Changes to the insurance and liability framework
Changes effective 31 March 2013
Domestic carriers should review their insurance policies before changes to the insurance and liability framework come into effect from 31 March 2013. The Aviation Legislation Amendment (Liability and Insurance) Act 2012 amends the amount of compensation payable to air accident victims on domestic flights and minimum insurance required under the Civil Aviation (Carriers' Liability) Act 1959.
The liability cap for domestic passenger carrying operations is increasing from $500,000 to $725,000 per passenger. The level of mandatory air carrier insurance is similarly increasing. The new laws will come into effect on 31 March 2013, after which insurance policies will need to reflect the increased limits.
Domestic air carriers are affected. Minimum insurance requirements for international carriers have not changed.
Why have the minimum insurance requirements changed?
The requirement for mandatory insurance was introduced in 1995 in response to the tragic Monarch Airlines fatal accident. The level of minimum insurance has never been increased, and the cap on liability has not been increased since 1994. The increase in liability and the increase in minimum insurance will ensure adequate compensation is available for air crash victims.
How do I comply with the changed requirements?
Carriers should contact their insurer or broker to ensure that they have appropriate cover that meets the revised requirements of the Act. Many carriers will have coverage that can absorb the increased requirements, however this may mean less cover is available to meet hull and other third party liabilities.
The ongoing requirements regarding the provision of information to CASA remain. Carriers who hold an Air Operators Certificate must submit a new certificate/declaration of insurance to CASA on each occasion that an insurance contract is commenced, renewed or varied (for example, to add a different aircraft type to the insurance). CASA does not need to be advised if a carrier simply increases the level of cover (without otherwise changing the policy).
Other changes to carriers’ liability and insurance
- The removal of references to ‘personal injury’ and replaced with ‘bodily injury’ under the Act to ensure consistency with the 1999 Montreal Convention concerning international flights;
- The inclusion of a provision for contributory negligence to be considered in compensation claims made under the Damage By Aircraft Act 1999 (DBA Act);
- The inclusion of a provision to allow defendants to seek a right of contribution from other parties who may have contributed to the damage suffered by the person bringing the claim under the DBA Act; and
- Preclusion of potential claimants from claiming compensation for mental injuries where that person has not suffered additional personal or property damage under the DBA Act.
Further information contacts:
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. Also available from:
- CASA Insurance Helpline: email@example.com or 131 757 (ask for the insurance helpline) or
- Trade and Aviation Markets Policy Section; Department of Infrastructure and Regional Development: (02) 6274 7064