Breach of Warranty Insurance Coverage

Breach of Warranty is coverage is an optional coverage that is sometimes required by the insurance company and/or financier of an aircraft. It is relatively inexpensive, and must be specifically requested by the buyer.

This additional coverage is not intended to ultimately protect the buyer, rather, breach of warranty coverage is issued in the interest of protecting the lienholder.

Simply stated, this coverage assures that the lienholder will be reimbursed in the event that a claim occurs whether or not the operator of the aircraft is in violation of the insurance policy’s usage restrictions. This additional coverage removes the financial responsibility from the insurance company and places it firmly back on the aircraft’s owner.

If there is a claim when an owner’s usage warranty is breached, the insurance company will pay the lienholder directly, but will then be looking to the owner of the aircraft to reimburse them for the total amount paid out.