Insuring Aviation-Related Businesses

Posted on July 9, 2021

Have you considered how many businesses provide services to or intersect in some way with the aviation industry?

There are the more obvious examples, including manufacturers who develop parts for a variety of aircraft as well as companies who rent out aircraft parts. Aircraft manufacturing is reportedly a $169bn industry that employees over 500,000 people.

Another example? More than 300,000 aircraft mechanics across the country service both commercial and private leisure aircraft at international, general, and municipal airports. In addition, hangar operators throughout the country maintain storage facilities for airplanes not in use.

Partial aviation exposures

While a significant number of businesses work directly—and repeatedly—with the aviation industry, there are many more with partial aviation exposures.

Numerous businesses provide services for the nearly 200,000 public and private airports across the country. Construction companies, for instance, take on projects to renovate the interior or exterior spaces of municipal and international airports. During the pandemic, a number of airports have hired construction crews and taken advantage of the decrease in air traffic to update their facilities.

Because of the significant impact of the pandemic on the aviation industry, airports have already received $20 billion in federal relief funds and hope to receive an additional $27.5 billion through the current administration’s infrastructure proposal. Airports that have postponed renovations may choose to use those funds to do so in upcoming years. If they do, they will likely require services from local contractors.

Construction companies are not the only businesses that provide services to airports. Paving companies are hired to resurface runways. Sanitation companies service both airports and individual aircraft. Painting and welding businesses use their skills to maintain aircraft.

The number of companies and individuals who interact with and provide services to the aviation industry at any level is surprisingly large, and this list only scratches the surface of clients who require specialized aviation insurance.

Popularity of drones

In addition to the businesses connected—even tangentially—with the aviation industry, businesses that use drones, or unmanned aerial vehicles, also require specialty aviation insurance.

Drone usage has skyrocketed in the past decade. As of March 2021, the number of commercial drones registered in the U.S. was 372,000. In the next few years, the market is expected to grow annually by 3.7{241d69fb6cc1b5cacc5f3e2661eaf0e97e5fed421b543841c6865fd1a2ecc898}.

Drones have proved invaluable to a number of industries across the country. The agricultural industry, for instance, has been revolutionized by the use of drones to gather valuable information about the status of crops. Information collected by these unmanned aerial vehicles can be used for water management and can significantly impact crop yield.

The potential for drone usage across industries seems almost limitless. Large-scale retailers use drones to manage inventory and deliver goods quickly. Engineers and architects use drones to improve safety and collect vital information for large-scale projects. Media organizations use drones to gather news footage. Real estate agents use drones to take high-quality photos and videos of larger properties and/or communities. Golf courses use drones to produce marketing videos as well as tutorials for golfers who want to gain inside knowledge before they play.

Drones are used for more than just commercial reasons, however. Sheriff departments across the country use drones to assist with search and rescue missions and to monitor traffic. Emergency response providers use drones to assess emergency situations and deliver needed medical supplies. Conservationists use drones to monitor animal populations, conduct marine mammal research, assess wildfires and other natural disasters, and inventory land that is hard to access.

Finding coverage

Most policies that would cover the types of businesses and organizations using drones have aviation exclusions. As a result, these organizations would be at risk if the drone they’re using was damaged or caused bodily injury or property damage.

All of these businesses—those that provide services directly to the aviation industry and those that use drones—require some level of specialized aviation insurance. Unlike for major aviation companies, however, large-scale aviation insurance would be overkill.

That puts these businesses in a tricky spot. They need special coverage for any work they do involving the aviation industry, including the use of drones, but the typical business policy doesn’t provide that level of protection.

As an agent, you have two options: You can send these businesses to other agents or insurance companies. Or you can work with companies like Aspera who supplement clients’ already existing policies with commercial general liability designed specifically for small to medium businesses involved in aviation.

Aspera has had success working with a number of clients who need special aviation coverage. A wood refinisher who replaces old dashboards in both cars and aircrafts, for instance, needed aviation liability insurance. Most insurance brokers would hear the word aircraft and back away, but Aspera was able to help because of our access to hard-to-insure markets. Our markets can provide coverage for aviation-only risks and partial aviation exposures.

Rather than losing business to another agency, you can work with Aspera to supplement your existing policies and find coverage for aviation-related risks. With knowledge of the aviation industry and the ability to cover these risks, the markets we can access are able to quote coverage to support businesses whose work intersects with the aviation industry.

The aviation industry was hit hard by the pandemic but has already started to rebound. As it continues to come back, airports and airlines will require more assistance from supporting businesses that in turn require specialty insurance to cover their risks.