Carriers liability insurance

Compulsory insurance against liability for death or injury to air passengers

Each carrier who carries passengers for hire or reward to or from Australia, or within Australia, is required to have in place passenger liability insurance which ensures that compensation will be paid in respect of death or personal injury to passengers arising from an air accident.

The Civil Aviation Safety Authority (CASA) is responsible for administering and enforcing the Commonwealth and State compulsory insurance schemes. The legislation governing the schemes is contained in Part IVA of the Commonwealth Civil Aviation (Carriers' Liability) Act 1959; Civil Aviation (Carriers' Liability) Regulations and complementary State legislation. Additional supporting provisions are contained in the Civil Aviation Act 1988 and Civil Aviation Safety Regulations 1998 (this entire package of legislation is referred to here as "the legislation").

The legislation requires carriers to have in place an acceptable contract of insurance and to routinely submit evidence of that insurance to CASA whenever a contract is commenced, varied or renewed.

Changes effective 31 March 2013 - minimum insurance requirements for domestic carriers

Domestic carriers should review their insurance policies before changes to the insurance and liability framework come into effect from 31 March 2013. Insurers and brokers are familiar with the regulatory changes and will be able to assist operators to ensure policies are compliant with the new laws.

What is a "carrier"?

For the purpose of the legislation, a carrier is a person who:

• holds an Australian Air Operators Certificate or other operating approval authorising passenger charter or Regular Public Transport (RPT) operations (for convenience, the various permission types are hereafter referred to as an Air Operators Certificate or "AOC"); or
• offers to transport passengers to, from or within Australia on aircraft operated by another carrier.

What is an "acceptable contract of insurance"?

An insurance policy will only constitute an acceptable contract of insurance for the purposes of the legislation if it satisfies the requirements prescribed in s.41C (2) of the Civil Aviation (Carriers’ Liability) Act 1959.  Amongst other requirements, it is essential that your insurance policy grants you a right of indemnity in respect of personal injury liability:

• for an amount not less than $725,000 (for domestic carriers from 31 March 2013) or 260,000 Special Drawing Rights (for international carriers) per passenger; and
• which cannot be voided by an insurer in the event that you fail to comply with safety requirements or become insolvent.

You are expected to hold insurance which covers all of the types/models of aircraft which you are authorised to use, or propose to use, to conduct Regular Public Transport or charter operations under your AOC.

Your responsibilities

A person who applies to CASA for the initial issue of an AOC must submit a suitable certificate/declaration of insurance to CASA before an AOC is issued to the applicant. 

Existing carriers (i.e. AOC holders) must submit a new certificate/declaration of insurance to CASA on each occasion that an insurance contract is commenced, varied or renewed.

Once you have arranged suitable insurance, or varied or renewed an existing insurance contract:

1. your insurer or broker will issue you with an insurance declaration that states that you have insurance that complies with the requirements of the legislation.
2. you should forward this insurance declaration to CASA within 14 days of the commencement of the contract;
3. declarations of insurance may be submitted to CASA by fax or email – See CASA contact details.

You are wholly responsible for arranging insurance that meets the requirements of the scheme. CASA has no obligation to remind carriers about the need to renew their insurance cover or to submit evidence of renewals to CASA. 

Obligations of foreign carriers

Generally, a foreign carrier is a person:

• who holds a current AOC which authorises the carriage of passengers for hire or reward to, from or within Australia; or
• who offers to transport passengers to/from Australia in its own aircraft or aircraft operated by another carrier (includes code-share and similar joint venture operations); or
• who physically transports passengers by air to/from Australia on behalf of another carrier, under a wet lease or other commercial arrangement. In this situation, it may be necessary for both the “actual carrier” and the “contracting carrier” (i.e. the carrier that is contracting with the passengers) to be indemnified under an acceptable contract of insurance. Carriers who operate under such agreements may obtain advice from CASA as to their insurance obligations; or
• whose primary operations involve the transport of cargo/freight but may occasionally include the transport of one or more passengers to/from Australia - refer to paragraph titled "What is a 'passenger'?"

Foreign carriers with a commercial presence in Australia

Foreign carriers that have a commercial presence in Australia have the same obligations and responsibilities as Australian domestic carriers (as outlined in this brochure).  In this context “Commercial presence” means any type of business or professional establishment including the maintenance of a branch or representative office in Australia.

Foreign carriers without a commercial presence in Australia

Carriers in this class who are actively engaging in passenger carrying operations to/from Australia must at all times submit evidence to CASA of any renewal or variation to an insurance contract on/before the date on which the new contract commences – the legislation does not allow carriers in this class to submit such evidence to CASA up to 14 days after the commencement of a new insurance contract.

If you have any questions about your obligations as a foreign carrier under the legislation please contact CASA's Insurance Helpline for more information.

Multiple insurers

If you have a number of policies with different insurers covering the types/models of aircraft on your AOC, copies of insurance declarations signed by each insurer or broker should be submitted to CASA. It is essential that the insurance declarations will together give complete coverage for all passenger injury risks including full aircraft fleet coverage.

What is a "passenger"?

CASA takes the view that a passenger is any person who is carried, or to be carried, by a carrier other than a member of the aircraft operating crew that has duties in relation to the flying or safety of the aircraft.

A carrier must have insurance in place to cover all passengers carried on commercial flights including passengers carried on freight/cargo flights. The legislation provides that a person who is an employee of the carrier travelling in the course of his/her duties as an employee may be excluded from the insurance policy.

Providing evidence of insurance

If doubts exist as to the currency or acceptability of a carrier’s insurance contract CASA may require the carrier to provide further details of the carrier’s insurance arrangements.  This situation could arise when:

• CASA receives advice that a certificate/declaration of insurance previously submitted by or on half of a carrier lapses or is cancelled by an insurer; or
• new types or models of aircraft are added to a carrier’s AOC and the insurance in place does not cover these types/models; or
• there is a change in the person(s) or company(ies) holding an AOC and a new AOC is issued; or
• CASA has reason to believe that a policy otherwise does not meet the prescribed requirements of the legislation.

Cessation of insurance contracts

Insurers should give CASA three (3) business days notice in writing of the lapsing or cancellation of insurance policies.

Penalties

Penalties for prohibited carriage

A person who carries passengers for hire or reward without an acceptable contract of insurance will commit a criminal offence. A person convicted of an offence may face heavy fines or imprisonment. In addition, CASA may apply to a court for an injunction to prevent a carrier from conducting operations which are in breach of the legislation.

Penalties for failure to submit evidence of insurance to CASA

Any failure by a carrier to submit a new certificate/declaration of insurance to CASA when contract of insurance is commenced, varied or renewed may result in the issue of an administrative fine/penalty.

Cessation or withdrawal of operating approvals

The requirement for a carrier to have acceptable insurance in place is reinforced by section 28BI of the Civil Aviation Act 1988. CASA may pursue action to suspend or cancel a carrier's charter/RPT approval where section 28BI is breached.

Furthermore, the legislation provides that an AOC will automatically cease to authorise a passenger carrying flight or operation that is not covered by an acceptable contract of insurance.  The authorisation will automatically reactivate as soon as an operator secures appropriate insurance.

Suitable evidence of insurance

Australia's major insurers are familiar with the types and formats of certificates/declarations of insurance which are acceptable to CASA.

For the benefit of insurers (e.g. foreign insurers) who are not familiar with CASA's requirements, this page includes two sample certificates/declarations of insurance which reflect CASA's preferred formats.

A certificate/declaration of insurance presented in either of the formats shown at Sample 1 and Sample 2, is likely to be accepted by CASA.

Sample 1

Note: It is a requirement that an insurance contract does not exclude coverage for risks associated with computer date recognition errors/failures. For this purpose the sample certificate (No. 1) includes suitable certification (two options are given) at item 6 to show that risks associated with date recognition errors/failures are covered. The certificate should include one of the two statements at item 6 (ie. it is not necessary to include both statements).

Sample 1 (RTF 14.6KB)

Sample 2

Note: It is a requirement that an insurance contract does not exclude coverage for risks associated with computer date recognition errors/failures. For this purpose the sample certificate (No. 2) includes suitable certification (two options are given) at item 10 to show that risks associated with date recognition errors/failures are covered by the insurance policy. The certificate should include one of the two statements at item 10 (ie. it is not necessary to include both statements).

Sample 2 (RTF 15.5KB)

How to contact CASA's insurance helpline