Contingent and possessed cover
Cover bought by an aircraft lessor that responds when the lessee airline's insurance fails or when the aircraft returns to the lessor, and that carried most of the litigation over aircraft stranded in Russia.
An aircraft lessor is normally protected by the insurance of the airline operating the aircraft, which names it as additional insured and loss payee. Contingent and possessed cover completes that structure with two parts. The contingent part responds when the airline's policy fails to pay when it should have, because it was canceled, an exclusion applies, or the local insurer cannot transfer funds. The possessed part covers the aircraft during periods when the lessor has repossessed it and has custody. Each comes in an all risks version and a war risks version, and the line between the two is the main issue in claims. This cover was a quiet niche until 2022, because a simultaneous default by many airlines and their local insurers seemed improbable. Sanctions against Russia produced exactly that correlated default: a political risk triggered hundreds of contingent covers at once, revealing an accumulation nobody had modeled.
After the EU requirement to terminate Russian leases before March 28, 2022, more than four hundred leased aircraft remained in Russia. AerCap, the world's largest lessor, took a charge of about 2.7 billion dollars on its stranded aircraft, then sued its insurers in London. In June 2025, the High Court held that the losses fell under war risks covers rather than all risks covers.
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