Aircraft insurance—also known as aviation insurance—is designed to protect both pilots and aircraft owners. There are policies available for aircraft owners, aircraft owners who pilot their vehicles and pilots who lease or even borrow the aircraft being piloted. Coverage can vary considerably from one provider and even policy to the next, so it’s very important to understand what your particular policy entails. To help you do that, here are seven pivotal questions to ask your agent.
1. How much liability insurance is enough?
Determining the appropriate amount of liability insurance is not simple. If you’re purchasing aircraft insurance for the first time, an agent can help you determine the appropriate amount based on your exposure. Your exposure can include the value of a rented aircraft as well as the number of passengers you tend to have and any assets that you may have aboard. Recommended liability coverage is usually above and beyond what the law requires.
2. What are the territorial limits?
Aircraft insurance policies will generally have territorial limits. The usual policy purchased in the United States, for instance, will extend coverage to Canada and Mexico but not beyond. However, you shouldn’t assume but rather where your coverage is active. In addition, if you need coverage that extends beyond North America, you need to discuss this with your agent explicitly. Aircraft insurance becomes even more complex and expensive as it extends throughout the world.
3. What options are available to lower premiums?
Just as with auto insurance and home insurance, providers often offer discounts based on a range of factors. Some insurance companies offer discounts for recurrent training as well as having specific instrumentation installed in the aircraft. Membership in certain organizations can lessen premiums as can hangaring your aircraft. It’s also important to make your agent fully aware of all flying hours and training so that you’re properly discounted for having no losses or violations.
4. What is my coverage as an employee?
If you only fly recreationally, then you can skip this question. If you plan to fly as a salaried pilot or perform work for hire, then you need to consider your liability in this context. Isn’t the employer responsible? Yes. In the event of an accident, the owner of the aircraft will be sued. However, there can be a separate lawsuit claiming that the pilot—in this case you—was responsible and/or negligent.
5. What is the proper insured value of an aircraft?
If you want coverage beyond just liability, which is highly recommended, then you need to determine the proper insured value and what is and what is not covered. It’s very important that you neither under insurance your aircraft or over insure it. If you over insure, insurance companies will usually elect to repair and you’ll be stuck with a damage history. If you under insure, insurance companies will cover your total loss, sell the salvage and leave you with no equity.
6. Who may pilot the covered aircraft?
Often, a policy for an owner-pilot will only cover only that particular pilot. If you intend to have other people pilot the covered aircraft, then you need to discuss this with your aviation insurance specialist. If a pilot is not specifically covered, you could be out of luck if an accident did occur.
7. Are ancillary coverages prudent?
Discuss all of the ancillary coverages available to you and how they may be applicable to your situation. These coverages can range from terrorism risk insurance for coverage for engine failure in cases where the engine is actually a converted automobile engine, and often, these add-ons are less expensive than you may imagine but provide great financial protection in return.
8. Is borrowed aircraft covered?
From the insurance perspective, borrowing is different than leasing. Aircraft insurance designed for non-owing pilots—or with a non-owned component—will generally provide a form of renter’s insurance. If you lease a plane and damage it, your insurance will cover that damage. Insurance may also cover borrowed aircraft, but it must explicitly do so. If your insurance lacks that feature, then any damage would have to be covered by the aircraft owner’s insurance or be an out-of-pocket expense for you.