February 15 2012
In September 2011 the Court of Cassation issued an apparently unremarkable ruling in a case relating to yachts and recreational boats. However, its ruling may have refined the concept of aviation insurance.
Two insurance acts
In Belgium, insurance law is governed by the Land Insurance Act 1992; however, this excludes insurance for the carriage of goods and luggage, as well as maritime, river and aviation insurance. Maritime, river and aviation insurance remain governed by the Insurance Act 1874.
This distinction has many practical consequences. The 1992 act is much more favourable to consumers and insureds. For example, the 1874 act provides for the strict enforcement of policies, stipulating the loss of right if a claim is not filed within the period stated in the policy; whereas the 1992 act provides that claims must be filed as quickly as is reasonably possible, with a loss of right occurring only under restrictive conditions.
As a result, consumers - and insured or beneficiary parties more generally - tend to prefer to rely on the 1992 act, whereas aviation insurers prefer the 1874 act; however, this approach implies that the policy covers aviation insurance.
Concept of aviation insurance
The problem with this approach is that the concept of aviation insurance is unclear. Logically, it should include risk in the air or relating to the air, but this can be difficult to determine. Should the vessel (ie, the involvement of an aircraft) or the carriage (ie, the involvement of carriage by air) be taken into account? For example, risks related to aircraft maintenance could be said to relate to risks both on the ground and in the air.
Court of Cassation ruling
The Court of Cassation appears to have endorsed a broad interpretation of the scope of the 1992 act. In the case at issue, a yacht was stolen while at anchor. The insurer denied coverage for loss of right, as the insured had not strictly complied with the policy provisions dealing with the claim. The Court of Appeals endorsed the application of the 1874 act and dismissed the claim, but the Court of Cassation took the opposite view. It held that as yacht insurance is not clearly covered by maritime insurance (which is excluded from the 1992 act), yachts are governed by the 1992 act.
Consequences for aviation insurance
Although the Court of Cassation did not directly address the case of aviation insurance, its ruling could be interpreted as meaning that insurance which covers risks that are not clearly aviation risks, despite being related to aviation to some extent, are subject to the 1992 act. The application of the more consumer-friendly framework for insurance claims could have a significant impact on air travellers, aircraft operators and their insurers.
However, insurers and the aviation industry generally should remain cautious. The issues raised by the case remain fact sensitive and case law relating to aviation insurance is rare. The situation will remain unclear unless the Court of Cassation or the legislature defines the position precisely, by reference to the aerial vessel or carriage by air.
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