Summary: Hot air balloons tend to attract attention when they are in the air. They are large, colorful, and often fairly close to observers, making the encounter a real treat for those on the ground. Operators are considered to be pilots, but piloting a hot air balloon is significantly different than flying an airplane, even a small one. Insurance considerations are different as well; a hard landing in an airplane may be nothing more than a loud and somewhat disruptive bump, but a hard landing in a hot air balloon can result in passenger injuries or even death.

Topics:
Introduction
Hazards
Underwriting
Coverages
Summary

Introduction

The first hot air balloon flight occurred on November 21, 1783, in a craft built by the Montgolfier brothers and powered by hot air. A gas balloon filled with hydrogen was flown the next month. The Federal Aviation Administration (FAA) considers balloons to be lighter-than-air vehicles that are not engine driven and sustain flight through the use of gas buoyancy or an airborne heater. Because balloons have no directional control and must rely on the winds, they have right of way in all aviation operations over helicopters, gliders, and powered aircraft. Wind direction varies at different altitudes, so the only way to change direction is to adjust height; hence the need for a chase team, a ground based team that follows the balloon that picks up the pilot and passengers at the landing site.

Hot air balloons are basically an empty bag that is filled with hot air generated by an open flame below it, usually using propane. Cold air or gas balloons are available and use helium for lift. The cold air balloons were reintroduced in 1995. Lift is more limited in a gas balloon; with a hot air balloon the air can be made hotter to create more lift. Most flights take place at altitudes lower than 5,000 feet above ground level. This reduces concerns for sufficient oxygen for passengers as the basket is open to the air.

The FAA issues airworthiness certificates once a balloon has been inspected and meets the requirements and is in safe condition for operation. The certificate is required to be displayed in the balloon so that it is legible to passengers and crew when the balloon is being used. Certificates are in effect as long as the balloon receives the required maintenance and is properly registered. Owners are responsible for maintaining the airworthiness certificate, maintaining the balloon in airworthy condition and maintaining records, keeping up with changing regulations, and notifying the FAA of any change in permanent address or sale or export of the aircraft or loss of eligibility to register. Balloons are required to be registered

While most balloons are used for recreational use, the pilot still must have training on the principles of flight, operation of the equipment, situational awareness, aeronautical decision-making, emergency operations, use of aeronautical charts, and other key skills in order to navigate the balloon. With no real directional control, the pilot must constantly be aware of trees, power lines, and objects on the ground that can affect flight and landing.

The FAA publishes a balloon flying handbook for student and certificated pilots. An individual must pass a written and practical test in order to obtain a hot air balloon pilot's license. In order to be eligible for a private pilot's license a person must be sixteen years of age, read, speak and understand English, pass a written test, have received instruction on balloon handling, and have ten hours of balloon experience with six flights under supervision of an instructor. The flights must include two flights of a least one hour long, one ascent to 3,000 feet above takeoff point, and one solo flight. Commercial pilots must be at least eighteen years old and pass a more advanced written test and have advanced training and thirty-five hours of flight time, two solo flights, two flights of one duration, and one flight to 5,000 feet above the take-off point. Commercial pilots may operate for hire and give flight instructions.

The Balloon Federation of America encourages balloonists to be safe. They offer continuing education seminars and classes for pilots and crew. Since ballooning is not something done every day or even year round in many areas, carriers encourage pilots and crew to keep up with continuing education to be as safe as possible. Insurance applications for pilots and crew frequently ask how often the person pilots or crews and what safety seminars or continuing education has the person attended or completed in the past twelve months.

Equipment consists of the balloon itself, a heater system with propane burners and fuel tanks, pilot light system, inflation fans, compass, radios, igniters, fire extinguisher, first aid kit, drop line, gloves, helmets, and the basket. The basket is usually made of wicker because it is strong, flexible, and lightweight. The flexibility helps with landings as it can cushion some of force when contacting the ground. However, the fact that it is flexible and lightweight also makes it hazardous; it may not withstand hard landings or contact with obstacles as well and being made of wicker is readily flammable.

Instruments include an altimeter, a rate of climb indicator, fuel quantity gauges, and an envelope temperature gauge. Unlike other aircraft, a support team is necessary in order for the balloon to fly. A ground crew is needed to assist in inflation and set up, weather briefers are needed to keep track of changes in weather, and spotters to keep track of where the balloon is and warn of trees, power lines, livestock, or other things in the balloon's path of flight or descent. The crew does not have to have a license or any formal training; it is the responsibility of the pilot to ensure that he has a crew he can rely on for information and assistance.

Balloons flown for business or pleasure and not for compensation or hire are required to be inspected annually by a certified and appropriately rated repair station, the manufacturer, a certified airframe, and a power plant mechanic who holds an Inspection Authorization. Balloons used to carry passengers for hire must have a 100-hour inspection within the preceding 100 hours of time in service and be approved for return to service. Aircraft used for flight instruction are also required to have a 100-hour inspection.

Hazards

Hot air balloons have unique and specific hazards. One is hard landings. A “hard landing” is defined as when an aircraft or spacecraft hits the ground with a greater vertical speed and force than a normal landing. In an airplane the wheels will bounce and the plane will drop down again on the wheels; in a hot air balloon, it is possible for the basket to tip over and dump the passengers onto the ground. The baskets may be padded but generally do not have seats, so passengers are not secured to the basket. With a hard landing, passengers may be seriously injured when the basket hits hard and the passengers spill out, even if they are seated in the bottom of the basket on landing. A National Transportation Safety Board (NTSB) report on hot air balloon tour crashes from 2000 to 2011 shows that 83 percent of crashes resulted in one or more serious or fatal outcomes. Most crashes occurred during landing—81 percent—and fixed object collisions accounted for 50 percent of serious injuries. An insured flying friends for fun or someone giving balloon rides may be found liable for injuries to his passengers.

Contact with obstacles is another significant issue. Contact with power lines is serious hazard; the balloon can catch fire, the propane tanks can explode, and passengers can be burned or suddenly dropped from the basket several feet. Contact with power lines commonly results in death or serious injury for the pilot and passengers. Trees pose a similar hazard—the basket can get caught in the trees, stranding passengers and again, depending on how it crashes, fire could be an issue.

The NTSB made recommendations to the FAA in 2014 regarding requirements that the NTSB felt would make ballooning safer, including pilots obtaining and maintaining a letter of authorization outlining the operational limitations and provisions from the FAA flight standards district office. The letter of authorization would allow the FAA to include balloon operators in their regular surveillance activities as they do with aircraft. This would allow the FAA to monitor the safety of the operations and that flights are in accordance with the letter of authorization.

Property damage is also an issue. Since the pilot does not have directional control and is dependent on weather and wind conditions, the pilot may end up landing too close to or on someone's property and damage property in the process. Baskets may weigh 800 pounds or more, so a landing where the basket hits a fence, auto, shed, or other type of property on landing can be problematic. The balloon and its equipment may be damaged and the property the balloon lands on. Balloons have substantial weight and even when landing have some speed, and if the balloon is out of control, greater speed will be involved, causing potentially more damage. Trees and power lines are the most common obstacles struck, but during landings it is not uncommon for the wind to drag the balloon along the ground until it crashes into an object.

The balloon itself is fragile and can readily be damaged by contact with objects. Fire is a hazard—the wrong combination of firing the heater at the wrong time with the wrong wind gust can put the balloon or at least the pilot and passengers in danger. The basket being lightweight and made of wicker is also easily damaged. This is in part why it is so important for the balloon, rigging, and basket to be inspected preflight to ensure that all connections are secure, the balloon and basket are in good condition, and the fuel lines for the propane tank are in good condition.

Changes in weather affect most modes of transportation, but balloons are more susceptible than most. Staying at lower altitudes makes them more susceptible to changes in wind and down drafts, while flying at higher altitudes makes oxygen levels a serious medical concern. Balloons need to fly in calmer winds, and while wind speeds are reviewed before flight, a sudden change in wind speed can be significantly hazardous, forcing a balloonist to land is a less desirable area. Balloons need solid ground clear of obstacles. A sudden landing may force a balloon into obstacles or swampy land, making landing dangerous and difficult.

Underwriting

Before getting to the actual coverages, some of the unique issues need to be addressed by underwriting. Is the certificate of airworthiness up to date? Balloons used for pleasure must be officially inspected annually, and those used commercially or to carry passengers for hire must be inspected every 100 hours.

Necessary on the balloon and equipment is the year, make, and model of the balloon; how many hours it has flown; size of the envelope/balloon; if the balloon the same age as the basket; the use of custom artwork; the fabric of the balloon; and whether the suspension wires are Kevlar.

Similar information is required on the basket: year, make, and model; number of hours flown; number of burners; date of the last 100 hour inspection and who conducted it; need for repairs; number of passengers the basket can carry; and whether the airworthiness certificate is current.

All these factors will help underwriting determine the eligibility of the balloon for coverage. The underwriter will also want to know how the balloon will be used—for pleasure, for hire, for instruction, for banner flying or for custom envelope flying; and the estimated number of hours to be flown in the next twelve months. Rates will vary greatly for a pleasure balloon used a few times a year and a commercial balloon used weekly for passenger rides. Amounts for the balloon, basket, and contents are generally scheduled.

The pilots must be underwritten as well—they are operating a very large and possibly hazardous piece of equipment; someone with no experience should not be operating a balloon, and someone with past crashes will be charged more if coverage is even granted.

Underwriters will ask if ballooning is a major or minor source of income if the insured is giving rides, how long the pilot has been flying, the pilot's license number, type of license, number of years flying balloons, the pilot's membership in the Balloon Federation of America, total number of hours the pilot has flown in charge, date of last flight review, estimated number of hours flown in past year in all balloons, estimated hours to be flown in the coming year, safety and continuing education classes the pilot has attended, and past five years' experience while flying—noting any accidents, citations, denial of FAA medical certificate, or conviction of illegal or excessive use of alcohol or drugs, whether or not while flying. An insured who has DWIs is apt to be a poor risk in the air as well as on the freeway. When applying for a balloon pilots license the individual is not required to disclose any prior drunken-driving convictions nor do they have to get medical exams from FAA-certified examiners. A statement written by the individual certifying that he has no medical defect is sufficient. Crew underwriting is pretty much the same: balloonists need crew to help set up the balloon, watch weather and hazards while the balloon is in the air, chase it to its landing spot, and pack it up.

Coverages

Policies are generally provided by specialty carriers dealing with aviation and other nonstandard risks. A home and auto policy carrier is not likely going to provide coverage for a hot air balloon, although some might. Coverage is similar to the CGL and commercial property policies. There is not much property at stake other than the balloon, basket, equipment, and belongings of the pilot and any passengers, and property the balloon might crash into. Liability for injuries to any passengers or those at the landing site is also an issue. Since balloons tend to fly early in the morning or in the early evening due to wind patterns and fly in open areas, risks are manageable.

Policies generally address damage to the balloon and its equipment first. Coverage is often for the balloon and equipment up to a specified limit; equipment may have its own limit. There is likely a limit for personal property of passengers. Most passengers will not have much with them other than what they are wearing and purses, wallets, and cameras. Settlement may be for repair or replacement of the balloon and equipment to the condition when new or they may be replaced or covered up to a schedule limit. Balloons with more than two hundred flying hours or over five years old may be limited to their market value at the time of loss.

Some carriers will pay the cost of salvaging the balloon and removal from the scene of the accident to a repair shop. Nothing should be dismantled or repaired without consent of the carrier unless it is to prevent further loss, in the interests of safety, or under order of an authority. If the carrier pays for or replaces the balloon, the damaged balloon becomes property of the carrier. The replacement balloon will be of the same make, type, and in reasonably like condition unless the insured agrees otherwise. Standard exclusions for wear and tear, deterioration, and mechanical or electrical breakdown apply. Some carriers also have exclusions for damage from vermin or insects.

Coverage for passengers is fairly basic and similar to any liability policy. Coverage for injury or property damage to passengers and third parties for which the insured becomes legally liable is covered from an accident or arising out of the ownership, maintenance, or use of the balloon.

Exclusions are the typical exclusions for employees, property belonging to the insured other than the pilot's personal effects, and liability assumed under a contract or agreement unless such liability would have existed absent any such contract.

Also excluded is damage or injury if the certificate of airworthiness is suspended or invalidated, if the pilot is carrying more passengers or load in excess of the balloon and basket's limits, if other insurance applies, nuclear hazards, war, hijacking, noise pollution, or other pollution. Some carriers will exclude certain activities unless they are specifically scheduled, such as night flying except when participating in a tethered night glow, occupant carriage for hire or reward, carriage of external loads, flights for the purpose of breaking records, instructional purposes, or intentional flights over the sea where land mass to land mass exceeds five miles.

Summary

The August 2016 crash in Texas of a balloon that killed the pilot and several passengers has brought coverage for balloons to the spotlight. Coverage is straightforward once the balloon, equipment, pilot, and crew have been underwritten. Balloons tend to operate in sparsely populated areas as they need a significant amount of open area to land safely. Accidents do happen, and as always, insurance is there to provide coverage.