Let’s Talk Insurance – Boring! Right? Agreed it is not the most entertaining of subjects to talk about, but what do you really know about your aircraft insurance policy. You get the quote, your agent binds the coverage, you pay the bill, the policy arrives, and you file it away. You might read it before you file it away, or if you’re like me you toss it on the desk in the “to be done” pile and never come back to it. Sound familiar. When you have a question about the policy and your coverage what do you do? You call your agent. That’s a good thing. As an insurance agency we value your phone calls and questions.
What is the most important question - Why do I need aircraft insurance? You need aviation insurance to protect your investment. It’s that simple. Hull Insurance protects the aircraft. Liability Insurance protects you if people or property is damaged.
Once you’ve decided to protect your investment – Who do you call? You call a trusted agent. Ask your fellow pilots who they use and find one that fits your customer service needs. Some are larger companies others are smaller close to home operations that can help you through the process.
When you contact the agent you will be asked to answer some basic pilot history questions. Is it necessary for me to fill out the application? The answer in short is yes. The applications that our office sends out to clients every year gather the most current information on a pilot and the aircraft. We need this information to make sure the underwriter can offer you the best price for your premium dollar.
Rates are determined by pilot experience, year, make, and model of the aircraft. There are also “credits” given for keeping it hangered and being based at a paved runway airport. The more experience you have the better your rate in most cases. Did you install a new Garmin 530 or get a new interior? These things can help to increase the value of your aircraft and an increase in hull value may be advised. Maybe your aircraft is going to be down for an extended period of time for maintenance. Did you decide this year is the year you are relocating to a warmer climate and Arizona is your new home. All of these things are important to your agent to know to help you have the best coverage for your aircraft. Completing the insurance application can be your first step to getting the coverage you need.
The completed application will be submitted to the underwriter and a quote will be generated. The quote will contain the hull coverage and the liability coverage for the aircraft. Aircraft policies are not like car insurance policies. Aircraft insurance policies are stated value policies and do not depreciate in value. If there is a total loss and you have the aircraft listed at a $50,000 hull value, you will be paid $50,000 minus any deductible. Another difference between an auto policy and an aircraft policy is that increasing a deductible does not decrease your insurance premium. Deductibles are not a factor in the actuarial system for aviation insurance. There are two different types of deductibles, in motion and not in motion. An in motion deductible is applied any time the propeller is spinning, while the not in motion is applied while the prop is not spinning. In Motion and Not In motion deductibles vary depending on the aircraft type and pilot experience. They can be as little as $0 and as much as 10% or more of the hull value.
Public liability insurance
This coverage, often referred to as third party liability covers aircraft owners for damage that their aircraft does to third party property, such as houses, cars, crops, airport facilities and other aircraft struck in a collision. It does not provide coverage for damage to the insured aircraft itself or coverage for passengers injured on the insured aircraft. Public liability insurance is mandatory in most cases and is usually purchased in specified total amounts per incident, such as $1,000,000 or $5,000,000.
Passenger liability insurance
Passenger liability protects passengers riding in the accident aircraft who are injured or killed. Coverage is often sold on a "per-seat" basis, with a specified limit for each passenger seat.
Combined Single Limit (CSL)
CSL coverage combines public liability and passenger liability coverage into a single coverage with a single overall limit per accident. This type of coverage provides more flexibility in paying claims for liability, especially if passengers are injured, but little damage is done to third party property on the ground.
If this is a new purchase of an aircraft and you have never had aircraft insurance quoted before, calling 2 or 3 agents will not get you a lower premium. Aircraft insurance agents have a small number of underwriters that we can submit quote requests too. Once an aircraft quote request has been submitted it will block other agents from submitting the same aircraft and owner for a quote. This means that if you have called an agent and have a quote from them, you can’t call our office and get a “better” quote from the same underwriter. A broker of record letter must be signed and submitted in order for them to release the same quote to us for you.
My son/daughter/wife/friend just got their pilot’s license, can they fly my plane? – It depends on what type of pilot warranty you have. Is it named pilot only? You will need to submit a pilot history form to your agent to have any new pilot listed as a named pilot on your policy. Depending on pilot experience and year make & model an additional premium may be required to allow them to fly your aircraft. If a non-named pilot is piloting your aircraft and there is an incident the claim may be denied. This can be a costly over sight. If you have an open pilot warranty it will state the criteria that must be met to be compliant with the terms of the policy. Open pilot warranties can be as open as: any properly certificated pilot who has the owner’s permission and as detailed as any pilot who has 750 hours total time, with 100 hours make retractable landing gear time, and 50 hours in make and model or even more detailed depending on the type of aircraft . Bottom line check with your agent or refer to your policy before you let ANY new pilot fly off with your plane.
Can I fly to Mexico, Alaska, or the Bahamas? You can fly to all of these places, but your insurance may not cover you there. Example: Most policies include Mexico in their covered territory however, to land in Mexico you need a separate Mexican policy issued by a Mexican Agency (we can provide that for you) landing there without the proper coverage could have dire consequences including impounding of your aircraft. Alaska and the Bahamas are policy specific. You need to refer to your agent or your policy covered territories to make certain you have proper coverage for those flights.
If I have an accident/claim will my rates go up? Not necessarily. The underwriters look at a variety of factors. Once of which is how long you have been with their company. For example: If you have been with the same underwriting firm for 5 years with no claims and on the 6th year you have a small claim, they may not raise your rates the following year. It depends on the amount of the claim, previous claim history, and length of time with that insurance company.
What is a non-owned aircraft insurance policy? Non owned aircraft insurance policies are recommended for pilots who do not own their own aircraft and are renting or using any aircraft that they do not have ANY financial responsibility in. Non owned rates are set premiums for multiple limits of coverage.
There you have! Aircraft insurance in a nutshell.
Richard Packer Sr, is President and Owner of Packer & Associates Inc and has accumulated over 10,000 hours logged in single and multi engine aircraft, agricultural, turbine and aerobatic aircraft. Richard received his airframe and powerplant mechanics certificate with inspection authorization in 1975 and is still an active flight instructor, and aircraft inspector. Richard received his Property and Casualty agents' license in 1981 and formed Packer & Associates that year. He has a unique understanding of
the Aviation Industry and it's insurance requirements. We are here to get you the best coverage for your premium dollar. Customer Service is our top priorty.