WHAT TO KNOW ABOUT INSURING AN AIRCRAFT

Insuring an aircraft or an aviation business is an essential part of ownership. Whether you’re a private pilot or you manage a fleet of corporate jets, understanding the types of coverage, how costs are affected and how to select the right policies can be a complex process. This article offers a comprehensive view of what aircraft owners and operators need to know about their insurance. This includes premiums, types of policies and regulatory requirements.

Patriot Growth Insurance Servies specializes in aviation coverage. For specific information about your needs email us at contact@patriotgis.com. We can put you in touch with an aviation expert. Patriot has extensive experience with small personal planes, large fleets of corporate jets, former military aircraft, helicopters, flight schools, fixed-based operators, hangers and drones. Find more information about our services at the end of this article.

Aviation Insurance is Unique

Aircraft insurance differs from automobile or home insurance in that it requires specialized knowledge about aviation. Aircraft insurance typically falls into two categories: Hull Insurance and Liability Insurance. Both are part of an overall policy, but they serve different purposes. There are several additional coverages that can be tailored to the specific needs of the insured.

Hull Insurance covers damage to the aircraft itself, similar to comprehensive coverage in car insurance. “All-risk hull insurance” provides protection against all types of physical damage to the aircraft, regardless of the cause. Although some exclusions might apply, depending on the policy.

Liability Insurance covers third-party damages. This includes both bodily injury and property damage liability. There are two types:

• Passenger liability covers injuries to passengers on the aircraft.
• Third-party liability covers damages or injuries to people or property on the ground or in other aircraft.

Additional Options

• “Grounding coverage” protects an aircraft that has been grounded due to mechanical issues or damage.
• Loss-of-use insurance covers costs associated with a grounded aircraft, such as rental fees for a replacement plane and lost opportunity costs.
• Commercial general liability covers damages or injuries that might occur while the aircraft is in a hangar or other facility.
• Non-owned aircraft liability is tailored to people who fly aircraft they do not own. It generally covers most issues from their operation of the aircraft.

CONSIDERATIONS FOR AIRCRAFT INSURANCE

There are several factors that influence policy terms, coverage options and premiums. They include:

Pilot Experience and Qualifications

Underwriters often review a pilot’s qualifications, experience and flight hours when determining a policy’s terms and costs. Pilots with more flight experience, a higher number of hours logged or specific ratings – such as multi-engine or instrument ratings – often find lower premiums than less experienced pilots.

Aircraft type, age and value

The make, model and age of a plane or helicopter plays a significant role in determining the insurance cost. Newer, higher-value aircraft typically demand higher premiums for hull insurance. Some older aircraft also can be more expensive, especially if parts are hard to replace or repair.

Aircraft Usage

How an aircraft is used is another important consideration. Planes used for personal or recreational purposes tend to have lower premiums, compared to those used for commercial purposes, flight schools and corporate travel. High-risk activities, such as aerobatics or flight training, can increase premiums.

Location and Storage Conditions

Where an aircraft is based, operated and stored affects costs. Aircraft based in areas with high risks, such as severe weather or frequent theft, may cost more. Aircraft stored in secure hangars generally qualify for lower premiums than those kept outside near the runway.

Safety Features

Aircraft with modern safety features such as advanced avionics, anti-collision systems and enhanced navigation might be eligible for discounts. These features reduce the likelihood of accidents, making the aircraft safer to operate.

Safety Programs

Some insurers offer discounts to pilots and operators who participate in safety training programs, continuing education or demonstrate a strong safety record.

REGULATORY AND LEGAL ISSUES

Federal Aviation Administration (FAA) Regulations

In the United States, the FAA governs the operation of all aircraft, and insurance requirements for commercial and private pilots are no exception. While the FAA does not mandate minimum coverage for private aircraft, certain operational conditions can require specific levels of liability insurance.

State Regulations

Several states or localities have additional insurance requirements, such as mandatory liability coverage for aircraft registered within their jurisdiction. It is important to learn these regulations in your state to ensure compliance.

Insurance for Commercial Operators

The FAA has specific insurance requirements for commercial aircraft, including flight schools, charter services and business jets. This includes minimum liability limits. It is important to work with an aviation broker to ensure full compliance with all legal and regulatory standards.

DETERMINING INSURANCE PREMIUMS

The cost of insuring a small aircraft can vary significantly from multiple factors, including:

• Aircraft Value: More expensive aircraft typically require higher premiums for hull coverage.
• Pilot Risk Profile: A pilot’s age, flight experience and history of accidents or violations can be considered.
• Aircraft Use: Commercial and high-risk uses, such as flight training or crop-dusting, typically draw higher premiums.
• Location: Risks associated with specific areas, such as weather or accident rates, play a factor.
• Deductible: A higher deductible often lowers the premiums, but it can increase the out-of-pocket cost in the event of a claim.

How Premiums Are Calculated

Underwriters consider a variety of variables, often weighing the aircraft’s replacement value, the pilot’s flying experience and the location of operations. Insurance brokers or agencies that specialize in aviation can customize policies to fit the unique pros and cons of each policy holder.

WORK WITH AN AVIATION INSURANCE BROKER

An aviation insurance specialist can help navigate the complexities of aircraft policies, ensuring that owners are getting the best coverage and most affordable premiums for their needs. Brokers have access to multiple insurance carriers and can often negotiate better terms and rates based on unique situations.

Review Policy Exclusions

It is essential to understand what is and isn’t covered in your aviation policy. Common exclusions include damages from acts of war, certain types of weather events and maintenance-related issues. Carefully review these exclusions to avoid surprises and ensure your policy suits your needs.

Ensure Effective Liability Coverage

Liability coverage should protect against potential claims for bodily injury or property damage. This could include evaluating how much coverage is needed for both passenger liability and third-party liability.

Periodically Review and Update Your Policy

Over time, an aircraft’s value can decrease; the pilot’s experience can increase, and the use of an aircraft or fleet can change. This is why it is important to revisit your insurance policy to ensure it remains effective for you and affordable.

Patriot Growth Insurance Services maintains one of the most diverse sets of aviation clients in the industry. In addition to former military aircraft, corporate jet fleets and flight schools, the company has become well known for its ability to manage mixed fleets of aircraft. This is a significant advantage over many aviation brokers, who tend to focus on one type of aircraft. Patriot’s experience and ability to manage multiple assets within grouped and bundled policies enables more comprehensive coverage at reduced rates. Talk to one of our experts about what Patriot and its partner agencies can do for you. Contact us at contact@patriotgis.com.