Case note: whether an aviation policy extends to a claim involving a blimp that was neither owned nor operated by an insured

We recently acted for QBE Insurance in successfully defending an indemnity dispute in the County Court of Victoria concerning the scope of cover available under an aviation policy.

The decision of Cavanagh & Anor v Airship Solutions [2026] VCC 559 delivered on 4 May 2026 by His Honour Judge Palmer, found in favour of QBE in relation to a Third Party Proceeding concerning whether an aviation policy extends to a claim involving a blimp that was neither owned nor operated by an insured at the time of the incident.

The claim arose following an incident where two individuals suffered serious burn injuries while attempting to re-inflate a blimp that was sold to them by Airship Solutions over a year prior. Airship Solutions sought indemnity from QBE for the claims brought against it by the injured parties under its policy which carried a $20 million third-party liability limit. Airship Solution’s argued that the policy extended to the blimp because the policy schedule identified insured aircrafts by model type rather than by serial number or by any specific aerial marker.

We submitted that when as read as a whole, the policy was intended to apply to aircrafts connected to the insured’s operations (i.e. aircrafts owned or operated by the insured and that fell within the model descriptions listed in the policy schedule). The Court accepted our construction and further rejected Airship Solution’s allegations that QBE breached its duty of utmost good faith under the Insurance Contracts Act 1984 (Cth), finding instead that QBE was entitled to reserve its rights while it investigated coverage and later issue a declinature.

Key takeaway

The decision highlights the importance of careful policy construction and precise drafting of aviation policies; indemnity will not be extended to aircrafts that are neither owned nor operated by an insured at the time of an incident. The judgment also provides useful guidance that an insurer acting on a reservation of rights basis does not preclude it from later denying indemnity.