Global specialty insurance and reinsurance broker McGill and Partners has expanded its aviation insurance solutions to offer protection to aviation spares against war perils while on the ground.
The broker is providing this coverage in tandem with certain carriers in the London market, intending to fill a “crucial” coverage gap in traditional policies.
The new policy is designed to provide ground-based war coverage and protection for spares and equipment located on the ground and not in transit by sea or air, and will have defined limits with a sum insured per item, subject to a defined annual aggregate limit.
The broker confirms that the policy provides war perils coverage for physical loss or damage resulting from war, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power or attempts at usurpation of power.
The coverage gap exists because historically, aviation hull war policies have only covered spares for war perils while they are in transit by sea or air, leaving ground-based assets exposed.
With individual aircraft engine values approaching $50 million, the absence of ground-based war peril coverage creates a direct and material risk to the balance sheets of both airlines and lessors for these multi-million-dollar assets, explained the broker.
Jon Petursson, Partner, Aviation, McGill and Partners, commented, “The launch of this new policy is incredibly timely and a demonstration of how McGill and Partners’ constantly innovates to provide clients with comprehensive protection where they need it most. For years, traditional hull war policies have left airlines and lessors significantly exposed to financial loss due to insurance coverage for spare parts being restricted while they are stored.
“Multiple warehouses and hangars hold significant inventories of high-value assets, including individual engines worth up to $50 million, with no existing protection for stored spares impacted by physical loss as a result of war, and representing a significant and growing balance sheet risk. This solution can provide the assurance, protection, and financial security that operators require to safeguard essential equipment and high-value assets, regardless of their operational status.”
In February, the broker also renewed its Ukraine War Risks Reinsurance Facility for another year, with the maximum line per risk increasing from $50m to $100m.
