Frequently Asked Aviation Insurance Questions
Do I need to call multiple aviation insurance brokers?
Can I buy a short-term aviation insurance policy or trip insurance?
Can I reduce my premium by taking higher deductibles?
What liability limit should I choose?
What value should I insure my aircraft for?
Who can I allow to fly my aircraft?
Where can I fly my aircraft?
Can I charge people for the use of my aircraft?
Why do my premiums continue to go up?
What can I do to lower my premium?
Do I need to call multiple aviation insurance brokers?
No. Our agency has access to all of the aviation insurance companies and we handle the shopping for you. Regardless of whether you are new to our agency or you have been with us for 20 years, we handle the process the same. We take all of your risk information and shop the market for the best deal. Yes, price is important, but our goal is to provide you with a quote for the best coverage for the most competitive premium. There are other things to consider when buying a policy as well, such as a companies claims track record and/or a companies financial viability. Unlike fire and auto policies, aviation insurance policies can vary widely from one carrier to another and it is best to deal with a broker that specializes in aviation insurance.
Can I buy a short term aviation insurance policy or trip insurance?
Unfortunately, no. A short-term policy does not exist. The aviation insurance industry only offers a 12 month annual policy.
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Can I reduce my premium by taking higher deductibles?
Historically the aviation insurance market has not made higher deductibles an attractive option for pleasure and business aircraft owners. Aviation insurance is subject to large catastrophic losses, not small, frequent claims for which deductibles were designed to alleviate. In order to have any effect on the premium, the deductibles would need to be at least 5% to 10% of the aircraft insured value and the reduction in premium is rarely worth the additional risk. Higher deductibles might help reduce the premium on helicopter and commercial policies.
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What liability limit should I choose?
That question is best answered by looking at your overall aircraft operations. Do you carry passengers often? If so, what kind of passengers are you carrying? Do you only carry family members? If the answer is yes, then maybe you would be comfortable with a lower limit than if you were carrying high net worth clients. We normally advise our clients to buy as much liability as they can reasonably afford and/or a limit that will make them comfortable. In the current aviation insurance market, it is often difficult to meet both objectives.
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What value should I insure my aircraft for?
The important thing to remember is that almost all aviation insurance policies are "stated" value policies. In other words, if you decide to insure your aircraft for $100,000 and the deductible on the policy is $100 and you experience a total loss of the aircraft, the insurance company will pay you $99,900. So, it is extremely important to insure your aircraft for its replacement cost. So ask yourself, if I had a total loss tomorrow, could I replace my aircraft for what I have it insured for? There are negatives to overinsuring and underinsuring your aircraft. The negative to overinsuring your aircraft is the insurance company might be in a position where it would make more sense financially to fix your aircraft than to total it. So you are left with an aircraft with major damage history. The other negative is the opportunity cost of the additional premium you have been paying to insure the aircraft for the higher amount. Underinsuring your aircraft is probably more dangerous. It puts the insurance company in a position to total an aircraft when it should be fixed. And when an insurance company pays a total loss on an aircraft they own the salvage. This would leave you without an airplane and not enough money to replace it.
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Who can I allow to fly my aircraft?
Only those pilots that are specifically named on the policy or pilots that meet all the requirements of the Open Pilot Warranty. Do not allow anyone to take dual in your aircraft that is not specifically approved by your insurance company.
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Where can I fly my aircraft?
Most aviation insurance companies include coverage for the United States, Mexico, and Canada. A few companies exclude coverage for operations in Alaska so be sure to check your policy or call your broker for clarification. Also, if you are planning a trip to Mexico, the Mexican government requires proof of a separate liability policy issued by a Mexican insurer. So in order to avoid complications and other penalties possible under the laws of Mexico, including possible impoundment of your aircraft, you will need to secure a separate liability policy issued by a company licensed under the laws of Mexico. The Baja Bush Pilots recently came out with the following announcement - "The Mexican government has made a recent change that allows US liability insurance to provide protection when in the Country of Mexico. In order for this to be accepted, the words "Liability Insurance in Mexico" must be stated in your policy and that the limits of coverage are covered. (we advise that US pilots continue to purchase Mexican insurance for at least one more year, primarily to insure that Mexican authorities understand that you are covered and don´t face additional challenges in the case of an incident" You can reach the Baja Bush Pilots website by clicking on the following link - www.bajabush.com.
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Can I charge people for the use of my aircraft?
Each aviation insurance policy deals with this issue differently. We recommend that you contact your broker for clarification if you do charge individuals or entities for the use of your aircraft.
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Why do my premiums continue to go up?
Profitability has been a real problem in the aviation insurance industry for at least the last 10 years. The Loss Ratios (The ratio of money paid out for claims versus the money taken in through premium) has consistently exceeded 105%. That means the companies have paid out $1.05 for every $1.00 they take in. Here are just a few reasons... the overwhelming reason for higher premiums in all lines of insurance, especially aviation insurance, is increased tort costs. The escalating jury awards in liability cases continue to outstrip the insurance company's ability to stay profitable. The rising cost of hull claims is another reason for the increases. One insurance company that we deal with shared with us the following fact - the average cost of a hull claim in 1997 was $19,000...in 2002 that number rose to over $23,000, or a 21% increase. Also, aviation insurance is different from almost all other lines of insurance for two reasons - Number one, aviation insurance does not comply with the law of large numbers like the auto and homeowners insurance markets do. Number two, aviation insurance is subject to catastrophic losses. Both of these issues make pricing aviation insurance very difficult.
You might ask why the companies continue to offer coverage at premiums they know will cause them to lose money. Well, one of the answers is competition. About 10 years ago, the marketplace had almost double the number of companies that it does today. The companies were forced to accept premiums below a profitable level in order to hold onto market share. Over the last 10 years companies have either gone out of business, left the marketplace or merged with other insurance companies - and now we are left with only 9 domestic aviation insurance underwriters.
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What can I do to lower my premium?
Our best advice would be to make sure your broker has all of your updated pilot information for your renewal, including your updated pilot hours and any initial or recurrent training you completed in the last 12 months. Here are some things that MAY help reduce your premium - participating in the Wings Program; adding additional ratings; Instrument or multi-engine proficiency checks within the last 12 months; annual flight reviews; attending training at a recognized facility for your make and model.
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