On the morning of Jan. 26, 2020, basketball legend Kobe Bryant and eight other individuals, including his 13-year-old daughter, were tragically killed in a helicopter crash. With the investigation into the cause of the crash underway, thoughts turn to how this incident was insured. Would all the victims have life insurance coverage? Could the helicopter operating company or the helicopter manufacturer be liable in some way? "Several insurance coverages might be triggered by this tragic incident," says a top commercial property & casualty insurer. "First and foremost, there was bodily injury to the passengers and pilot. The manufacturer of the aircraft, as well as the owner and potentially the operator (if not the same as the owner), could be found liable for the deaths of the people on board, depending on the NTSB's [National Transportation Safety Board] findings as to what caused the crash. "Typically, these types of entities would have liability insurance to cover them for bodily injury torts. Certainly, the owner of the aircraft would need to have carried some sort of comprehensive property damage policy to cover the repair or, in this case, replacement of the aircraft. Also depending on the outcome of the NTSB investigation, professional liability could be triggered if the crash was caused by pilot error. If the pilot was employed by the owner or operator of the aircraft, a workers' compensation policy might apply as well." Lisa Lindsay, executive director of Private Risk Management Association, comments that "The investigation, the lawyers and insurance professionals will ultimately figure out the insurance coverage, and there will be some lessons learned. This tragedy highlights the importance of having the right people at the table when making important decisions ... If I was considering an aviation charter, I would want to have a risk manager with aviation expertise, an aviation attorney and any other expert in the field ... to help me vet the charter company, maintenance reports, pilots' qualifications, an audit of the company's safety systems and recommend the type of insurance coverage." With a variety of coverages possibly at play in this devastating event, here is a comprehensive look at the way different insurance policies could be involved. Note that we have no inside information regarding this crash; our list that follows is based on our knowledge of the many insurance policies that are generally involved in similar aircraft crashes, especially those with celebrities on board. |

Life insurance

The first, and most obvious, coverage is life insurance. It's likely that, given his celebrity status and his high net worth, Kobe Bryant was covered by a personal life insurance policy, payable to his wife or a trust. Bryant also may have had life insurance or accidental death coverage through his many business ventures that relied on his personal involvement, such as the venture capital fund he started in 2013, Bryant Stibel, with Jeff Stibel, founder of Web.com, for example. For similar businesses that rely on a few key executives, the company is likely to carry what is known as "key person insurance." Such a policy is used to protect the business in the event of the death of the person who is most responsible for managing the company or generating the most income. If that key person is no longer involved in the business, it may have to close. Life insurance policies generally include some exclusions, centered around misrepresentations on the application, for example, saying you don't have cancer when you already have a diagnosis. The policies often have an exclusion when the death is caused by suicide during the first two years the policy is in place. In the event of a catastrophic accident, a life insurance payout may become complicated if remains can't be recovered or without a death certificate. Generally, carriers require the original policy and an official death certificate in order to pay the beneficiary. |

Product liability

Product liability insurance provides coverage when a particular product is found to be inherently faulty, causing injury or damage. Under a standard commercial liability policy, this is known as products-completed operations hazard. It provides coverage for injury or damage resulting from the insured's product, which in this case would be the helicopter. If it were found that the aircraft had an inherent mechanical defect that caused the crash, a claim could be filed under this coverage. According to an update on the investigation from the NTSB, issued on Feb. 7, 2020, "Viewable sections of the engines showed no evidence of an uncontained or catastrophic internal failure." The investigation is ongoing, and is likely to take up to a year. |

Basic hull coverage

As with any aircraft, the helicopter was likely insured for physical damage coverage. Generally, a helicopter is insured for a stated value, that is, the amount that will be paid in the event of a total loss and agreed to by the underwriter and helicopter owner at the time the policy is issued. Most policies provide some common exclusions, such as bodily injury to employees, which would be covered under workers' compensation policies. Other standard exclusions include deliberate destruction of the helicopter, terrorism and acts of war. |

Business insurance policy

The company that owns the aircraft is likely to have an aviation business policy to cover the same issues most companies face, such as business interruption. It can provide a source of income in case the helicopters can't fly, for example. The policy might also cover other equipment necessary for operating the business, for example, medical equipment for an air ambulance service. |

Professional liability

Generally, the company operating the helicopters would have professional liability coverage for its pilots. According to FAA regulations, helicopter owners and pilots are separately liable for accidents. In the case of a crash, if the pilot was found to have acted negligently, the pilot would have insurance coverage with a professional liability policy. This coverage would respond when a claim is made that the policyholder committed a "wrongful act," as defined in the policy, that resulted in damages other than bodily injury or property damage. For example, inadequate pre-purchase inspection or improper advice concerning an engine overhaul may not result in an accident that would trigger an "occurrence" insurance policy, but they are wrongful acts to which a professional liability policy would likely respond. |

CGL coverage

The standard commercial general liability (CGL) policy excludes aircraft, including helicopters, so liability coverage likely would have been obtained from a specialty or surplus lines carrier, or a carrier that provides aircraft liability coverage. Those policies are specially drafted to provide coverage for specified aircraft with experienced pilot requirements. It has been reported that the pilot flying Bryant and his group was a highly experienced 20-year pilot. The carrier likely would have had no issue in providing coverage for this trip, as long as the helicopter was in good condition, well maintained and serviced regularly. It is standard practice for pilots to do pre-checks of an aircraft prior to flight and to file their flight plan with the Federal Aviation Administration (FAA). All of these steps appear to have been taken based on what the NTSB has determined so far in this crash. The helicopter, a Sikorsky S-76B, had a strong safety record. Bryant was known for leasing helicopters to avoid traffic and even help teammates get to medical appointments. These helicopters were built for transporting people to and from offshore oil rigs and have also served successfully as vehicles for executive travel, search-and-rescue, and air-ambulances. A similar crash in 2004 led the FAA to recommend that all registered turbine-powered roto-craft certified for six or more passengers be equipped with Terrain Awareness Warning System (TAWS), but that is simply a recommendation and not a requirement. The helicopter in the Bryant crash did not have a TAWS or a black box flight recorder, but the NTSB has not determined whether having such a system on the aircraft would have made any difference. |

Manufacturer liability

Although pilot error often plays some part in aviation accidents, mechanical problems with the craft or its component parts may contribute to an accident or the severity of the injuries. In such cases, the manufacturer of the aircraft (or the manufacturer of a component part) may share the legal blame with pilots for a crash — and for any deaths or injuries caused by the accident, under the theory of strict liability. Unlike cases against an airplane pilot or carrier, a strict liability claim against a manufacturer does not require proof that negligence caused the accident. In almost all states, a victim can hold a manufacturer or seller "strictly liable" if it is shown that a defect in the product caused the injury. |

Business income coverage

The owner of the helicopter, Island Express, is now short one helicopter that may affect its business income. With a business income policy, a company has coverage when it sustains damage to property that affects its ongoing business. With one less aircraft, Island Express cannot provide as many tours or flights per day as it did before the crash. Business income generally pays the difference in expected income until the business is fully operational. In the case of Island Express, the interruption to the business may be more than just the loss of one helicopter. For example, their pilots and their aircraft could be grounded for a period of time while the investigation continues. In some cases, a business income policy may include coverage for public relations or other costs relating to the response to a high profile event. It's not clear whether any of the companies involved in this situation might have such coverage but it would be in play if they do. As the investigation continues, additional insurance issues may come to light. As you consider this list, let us know if you think we've overlooked something by sending an email to [email protected]. See also: |

• How insurance can protect the future earnings of top athletes
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