Aircraft are high value Assets, prone to damage and capable of causing destruction. Appropriate insurance coverage is a vital concern for financiers and the contents of the policies and their legal effect is an area where more attention is required than may be the case in other types of asset finance.

This Practice Note considers insurances in a situation where an aircraft owner, as lessor, is leasing an aircraft to an airline as lessee. Where an aircraft has been financed by a bank or other lender, the issues identified as relevant to a lessor in this Practice Note will also be relevant to the aircraft financier. This is because in many aircraft finance structures, the financier will typically take security over the rights of the lessor against the lessee under the lease.