Do I Need Aircraft Insurance?
Saving Money on an Essential Fixed Cost
Aside from actually buying an aircraft and maintaining it, one of the largest fixed costs you will face in owning private planes, or any aircraft, is the insurance. Insurance isn’t an option—it is a necessity. If you are financing the purchase of a new or used aircraft, there will likely be a minimum amount of insurance that you will have to carry. And while the cost to ensure your aircraft may seem excessive at first blush, it pales in comparison to the cost associated with covering a loss—especially if the loss injures a passenger or damages property on the ground.
So, insuring your new or used aircraft is one of the unavoidable fixed costs of aircraft ownership. There are some ways to ensure that you get the best deal, though. The trick is to not just get a policy, but the insurance policy that is right for you and the type of flying you will be doing. Doing your homework on the front end, as well as whenever the policy is due for renewal, will not only ensure that you are protected but that you aren’t throwing away unnecessary money in the process.
Where to find insurance—and the importance of getting a good broker
When you are first considering buying an airplane, whether it is used for new, you’ll have to immediately start looking for ways of ensuring that your asset is properly insured. The choice is dizzying; there are many long-established vendors of aviation insurance products that you can choose from. Global Aerospace, Starr Aviation, AIG, Phoenix Aviation Management, and USAIG are all experienced companies who deal in aviation insurance. Falcon Insurance, Hardy Aviation Insurance, and STARR Aviation are popular brokers that aircraft owners use. If you are an AOPA member, you can take advantage of their insurance services. AVEMCO also offers an easy to use website that makes purchasing insurance a fairly painless process.
While you can go it alone in your insurance decision, many owners of new and used aircraft can benefit from the services of a local aviation insurance broker. You can find many brokers through a simple search engine search, but going deeper and finding someone that you can discuss your needs within person can reap major benefits. A local broker is someone that you can discuss options with face to face—even go flying with—so that they understand your exact unique insurance needs. One of the dangers of buying insurance is that you might miss an important detail in the quoting process, leaving you with the wrong or inadequate coverage. A good broker will have specialized search tools and relationships in the industry that might net you a better premium rate than you can find on your own. The decision of what kind of aviation insurance to buy and which provider to use is an important one, and it helps to compare and contrast policies face-to-face with an experienced professional.
Different airplanes, specialized issues
If you plan on buying a used aircraft that is a garden variety Cessna 172 and Piper Cherokee, the insurance process will probably be relatively straight forward. But, if you used aircraft purchase search includes rare or specialized types of aircraft, engaging with owners’ groups is essential to your insurance shopping process. There are many specialized aircraft owner clubs that can help, such as the Pilatus Owners and Pilots Association, the MU-2 Aircraft Owners and Pilots Association, the American Waco Club, and the EAA Vintage Aircraft Association. These organizations and the forums dedicated to the aircraft that they cater to, can be important resources for finding insurance carriers and brokers who specialize in these unique and rare aircraft.
Working with your broker or agent
The cost of aviation insurance can vary widely. A basic policy against hull loss for a Cessna 172 can be around $1000 per year. The cost of insuring a complex twin can be $10,000 per year or more. Aerobatic airplanes, tailwheel airplanes or those intended for bush use can be more expensive to ensure than you might otherwise think; remember insurance is all about risk assessment. Whatever used aircraft you are looking to buy, make sure that your agent or broker has all of the right information to come up with a realistic quote. Cheap insurance is not necessarily money well-spent or saved; the wrong policy can end up costing you major money if it doesn’t cover the types of operations you will be performing or the environments you will be flying in. Even geographic area can come into play; policies and Alaska or operations outside of the contiguous 48 United States can add cost to your policy.
Here are some questions that you’ll want to ask your agent or broker to make sure that you get not only the best deal, but the policy that is right for you.
- Do you work with insurance providers in all states?
- What areas of aviation do you specialize in?
- Have you worked with other owners with circumstances similar to mine? Can you provide references?
- Can you provide me with a range of sample policies?
- What makes one insurance quote better than other?
- What insurance pitfalls should I avoid?
- Will you automatically shop around for a better rate when my policy if up for renewal?
- Are there any discounts available for industry groups or aviation organizations that I am a member of?
Keeping costs in check
Once you have settled on the right insurance policy for your recently purchased used aircraft, there are some things you can do to make sure that you don’t spend more than you need to; you might even take some steps that can drive down your premium costs by up to 10% or more. Make it a habit to check in with your insurance provider prior to each renewal; it is a good idea to update them on what kind of flying you are doing, how much you’re flying, and what kinds of training you’ve received that might lower your rates.
Above all else, the best way to keep your insurance rates under control is to not need to use your insurance! Gaining experience and remaining accident and incident free is the best way to avoid spending extra money. FAA enforcement actions can have a seriously detrimental effect on your insurance rates—they can even impact your ability to get insurance at all. The more hours you gain, especially in type, the less you are apt to spend on insurance. In fact, insurance carriers will insist upon you having a certain number of hours in some types of aircraft before they will insure you to fly solo. Be sure to be clear about the requirements before you buy a used aircraft.
Engaging in training won’t just make you a better pilot, but it might just drive down your insurance premium rates as well. Many insurance carriers offer rate reductions for new certificates and ratings earned, especially if those certificates and rating pertain to the kind of flying that you are doing. Credit is also often given for completing FAA WINGS pilot proficiency or FAAS Team training.
Where you keep your airplane will affect your insurance premiums as well, so parking is an important consideration when you are considering buying a used aircraft. Airplanes kept in hangers are better protected, so you can expect that if you choose to hanger your airplane some of the costs of that can be defrayed by lower insurance rates. If you are considering partnering with someone else to buy your used aircraft you might realize some additional insurance cost benefits as well. The cost of insuring your aircraft can be shared by the members of the partnership, but the rates will be based on the least experienced pilot in your group. Make sure you do your homework to find out if a partnership option is really the right one for you.
Thinking about life insurance
It is easy to just think about the airplane when you are considering your aviation insurance options, but you’ll need to consider yourself as well. Most life insurance policies exclude accidental death that happens when you are flying an airplane. Term, universal, and whole life coverage is available for pilots at relatively reasonable rates, but you’ll need to include the cost of this insurance in your fixed cost calculation when you are shopping for your used aircraft.
Here are some helpful insurance links to get you started in your search for insurance for your airplane: