Tennessee Life Producer Practice Exam

If an insurance application for a pilot is approved with an additional premium and the pilot declines that modification, what is likely to happen?

1. The application is automatically denied

2. Aviation coverage is included without extra fee

3. An Aviation exclusion is added to the policy

4. The insurance policy will cover all activities

The correct answer is: An Aviation exclusion is added to the policy

When an insurance application for a pilot is accepted with the condition of an additional premium to cover aviation activities, the approval inherently acknowledges the increased risk associated with air travel. If the pilot chooses to decline this modification, it prevents the insurer from adequately covering that specific risk without the additional premium. In this scenario, the likely outcome is that the insurer will include an aviation exclusion in the policy. This exclusion means that any claims related to aviation activities will not be covered. Insurers often apply exclusions to manage risk adequately while still providing some level of coverage for the applicant's other activities. Therefore, the inclusion of an aviation exclusion ensures that the insurance company mitigates its risk exposure while also allowing the pilot to have coverage for non-aviation-related incidents.