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Insurability and Cost, Part One: Aircraft

By Bob Mackey, Vice President, Falcon Insurance Agency, Inc.

A lot goes into determining whether or not you can obtain aircraft insurance and how much you’ll have to pay. It’s more difficult and more expensive to get aircraft insurance with $5 million in liability insurance coverage than, say, $1,000,000. You will also pay more if you buy hull (physical damage) insurance for anything that might happen to your airplane on the ground, while taxiing, and while flying instead of just getting insurance for the times your airplane is parked on the ramp or stored in a hangar.

There’s another element that will impact your insurability and cost and that’s the aircraft you own. In part one of this series (Aircraft), we look into the impact different aircraft have on the amount you pay for your insurance. Our investigation considers the overall insurability; just how willing the aircraft insurance companies are to offer insurance and the premium you pay for both liability and hull (physical damage) insurance. Let’s get started!

There are many different recreational aircraft types in the world. Just attend EAA AirVenture Oshkosh and spend a day walking around the various areas from the North Forty aircraft camping area all the way down south to the Ultralight Area. You will see more different kinds of aircraft than you could in a month of weekends checking out every EAA Chapter fly-in within an hour’s flying time from your home airport. Each and every one of these aircraft have their good points and their not-so-good points, which may very well impact their insurability.

When it comes to insurability, “common” is good and “uncommon” is not as good, that is, harder to insure most likely more expensive. For example, take your tried-and-true Cessna 172 or Piper Cherokee 180. These airplanes are perhaps the most common airplanes you will find on any given airport, and they are also the most insurable. Why? Because from an insurance company’s perspective, common equates to low-cost for repair or replacement. The more uncommon you get the more costly it is to repair or replace and, therefore, to insure.

By comparison, as you stroll through the Vintage Aircraft Area you will see airplanes you’ll most likely not recognize. (Thank goodness people put prop cards on their airplanes!) Forgetting the difference in value, consider the cost associated with repairs to a Cessna AirMaster. Yes, it is a Cessna; however the availability of parts is as rare as the airplane. The impact on insurability and cost, again forgetting the value of the airplane, will be substantial. While the Cessna 172 at $35,000 may cost a mere $800 for insurance, ($300 for liability and $500 for Hull) the AirMaster at $100,000 could run as much as $4,500, ($500 for liability and $4,000 for hull), all because the insurance company is concerned about the cost of repairs and availability of a repair shop capable of properly handling the work.  (Please keep in mind these premiums are strictly estimates and the actual premiums will vary based on other things like pilot skills, type of flying, and home airport, all of which we’ll talk about in the next two articles in this series.)

Now, before you get the wrong impression, I am not saying you shouldn’t want to own a less common airplane. Not at all! Fact is there are varying degrees of differences when you consider different airplanes. The point is you should consider these differences when you go looking to buy an airplane. Most importantly, you should check with the EAA Aircraft Insurance Plan to find out how much insurance is going to cost.

When I was considering buying a Cessna 170A, I was advised to consider the cost difference for engine overhaul (i.e. 6 cylinders verses 4 cylinders). But I decided to go with the 6 and never looked back. I will never regret the many hours I flew my Cessna 170A, especially the smoothness of the 6 cylinders humming away up front.

You should apply this same logic when considering the purchase of an airplane. Make the free call to Falcon Insurance Agency, 866/647-4EAA (4322), the official agency for the EAA Plan, and find out from a specialist the costs to insure the various airplanes on your short list.

One parting comment: I hear a lot of people say they are going to reduce the cost of their insurance by lowering the coverage amount on the hull (physical damage). WARNING: do not underinsure your airplane! If you airplane is worth $50,000, then insure it for $50,000. Why? Because your hull insurance is what is called “stated value,” which means if there is a loss the insurance company will determine how they will pay your claim based of that value. If you under insure, say $30,000 you stand the chance of your airplane becoming a total loss because the repair costs and the salvage value together far exceed the insured value of the airplane.

The specialists at the EAA Insurance Plan guard against this happening so don’t be surprised if you’re told you can’t underinsure your airplane. These folks are actually helping you avoid the potential for a major problem if an accident occurs. Just make sure you buy the right amount of insurance and the EAA Plan specialists will help make sure you do just that.

In Part 2 of this series, we will get into the difference pilots skills and experience makes in the cost of airplane insurance. In the mean time, if you have a topic you’d like to see covered in Insurance Tips, please let me know at bmackey@falconinsurance.com, To get in touch with the EAA Aircraft Insurance Plan, pick up the phone and call 866-647-4EAA (4322) or go online to www.eaainsurance.org. Let the EAA Aircraft Insurance Plan help you get great insurance, save you money, and get outstanding service at the same time!

EAA members have a great resource at their fingertips. Call the EAA Aircraft Insurance Plan (Falcon Insurance Agency) toll-free 866-647-4EAA (4322) or e-mail me at bmackey@falconinsurance.com. I’ll make sure you are contacted by one of the insurance specialists with the EAA Plan.

EAA INSURANCE TIPS is a special EAA Member benefit. If you have an insurance related topic you’d like to see addressed or if you have any comments, please email bmackey@falconinsurance.com. If you need an insurance quotation call 866-647-4EAA (4322).

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