. air taxi operators, or paragraph 

(d) of this section for Canadian charter air taxi operators.\1\ The 

single-limit liability policy for the required aircraft accident 

liability coverage may be provided by a single policy or by a 

combination of primary and excess policies.

----------------------------------------------------------------------

    \1\ For example: the minimum single limit of liability acceptable 

for any aircraft in air taxi passenger service with 16 passenger seats 

would be computed on the basis of limits set forth in paragraph (c) as 

follows: 16 x .75 equals 12; 12 x $75,000 equals $900,000; $900,000 plus 

$300,000 (nonpassenger liability per occurrence) plus $100,000 (property 

damage per occurrence) equals $1,300,000. The latter amount is the 

minimum in which a single-limit liability policy may be written.

----------------------------------------------------------------------

    (f) The liability coverage shall not be contingent upon the 

financial condition, solvency, or freedom from bankruptcy of the 

carrier. The limits of the liability for the amounts required by this 

part shall apply separately to each occurrence. Any payment made under 

the policy or plan because of any one occurrence shall not reduce the 

coverage for payment of other damages resulting from any other 

occurrence.

[Docket No. 47939, 57 FR 40101, Sept. 2, 1992; 57 FR 52590, Nov. 4, 

1992]

Sec.  205.6  Prohibited exclusions of coverage.

    (a) No warranty or exclusion in the policy or plan or in any 

endorsement or amendment to the policy or plan, nor any violation of the 

policy or plan by the carrier, shall remove the liability coverage 

required by this part, except as specifically approved by the 

Department. This requirement shall not limit the right of insurers to 

recover from the carrier for amounts paid.

    (b) A policy of insurance or a self-insurance plan required by this 

part shall not contain the following exclusions:

    (1) Violation of any safety-related requirement imposed by statute 

or by rule of a government agency.

[[Page 21]]

    (2) Liability assumed by the carrier under an agreement to raise the 

liability limitations of the Warsaw Convention by signing a counterpart 

to the agreement of carriers (such as the Montreal Agreement, 18900, as 

approved by Board Order E-23680, May 13, 1966, agreeing to a limit on 

the carrier's liability for injury or death of passengers of $75,000 per 

passenger), or any amendment to such agreement that may be approved by 

the Department and to which the carrier becomes a party.

[ER-1253, 46 FR 52577, Oct. 27, 1981, as amended by Docket No. 47939, 57 

FR 40100, 40101, Sept. 2, 1992]

Sec.  205.7  Cancellation, withdrawal, modification, expiration, or 

          replacement of insurance coverage.

    (a) Each policy of aircraft accident liability insurance and plan 

for self insurance shall specify that it shall remain in force, and may 

not be replaced, canceled, withdrawn, or in any way modified to reduce 

the minimum standards set forth in this part, or to change the extent of 

coverage, by the insurer or the carrier, nor expire by its own terms, in 

regard to coverage for the carrier in its common carrier operations in 

air transportation, until 10 days after written notice by the insurer 

(in the event of replacement, by the retiring insurer), or by the 

insurer's representative, or by the carrier, describing the change, to 

the Department's Office of Aviation Analysis (or, for Alaskan air taxi 

operators, to the Department's Alaska Field Office), which 10-day notice 

period shall start to run from the date such notice is actually received 

at the Department. For purposes of this part, a policy will not be 

considered to have expired if the same insurer renews its coverage 

without reduction in the extent of coverage or amounts of coverage, and 

without a break in coverage, whether or not a new policy is issued, and 

notice to the Department is not required in that event. If the coverage 

being changed is by type or class of aircraft or by specific aircraft, 

endorsements adding or deleting specific aircraft or types or classes of 

aircraft, for which prior notice would be required by this paragraph, 

shall be filed in accordance with Sec.  205.4(b), and prior notice of 

the change need not be given under this paragraph.

    (b) The requirements of this section shall not apply if the policy 

contains a lesser time period for cancellation in a war risk exclusion. 

If the war risk exclusion is activated by the insurer, the insurer or 

its representative shall immediately notify the Department.

[Docket No. 47939, 57 FR 40100, 40101, Sept. 2, 1992]

Sec.  205.8  Cargo liability disclosure statement.

    Every direct U.S. or foreign air carrier providing air cargo service 

in air transportation shall give notice in writing to the shipper, when 

a shipment is accepted, of the existence or absence of cargo liability 

insurance, and the limits on the extent of its liability, if any. The 

notice shall be clearly and conspicuously included on or attached to all 

of its rate sheets and airwaybills.

[ER-1282, 47 FR 16173, Apr. 15, 1982]

.Life Insurance Knowledge:Life Insurance , private, death, employee pensions and annuities,life insurance, educational, life insurance companies