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Insurance for air carriers and aircraft operators

Following the terrorist attacks in the United States on the air transport industry, the European Union (EU) has taken an interest in insurance requirements in the aviation industry. In the framework of the common transport policy, and in order to foster consumer protection and avoid distortion of competition between air carriers, the EU would like to ensure a proper minimum level of insurance to cover liability of air carriers in respect of passengers, baggage, cargo and third parties.

ACT

Regulation (EC) No 785/2004 of the European Parliament and of the Council of 21 April 2004 on insurance requirements for air carriers and aircraft operators [See amending act(s)].

SUMMARY

The objective of this regulation is to establish minimum insurance requirements for air carriers and aircraft operators in respect of passengers, baggage, cargo and third parties, for both commercial and private flights.

With regard to the carriage of mail, the insurance requirements are those set out in Regulation (EEC) No 1008/2008 and in the national laws of the European Union (EU) countries.

Scope

This regulation applies to all air carriers and to all aircraft operators flying within, into, out of, or over the territory of an EU country.

This regulation does not apply to:

  • state aircraft (military, Customs department or police aircraft);
  • model aircraft with an MTOM * of less than 20 kg;
  • foot-launched flying machines (including powered paragliders and hang gliders);
  • captive balloons;
  • kites;
  • parachutes (including parascending parachutes);
  • aircraft, including gliders, with an MTOM of less than 500 kg, and microlights, which are used for non-commercial purposes, or for flight instruction (in so far as the insurance obligations under this Regulation relating to the risks of war and terrorism are concerned).

This regulation is intended to apply to Gibraltar airport. The Governments of Spain and the United Kingdom will inform the Council of the date of application.

Principles of insurance

This regulation requires air carriers and aircraft operators to be insured, in particular in respect of passengers, baggage, cargo and third parties, to cover the risks associated with aviation-specific liability (including acts of war, terrorism, hijacking, acts of sabotage, unlawful seizure of aircraft and civil commotion).

This regulation is without prejudice to the rules on liability as arising from international Conventions, EU law and the national law of the EU countries.

Compliance

Air carriers and, when so required, aircraft operators, must demonstrate compliance with the insurance requirements set out in this regulation by providing the competent authorities of the EU country concerned * with a an insurance certificate or other evidence of valid insurance.

Insurance in respect of liability for passengers, baggage and cargo

For liability in respect of passengers, the minimum insurance cover must be 250 000 SDRs * per passenger. However, in respect of non-commercial operations by aircraft with a MTOM of 2 700 kg or less, EU countries may set a lower level of minimum insurance cover, provided that such cover is at least 100 000 SDRs per passenger.

For liability in respect of baggage, the minimum insurance cover must be 1 131 SDRs per passenger in commercial operations.

For liability in respect of cargo, the minimum insurance cover must be 19 SDRs per kilogram in commercial operations.

The levels of cover set out above do not apply with respect to flights over the territory of the EU country carried out by non-EU air carriers and by aircraft operators using aircraft registered outside the EU which do not involve a landing on, or take-off from, such territory.

Insurance in respect of liability for third parties

For liability in respect of third parties, the minimum insurance cover per accident and per aircraft must be:

CategoryMTO(kg)Minimum insurance(million SDRs)
1‹ 5000,75
2‹ 1 0001,5
3‹ 2 7003
4‹ 6 0007
5‹ 12 00018
6‹ 25 00080
7‹ 50 000150
8‹ 200 000300
9‹ 500 000500
10≥ 500 000700

Enforcement and sanctions

EU countries must ensure that air carriers and aircraft operators comply with the regulation.

With respect to overflights by non-EU air carriers or aircraft registered outside the EU which do not involve a landing on or take-off from any EU country, as well as with respect to stops in EU countries by such aircraft for non-traffic purposes, the EU country concerned may request evidence of compliance with the insurance requirements laid down in this regulation.

Sanctions imposed by EU countries for infringement of this regulation must be effective, proportional and dissuasive. For EU air carriers, these sanctions may include the withdrawal of the operating licence. With regard to non-EU air carriers and to aircraft operators using aircraft registered outside the EU, the sanctions may include refusal of the right to land on the territory of an EU country.

Where EU countries are not satisfied that the conditions of this regulation are met, they must prohibit an aircraft from taking off until the air carrier or aircraft operator concerned has produced evidence of adequate insurance cover.

Key terms used in the act
  • "MTOM" means Maximum Take Off Weight, which corresponds to a certified amount specific to all aircraft types as stated in the certificate of airworthiness of the aircraft.
  • "EU country concerned" means the EU country which has granted the operating licence to the EU air carrier or the EU country where the aircraft of the aircraft operator is registered. For non-EU air carriers and aircraft operators using aircraft registered outside the EU, it means the EU country to or from which the flights are operated.
  • "SDR" means a Special Drawing Right or a potential claim on the freely usable currencies of International Monetary Fund members (SDR as defined by the IMF).

REFERENCES

ActEntry into forceDeadline for transposition in the Member StatesOfficial Journal
Regulation (EC) No 785/2004

30.4.2005

-

OJ L 138 of 30.4.2004.

Amending act(s)Entry into forceDeadline for transposition in the Member StatesOfficial Journal
Regulation (EC) No 1137/2008

11.12.2008

-

OJ L 311 of 21.11.2008

Regulation (EC) No 285/2010

8.4.2010

-

OJ L 87 of 7.4.2010

Successive amendments and corrections to Regulation (EC) No 785/2004 have been incorporated in the basic text. This consolidated version is for reference purposes only.

RELATED ACTS

Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community [Official Journal L 293 of 31.10.2008].

Communication from the Commission to the European Parliament and the Council – ‘Insurance requirements for aircraft operators in the EU - A Report on the operation of Regulation 785/2004’ [COM(2008) 216 final – not published in the Official Journal].

Regulation (EC) No 889/2002 of the European Parliament and of the Council of 13 May 2002 amending Council Regulation (EC) No 2027/97 on air carrier liability in the event of accidents (Text with EEA relevance) [Official Journal L 140 of 30.05.2002].
This regulation deals with the liability of air carriers in respect of passengers, and has applied since the entry into force of the Montreal Convention in the European Union on 30 April 2004.

Council Decision 2001/539/EC of 5 April 2001 on the conclusion by the European Community of the Convention for the Unification of Certain Rules for International Carriage by Air (the Montreal Convention) [Official Journal L 194 of 18.07.2001].
With Council Decision 2001/539/EC the Community concluded the Convention for the Unification of Certain Rules Relating to International Carriage by Air, agreed at Montreal on 28 May 1999, which lays down new rules on liability in respect of the international carriage by air of persons, baggage and cargo.

Last updated: 28.07.2010
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