\[Code of Federal Regulations\]

\[Title 14, Volume 4\]

\[Revised as of January 1, 2004\]

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.

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