Trading vs broking: what insurance do I need?

An aircraft trader is any company that buys aircraft in its own name, and with its own funds. This includes those who hold aircraft in inventory for resale. Their primary exposure relates to defects or issues with the aircraft itself, which are generally insured under an aerospace products liability policy and are therefore not suitable for professional indemnity insurance.

By contrast, a broker will not buy aircraft with their own funds, or take any more than an agreed amount of the proceeds of an aircraft sale as commission. However, they may enter into contracts as buyer and seller on behalf of their client on a back-to-back basis, or they can bring buyer and seller into a binding contract to which they, as the broker, take no position. In doing so, a broker will owe fiduciary duties to their client, and they can also be held personally liable for damages assumed by third parties that arise from their negligent or fraudulent acts, errors, or omissions as an aircraft broker. These liabilities are covered under a professional indemnity policy.