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Hull Insurance Cost Comparisons: Homebuilt vs. Production Aircraft

By Bob Mackey, representative for the EAA Aircraft Insurance Plan, Administered by Falcon Insurance Agency

April 9, 2009 — An EAA member recently asked me the following question: “I’ve owned several airplanes, some were production and some were homebuilts. I found, and it confuses me, insurance costs about twice as much for the homebuilt compared to the production airplanes, even though the airplane values are the same. Why is there such a difference?”

While the universe of personal airplane insurance is large, it’s not large enough to allow insurance companies to develop significant statistical creditability in the prices they set. Even when grouping common airplanes together, insurance companies are forced to rely upon a number of methods to determine rating structures for various aircraft.

In addition to quantifiable statistics, insurance companies also depend upon basic analysis of individual losses and, sometimes, grouped losses (i.e. costs to repair certain homebuilt aircraft vs. costs to repair production aircraft). Let me explain in greater detail.

Suppose you have a damaged homebuilt of tube and fabric construction. This airplane will require special materials not often kept on hand by the repair shop, which might also need to hire a mechanic trained to do this type of repair. A tube and fabric repair may also take more time than a production aircraft. And what if the homebuilt is an airplane the mechanic has never worked on before? An added learning curve would consume more time and, consequently, money.

On the other hand, what if the airplane is a common production aircraft like a Cessna 172 or Piper Warrior? Parts are readily available and mechanic knowledge is not an issue. So the cost to repair the homebuilt could easily be double that to repair the production airplane, which is a factor - maybe not the only factor but a factor nonetheless - that will impact how much you will pay for insurance. Of course if you compare some of the more popular homebuilts to production airplanes you may find the costs get closer together because the construction techniques are similar and parts are more readily available.

So that’s one of the major reasons you will pay more to insure a homebuilt compared to a production airplane. Does that mean homebuilts are unsafe? Absolutely not! Does that mean you should shy away from building or buying a homebuilt? Heavens no! What this means is that while you will enjoy the special flight qualities of a homebuilt you may find the insurance cost higher.

How do you minimize this insurance cost factor? I recommend you go with the EAA Aircraft Insurance Plan because with the EAA Plan you will work with aircraft insurance experts who specialize in all types of airplanes - production and homebuilts. The skills and knowledge of EAA Aircraft Insurance Plan representatives at Falcon Insurance Agency means you will always get the right insurance at the best price. Call 866-647-4EAA (4322) or visit www.eaainsurance.org to submit a quote request.

The EAA Aircraft Insurance Plan provides aviation insurance coverage for a wide range of aviation activities and is administrated by Falcon Insurance Agency, Inc. Bob Mackey is senior vice president of Falcon Insurance Agency, Inc. and you are welcome to send your suggestions for insurance-related topics that you would like to see addressed to Bob at bmackey@falconinsurance.com. Thanks for supporting EAA by participating in the EAA Aircraft Insurance Plan. To obtain a quote from the EAA Plan you may call 1-866-647-4EAA (4322) or you may go online to www.eaainsurance.org.

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