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SUBCHAPTER N—WAR RISK INSURANCE 

PART 198—AVIATION INSURANCE 

Sec. 
198.1

Eligibility of aircraft operation for in-

surance. 

198.3

Basis of insurance. 

198.5

Types of insurance coverage available. 

198.7

Amount of insurance coverage avail-

able. 

198.9

Application for insurance. 

198.11

Change in status of aircraft. 

198.13

Premium insurance—payment of pre-

miums. 

198.15

Non-premium insurance—payment of 

registration binders. 

198.17

Ground support and other coverage. 

A

UTHORITY

: 49 U.S.C. 106(g), 40113, 44301– 

44310; 49 CFR 1.47(b). 

S

OURCE

: Docket No. 28893, 63 FR 13739, Mar. 

20, 1998, unless otherwise noted. 

§ 198.1 Eligibility of aircraft operation 

for insurance. 

An aircraft operation is eligible for 

insurance if— 

(a) The President of the United 

States has determined that the con-
tinuation of that aircraft operation is 
necessary to carry out the foreign pol-
icy of the United States; 

(b) The aircraft operation is— 
(1) In foreign air commerce or be-

tween two or more places all of which 
are outside the United States if insur-
ance with premium is sought; or 

(2) In domestic or foreign air com-

merce, or between two or more places 
all of which are outside the United 
States if insurance without premium is 
sought; and 

(c) The Administrator finds that 

commercial insurance against loss or 
damage arising out of any risk from 
the aircraft operation cannot be ob-
tained on reasonable terms from an in-
surance carrier. 

§ 198.3 Basis of insurance. 

(a) Premium insurance may be issued 

by the FAA is the requirements of 
§ 198.1 (a), (b)(1) and (c) are met. 

(b) Subject to § 198.9(c), standby in-

surance without premium may be 
issued by the FAA if all of the fol-
lowing conditions have been met: 

(1) A department, agency, or instru-

mentality of the U.S. Government 

seeks performance of air services oper-
ations, pursuant to a contract of the 
department, agency, or instrumen-
tality; or transportation of military 
forces or materiel on behalf of the 
United States, pursuant to an agree-
ment between the United States and a 
foreign government. 

(2) Such department, agency, or in-

strumentality of the U.S. Government 
has agreed in writing to indemnify the 
Secretary of Transportation against all 
losses covered by such insurance. Such 
an agreement, when countersigned by 
the President, constitutes a determina-
tion that the continuation of that air-
craft operation is necessary to carry 
out the foreign policy of the United 
States. 

(3) A current copy of the aircraft op-

erator’s applicable commercial insur-
ance policy or policies is on file with 
the FAA, including every endorsement 
making a material change to the pol-
icy. Updated copies of these policies 
must be provided upon each renewal of 
the commercial policy. Every subse-
quent material change by endorsement 
must be promptly provided to the FAA. 

(c) Insurance is activated, placing the 

insurance in full force, as specified by 
the FAA’s written notification to the 
operator and remains in force until 
such time as either of the following oc-
curs: 

(1) The requirements in § 198.1 are no 

longer met; or 

(2) In the case of non-premium insur-

ance, an aircraft operation is no longer 
performed under contract to a depart-
ment, agency, or instrumentality of 
the U.S. Government; or pursuant to 
an agreement between the United 
States and a foreign government; or 
the Administrator finds that commer-
cial insurance can now be obtained on 
reasonable terms. 

(d) Insurance policies revert to stand-

by status upon written notification by 
the FAA to the aircraft operator. A 
policy will remain in standby status 
until either— 

(1) The insurance is activated by 

written notice; or 

(2) The policy is canceled. 

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14 CFR Ch. I (1–1–24 Edition) 

§ 198.5 

§ 198.5 Types of insurance coverage 

available. 

Application may be made for insur-

ance against loss or damage to the fol-
lowing persons, property, or interests: 

(a) Aircraft, or insurable items of an 

aircraft, engaged in eligible operations 
under § 198.1. 

(b) Any individual employed or trans-

ported on the aircraft referred to in 
paragraph (a) of this section. 

(c) The baggage of persons referred to 

in paragraph (b) of this section. 

(d) Property transported, or to be 

transported, on the aircraft referred to 
in paragraph (a) of this section. 

(e) Statutory or contractual obliga-

tions, or any other liability, of the air-
craft referred to in paragraph (a) of 
this section or of its owner or operator, 
of the nature customarily covered by 
insurance. 

§ 198.7 Amount of insurance coverage 

available. 

(a) For each aircraft or insurable 

item, the amount insured may not ex-
ceed the amount for which the appli-
cant has otherwise insured or self-in-
sured the aircraft or insurable item 
against damage or liability arising 
from any risk. In the case of hull insur-
ance, the amount insured may not ex-
ceed the reasonable value of the air-
craft as determined by the FAA or its 
designated agent. 

(b) Policies issued without premium 

may be revised from time to time by 
the FAA with notice to the insured, to 
add aircraft or insurable items or to 
amend amounts of coverage if the in-
sured has changed the amount by 
which it has otherwise insured or self- 
insured the aircraft or itself. 

§ 198.9 Applicant for insurance. 

(a) Application for premium or non- 

premium insurance must be made in 
accordance with the applicable form 
supplied by the FAA. 

(b) Each applicant for insurance with 

the premium under this part must sub-
mit to the FAA with its application a 
letter describing in detail the oper-
ations in which the aircraft is or will 
be engaged and stating the type of in-
surance coverage being sought and the 
reason it is being sought. The applicant 

must also submit any other informa-
tion deemed pertinent by the FAA. 

(c) Each applicant for premium or 

non-premium insurance must, upon re-
quest by the FAA, submit to the FAA 
evidence that commercial insurance is 
not available on reasonable terms for 
each flight or ground operation for 
which insurance is sought. Each air-
craft operator who has a standby non- 
premium insurance policy must, upon 
request by the FAA, submit evidence 
to the FAA that commercial insurance 
is not available on reasonable terms 
before the FAA activates that policy. 
The adequacy of the evidence sub-
mitted is determined solely by the 
FAA. 

(d) The standby non-premium policy 

issued to the aircraft operator does not 
provide actual coverage until formally 
activated by the FAA. 

§ 198.11 Change in status of aircraft. 

In the event of sale, lease, confisca-

tion, requisition, total loss, or other 
change in the status of an aircraft or 
insurable items covered by insurance 
under this part, the insured party must 
notify the office administering the 
Aviation Insurance Program before, or 
as soon as practicable after, the change 
in status. 

§ 198.13 Premium insurance—payment 

of premiums. 

The insured must pay the premium 

for insurance issued under this part 
within the stated period after receipt 
of notice that premium payment is due 
and in accordance with the provisions 
of the applicable FAA insurance policy. 
Premiums must be sent to the FAA, 
and made payable to the FAA. 

§ 198.15 Non-premium insurance—pay-

ment of registration binders. 

(a) The binder for initial registration 

is $575 for each aircraft or insurable 
item. This binder is adjusted not more 
frequently than annually based on 
changes in the Consumer Price Index of 
All Urban Consumers published by the 
Secretary of Labor. 

(b) An application for non-premium 

insurance must be accompanied by the 
proper binder, payable to the FAA. A 
binder is not returnable unless the ap-
plication is rejected. 

915 

Federal Aviation Administration, DOT 

§ 198.17 

(c) Requests made after issuance of a 

non-premium policy for the addition of 
an aircraft or insurable item must be 
accompanied by the binder for each 
aircraft and insurable item. 

(d) When an operator acquires an air-

craft or insurable item that was pre-
viously covered under an active or 
standby policy, the new operator must 
register that aircraft or item on its 
policy and pay the binder for each air-
craft and insurable item. 

§ 198.17 Ground support and other 

coverage. 

An aircraft operator may apply for 

insurance to cover any risks arising 
from the provision of goods or services 
directly supporting the operation of an 
aircraft that meets the requirements of 
§ 198.3(b). 

PART 199 

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RESERVED

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