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How a Hangar or Tie-Down Lease Could Impact Your Insurance

Since many insurance policies specifically restrict the insured’s ability to agree to additional risks or waive rights of the insurance company, agreeing to hold harmless, indemnification, or subrogation clauses in a lease could jeopardize the policy’s effectiveness and even result in the denial of a claim.    

If an airport operator, fixed based operator (FBO), or other landlord has asked you to execute a hangar or tie-down lease agreement, be aware that certain provisions could impact your insurance coverage or require modification of an existing policy.   

Many aircraft owners may be familiar with hangar or tie-down leases that require aircraft and general premises liability insurance, as well as automobile insurance for any vehicles operated on the airport.  These provisions often specify minimum limits of liability, require the landlord to be named as an additional insured, and require proof of insurance to be provided upon request.

Less familiar, however, may be inconspicuous provisions requiring the renter to hold harmless or indemnify the landlord and their employees from any liability, damages, or legal fees concerning the leased premises.  Other obscure terms may mandate that any insurers waive all rights of subrogation against the landlord, preventing the insurer from recovering the costs of a claim caused by the landlord.

Since many insurance policies specifically restrict the insured’s ability to agree to additional risks or waive rights of the insurance company, agreeing to hold harmless, indemnification, or subrogation clauses in a lease could jeopardize the policy’s effectiveness and even result in the denial of a claim.    

For these reasons and many others, it is important to review any proposed lease along with your insurance policy and coordinate appropriate coverage with your insurance company.  While insurers can typically amend policies to accommodate the terms of a lease, it may increase premiums in certain circumstances.  In some cases, the lease terms may need to be negotiated.  Before signing a hangar or tie-down lease, have it reviewed by an experienced attorney.

Jared Allen

Mr. Allen is AOPA’s Legal Services Plan (LSP) senior staff attorney and is an instrument-rated private pilot. He provides initial consultations to pilots through the LSP when the FAA has contacted them about potential FAR violations. Jared has helped numerous pilots successfully navigate through compliance actions.

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