Commercial Risk Summary Aviation Risks FIXED BASE OPERATORS Category: Aviation Risks SIC CODE: 4581 Airports, Flying Fields & Services NAICS CODE: 488119 Other Airport Operations Suggested ISO General Liability Code: 40026 Suggested Workers Compensation Code: 7422, 7403, 8010 Description of operations: Fixed base operators contract with a local airport to provide many services to the flying public. The airport ownership and the size of the airstrip dictate the services provided. All provide fueling and general aircraft supplies. Additional services may include flight training, aircraft and engine maintenance and repair, aircraft parts sales, aircraft towing, baggage handling, hangaring and tiedown services, sales of new and used aircraft and chartering of planes. Since 2001, airports and fixed base operators have been required to work with the Transportation Security Administration (TSA) to improve public safety through screening of passengers and cargo being transported by aircraft. Property exposure is high. All buildings are subject to damage from aircraft. Buildings with fueling, refueling or repair operations have significant fire potential and should be located away from other buildings to prevent the spread of fire. Smoking should be prohibited. Repair operations, especially welding and painting, must be monitored with controls in place. Fuel must be kept under controlled conditions. Outdoor property can be damaged by wind, elements and collision with aircraft or vehicles. All airports are potential targets for terrorist attacks. Complete plans must be in place to deter and detect terrorism. Business income exposures can be substantial as backup facilities are unlikely to be available in the event of a major shutdown of operations. Crime exposure is due to employee dishonesty and money and securities. The exposure increases without background checks on all employees. Ordering, billing and disbursing must be separate functions. The books must be audited regularly internally and at least once a year externally. Money and securities exposure depends on the operations the fixed based operator directly controls and which are leased out. If there is a money exposure, regular deposits should be made. Appropriate security should be in place, especially in the evening hours and hours when there is limited travel. Physical inventories must be made on a frequent basis, including fuel, to prevent employee theft. Inland marine exposures include accounts receivable, communications equipment, computers, contractors equipment and tools, and valuable papers and records. Contractors equipment may be used to work on the exterior of the buildings or to tow aircraft. There may be bailees exposure for items kept in lockers for the flight school. Premises liability exposure can be substantial if passengers board in hangar areas for charter services or for flight schools. The safety of passengers, visitors and employees is critical. Exits, egress, lighting and condition of flooring are important. Elevators, escalators, people movers and other conveyances require routine inspection and maintenance. Of increasing concern is the issue of passenger and employee security from terrorists, hijackers, extortionists and others seeking to cause injury or damage. Adequate security must be in place throughout the premises, with entrance points inaccessible to unauthorized persons. Disaster planning should be in place in the event of a terrorist or hijacker attack. If the fixed based operator contracts out some of its services, the contracts should outline all responsibilities of the FBO and the contractor. Products liability exposure could be as low as a retail store or as catastrophic as an aircraft manufacturer, depending on the services offered. A major concern is the refueling operation as the wrong fuel or contaminated fuel can bring a plane down. All fuel deliveries should be monitored to make sure the appropriate fuel is placed in the appropriate tank. Foreign products directly imported and sold could increase the potential for product liability. Refurbishing of aircraft to sell could also place the fixed base operator in the role of manufacturer instead of retailer. Source: Rough Notes, Inc.
Commercial Risk Summary Aviation Risks Automobile exposure is generally low for fixed base operators as automobiles are rarely owned. There may be some hired and nonowned automobile exposure if employees use their own vehicles to run errands for the fixed base operator. Workers compensation exposure is significant. Fire and explosion are a constant concern in a fueling area and from repair operations that include welding or painting. All controls must be in place and carefully monitored. Repair operations involve significant chances for injury due to falling pieces, strains and sprains on backs from lifting and working in awkward positions. Safety equipment should be required. Injury from the propeller and other moving parts of the plane are hazards. Pilots and employees who fly with the pilots are subject to crashes. Aircraft and aviation exposures are covered by special aircraft policies. Hull coverage covers physical damage to owned aircraft. Aircraft liability covers damages to passengers and their cargo, and for damage to the property of others. Hangarkeepers legal liability, which is similar to garagekeepers legal liability, provides coverage while non-owned aircraft are in the hangar. Issues to consider center on who is responsible for the aircraft, what services are provided and what security arrangements are in place for the hangar. Minimum recommended coverage: Building, Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivable, Communication Equipment Floater, Computers, Contractors Equipment, Valuable Papers and Records, General Liability, Employee Benefits, Professional, Environmental Impairment, Umbrella, Hired and Nonownership Auto, Workers Compensation, Aircraft Hull, Aircraft Liability, Hangarkeepers Legal Liability Other coverages to consider: Bailees Customers, Employment-related Practices, Business Automobile Liability and Physical Damage Source: Rough Notes, Inc.
Agent: The coverages listed below are suggested for consideration for aviation operations. After evaluating each of the listed coverages, check the recommended blank by those that apply specifically to this client. Make sure both the exposure and the coverage are explained to the client. Client: For each of the coverages that the agent has recommended, initial whether you have chosen to accept or reject that coverage in the blanks provided. PROPERTY COVERAGES Building and Personal Property Coverage Form Building Business Personal Property Personal Property of Others Improvements and Betterments Building and Personal Property Coinsurance Percentages None 80% 90% 100% Bldg BPP PPO I&B Alternatives to Coinsurance Agreed Value
Functional Replacement Cost Peak Season Reporting Form Other Optional Property Coverage Forms Builders Risk Commercial or Manufacturers Output Policy Condominium-Unit-owners Coverage Equipment Breakdown Legal Liability Standard Property Policy Optional Property Endorsements Additional Debris Removal Ordinance or Law Outdoor Trees, Shrubs and Plants Enhancement Replacement Cost Valuation Spoilage Utility Services-Direct Damage
Other Property Options TIME ELEMENT COVERAGES Business Income With Extra Expense Coinsurance Percentage Business Income Without Extra Expense Coinsurance Percentage Extra Expense Leasehold Interest Alternatives to Coinsurance Agreed Value Maximum Period of Indemnity Monthly Limit of Indemnity Premium Adjustment Optional Time Element Endorsements
Business Income from Dependent Properties Ordinance or Law Increased Period of Restoration Utility Services Other Time Element Coverages PROPERTY AND TIME ELEMENT CAUSES OF LOSS Bldg BPP PPO BI EE Basic Broad Special Earthquake Flood Other Cause of Loss Endorsements
INLAND MARINE COVERAGES Accounts Receivable Commercial Articles Contractors Equipment Difference In Conditions DIC Electronic Data Processing Goods in Transit Miscellaneous Signs (Neon and Electric) Valuable Papers and Records Other Inland Marine Coverages
CRIME COVERAGES Money, Securities and Other Property Employee Dishonesty Including Customer s Goods Computer Fraud Extortion Forgery or Alterations Identity Fraud Expense Kidnap and Ransom Lessees of Safe Deposit Boxes (Securities and Other Property only) Unauthorized Reproduction of Computer Software by Employees Money and/or Securities Only Theft, Disappearance and Destruction Robbery and Safe Burglary Securities Deposited With Others Property other than Money and
Securities Premises Burglary Premises Theft Robbery and Safe Burglary Other Crime Coverages LIABILITY COVERAGES Commercial General Liability Occurrence Basis Claims-Made Basis Optional Liability Coverages Cyber Liability Directors and Officers Employee Benefits
Employment-related Practices Liquor Owners and Contractors Protective Railroad Protective Special Events Other Liability Coverages PROFESSIONAL AND E&O LIABILITY COVERAGES COMMERCIAL AUTO COVERAGES Liability Physical Damage Hired Cars Non-Ownership Auto
P.I.P./No-Fault Optional Automobile Coverages Garagekeepers Medical Payments Uninsured Motorists Underinsured Motorist Other Auto Coverages WORKERS COMPENSATION COVERAGES Workers Compensation and Employers Liability Stop Gap or Employers Liability Coverage Federal Employers Liability Act Longshore and Harbor Workers Coverage
Voluntary Compensation Other Workers Compensation Endorsements EXCESS LIABILITY COVERAGES Umbrella Policy Excess Liability Policy AVIATION COVERAGES Aircraft Policy Hangarkeepers Legal Liability Passenger Liability SPECIALTY COVERAGES Electronic Data Liability Environmental Impairment Liability Policy
Fiduciary Liability Insurance International/Foreign Operations Insurance Media/Communication Liability Rain or Weather Insurance Terrorism Insurance Underground Storage Tank Liability UST Other Specialty Coverages BONDS License and Permit Bond Other Bonds OTHER OPTIONS
Comments I certify that I have reviewed my coverage needs in accordance with this checklist with my agent and I have accepted or rejected the recommended coverages as indicated by my initials in the spaces above. Signature of Client Date Title I certify that I have reviewed the coverages outlined in this checklist with my client and that the initials of the client indicate the acceptance or rejection of the coverages recommended. Signature of Agent Date