Insurance and reinsurance

Captive insurance

Summarise any captive insurance regime in your jurisdiction as applicable to aviation.

The most common specific insurances in German aviation practice are as follows:

  • aviation hull insurance, covering damage to aircraft from the outside because of adverse weather conditions, crashes or forced landings, etc;
  • aviation liability insurance, covering damage to passengers (section 44 and 50 of the Air Traffic Act in connection with Regulation (EU) No. 785/2004); and
  • aviation liability insurance, covering damage (personal injury or property) to third parties caused by the aircraft (section 33 and 43 Air Traffic Act in connection with Regulation (EU) No. 785/2004).

Liability insurance is of special importance as it is compulsory under EU law and a prerequisite for an aircraft to be operated in Germany (see question 35). The respective insurance company must be licensed for business in Germany (section 105(1) of the Air Traffic Licensing Regulation) to ensure that it is properly supervised by German or EU authorities.

Cut-through clauses

Are cut-through clauses under the insurance and reinsurance documentation legally effective?

This depends on the content of the specific agreement.


Are assignments of reinsurance (by domestic or captive insurers) legally effective? Are assignments of reinsurance typically provided on aviation leasing and finance transactions?

Generally, such assignments can be effective. It depends, however, on the specific clauses of the agreement.


Can an owner, lessor or financier be liable for the operation of the aircraft or the activities of the operator?

No. Strict liability (thus without prove of fault or negligence or wilful misconduct) for any damage resulting from the operation of an aircraft according to EU and German law is limited to the aircraft operator for damage to third parties on the surface (article 1 et seq of the Rome Convention and section 33 et seq of the Air Traffic Act) and to the air carrier for damage to passengers (article 17 et seq of the Montreal Convention and section 44 et seq of the Air Traffic Act). Thus, a lessor or financier will never be strictly liable, and the owner only in case of simultaneously being aircraft operator or air carrier (compare article 4(2) of Regulation (EC) No. 785/2004).

Strict liability

Does the jurisdiction adopt a regime of strict liability for owners, lessors, financiers or others with no operational interest in the aircraft?

No. See question 33.

Third-party liability insurance

Are there minimum requirements for the amount of third-party liability cover that must be in place?

EU, as well as subsidiary German, law (see sections 43(1) and 44 of the Air Traffic Act and section 101 of the Air Traffic Licensing Regulation) again distinguishes between liability for damage suffered by a passenger, resting on the air carrier, and liability for damage suffered by a third party, resting on the aircraft operator:

  • insurance for (inside) passengers, baggage and cargo: according to article 6 of Regulation (EC) No. 785/2004 as amended by Regulation (EU) No. 285/2010, minimum insurance cover is 250,000 special drawing rights (SDR) per passenger, equalling €306,353.94 (conversion date: 17 January 2019); 1,131 SDR (€1,385.95) per passengers’ baggage and 19 SDR (€23.28) per kilogram of cargo; and
  • insurance for (outside) third parties: according to article 7 of Regulation (EC) No. 785/2004, minimum insurance cover per accident for each aircraft operated is determined by its maximum take-off mass or weight (MTOM or MTOW). Operators of aircraft within the ‘heavy’ class (ICAO/FAA) with an MTOM between 50 and 200 or 200 and 500 tonnes have to provide insurance amounting to at least 300-500 million SDR (about €368 million to €613 million). Only the Airbus A380-800, with an MTOM of over 500 tonnes, falls into the top bracket, necessitating insurance cover of at least 700 million SDR (about €858 million).

German law provisions contain the same amounts for German aircraft (section 103(2)(1) of the Air Traffic Licensing Regulation; section 103(2)(3) of the Air Traffic Licensing Regulation, together with section 47(4) of the Air Traffic Act; section 104(3)(1) of the Air Traffic Licensing Regulation and section 102(2) of the Air Traffic Licensing Regulation, together with section 37(1) of the Air Traffic Act, respectively).

A foreign aircraft entering German airspace must carry a certificate proving the existence of equivalent liability insurance for third parties to avoid being grounded on its first landing on German surface (section 99(4) of the Air Traffic Licensing Regulation). When taking on board additional passengers in Germany, the existence of liability insurance for such passengers must also be proven by a certificate to continue the journey (section 99(5) of the Air Traffic Licensing Regulation).