What Is Aviation Insurance?
Aviation insurance covers aircraft owners, operators and aviation businesses against physical loss or damage to aircraft and third-party liability arising from aviation operations. It is a highly specialist line: coverage terms, wordings and capacity are sourced exclusively from Lloyd's of London and dedicated international aviation underwriters. Standard commercial property or liability brokers do not have access to the aviation market.
Türkiye's aviation market is substantial and diverse. It encompasses the major national carriers, regional airlines, cargo operators, charter and executive aviation, general aviation (private fixed-wing and rotary), helicopter operations (tourism, offshore, emergency medical services), maintenance and repair organisations (MROs), and a rapidly expanding drone and UAV sector. Each segment has distinct coverage requirements and, increasingly, distinct regulatory obligations imposed by the Turkish Civil Aviation Authority — SHGM (Sivil Havacılık Genel Müdürlüğü).
All aviation insurance placed through Neolife is aligned with ICAO standards, applicable SHGM regulatory requirements for minimum liability cover, and Lloyd's or international market wordings including AVN (Aviation Underwriters' Notes) clauses where relevant. Coverage is typically structured as a combined aircraft policy covering hull and liability in a single document, with hull war written as a separate section or separate policy under specialised war-risk market wordings.
Hull Insurance
Hull insurance covers physical loss or damage to the aircraft itself — the airframe structure, engines, avionics, and installed equipment. There are two primary variants, which are typically placed together but under separate coverage sections or policies.
Hull All Risks (Gövde Tüm Riskler)
Covers accidental physical damage to the aircraft from all risks, subject to policy exclusions. Perils include in-flight accidents and incidents, ground handling accidents, taxiing collisions, fire and explosion, and weather-related damage during ground operations. The standard settlement basis for total loss is agreed value — no depreciation is applied, and the insured value agreed at policy inception is paid in full on a total loss. Partial losses are settled on a repair cost basis. Neolife assists clients in verifying that the agreed value reflects current market values or lender requirements.
Hull War & SRCC (Gövde Savaş)
Separate cover for loss or damage caused by war, strikes, riots and civil commotion (SRCC), confiscation, nationalisation, and allied perils. Hull war is typically written on an AVN52 wording or equivalent international aviation war wording. For passenger-carrying commercial aircraft, coverage is subject to AVS103 limits or bespoke terms negotiated with the war-risk market. Hull war premiums and terms respond to geopolitical conditions and can change at short notice under the 7-day cancellation provisions common in war wordings.
Why Agreed Value Matters
Under an agreed value settlement (mutabık kıymet), the total loss payout is fixed at the sum insured agreed when the policy was placed — regardless of the aircraft's market value at the time of loss. This contrasts with actual cash value (ACV) settlement, which applies depreciation. Lenders and leasing companies financing aircraft acquisitions consistently require agreed value cover to protect the outstanding loan balance. Operators should review their agreed value regularly to ensure it reflects current replacement costs.
Liability Coverage — Combined Single Limit (CSL)
Aviation liability cover responds to claims for bodily injury or property damage caused to third parties as a result of aviation operations. The standard structure for both commercial and general aviation is the Combined Single Limit (CSL), which provides a single aggregate limit that may be applied to any combination of third-party bodily injury and property damage claims arising from a single occurrence.
CSL replaces earlier policy structures that set separate sub-limits for passengers, third parties and cargo. The CSL structure offers greater flexibility in claims allocation and avoids the situation where one sub-limit is exhausted whilst others remain unused. Separate per-passenger sub-limits may still be set within a CSL policy where required by contract or regulation.
SHGM Minimum Liability Requirements
SHGM (Sivil Havacılık Genel Müdürlüğü) sets mandatory minimum third-party liability limits for aircraft operating in Turkish airspace. Minimum limits are stratified by aircraft category and maximum take-off weight (MTOW). All aircraft holding a Turkish certificate of airworthiness and operating commercially must carry at minimum the applicable SHGM-mandated limit. Failure to maintain compliant cover can result in suspension of operating rights. Neolife verifies SHGM compliance as a standard part of policy review.
In addition to CSL third-party cover, operators may require passenger liability (covering passengers carried for hire or reward or under a contract of carriage), cargo liability (covering goods in transit in the aircraft), and products liability (covering claims arising from components, services or advice provided to operators). Each is typically written as a separate section within the combined aircraft policy.
Agreed Value vs Actual Cash Value
| Feature | Agreed Value (Mutabık Kıymet) | Actual Cash Value (ACV) |
|---|---|---|
| Total loss settlement | Full insured value as agreed at policy inception | Market value of aircraft at date of loss (depreciated) |
| Depreciation applied | No | Yes |
| Typical use | Commercial aviation, financed/leased aircraft, newer fleets | Older general aviation aircraft with lower values |
| Lender requirement | Typically required by lenders and lessors | Not acceptable to most lenders |
| Premium basis | Rate applied to agreed value | Rate applied to ACV (generally lower sum) |
For most commercial and corporate aviation clients in Türkiye, agreed value is the appropriate and expected settlement basis. Neolife advises clients on valuation methodology and reviews agreed values at each renewal to ensure adequate coverage relative to current market values and outstanding finance obligations.
Pilot Warranty
An aviation policy's pilot warranty (pilot garantisi) specifies the conditions under which the aircraft may be flown for the hull and liability cover to remain in force. It is one of the most technically important policy conditions in aviation insurance.
Pilot warranties may be expressed in several forms:
- ›Named pilot warranty — cover is valid only when specific named pilots are in command. Used for owner-flown aircraft or small operations with a fixed crew.
- ›Qualification warranty — cover requires that the pilot-in-command holds specified licence, type rating and minimum total hours. Used for operators with multiple qualified pilots.
- ›Approved pilot list warranty — cover is valid for any pilot on an insurer-approved list, updated periodically as crew change.
Flying outside pilot warranty terms — including operating with a pilot not covered by the warranty, or with a pilot whose qualifications have lapsed — voids hull and liability cover for that flight. This is an absolute condition, not subject to proportional reduction. Operators must maintain current records of pilot qualifications and notify Neolife promptly of crew changes to ensure the warranty remains correctly aligned.
Important: Crew changes and new pilot qualifications must be reported to your broker before the pilot flies the insured aircraft. Retroactive endorsements are not possible once a loss has occurred. Neolife provides proactive reminders at renewal and upon notification of crew changes.
Other Aviation Risks
Beyond the core hull and liability cover, the aviation market offers a range of specialist products relevant to Turkish aviation businesses:
Airport Operators Liability
Covers the legal liability of airport operators, fixed-base operators (FBOs) and ground handling companies for bodily injury or property damage occurring on the airfield or in connection with ground handling operations. Distinct from aircraft liability — this covers premises and operations rather than an individual aircraft.
Drone / UAV Liability
An emerging and growing segment. Cover includes hull, third-party bodily injury and property damage liability, and in some cases payload or cargo liability. Turkish SHGM drone regulations classify UAVs by category and specify mandatory insurance requirements for commercial operators. Dedicated UAV wordings are available through specialist underwriters.
MRO Liability
Maintenance, repair and overhaul (MRO) organisations face distinct liability exposures arising from work carried out on aircraft. MRO liability cover responds to claims for damage to aircraft in care, custody or control and for third-party bodily injury or property damage arising from maintenance work. Workmanship liability (claims arising from errors in maintenance) is a key coverage element.
Hangar Keepers' Liability
Covers the liability of hangar operators for physical damage to third-party aircraft whilst in their care, custody or control for storage or maintenance. Standard property damage policies do not cover third-party aircraft in care and custody — a dedicated hangar keepers' policy is required.