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Why You Can’t Get Insurance
By Bob Mackey, representative for the EAA Aircraft Insurance Plan, Administered by Falcon Insurance Agency
February 25, 2010 - In the 1960s movie Catch 22, a scared B-25 bombardier sees the horrors of war and tries desperately to get the base doctor to declare him insane so he can go home. He soon, however, discovers the catch: If the bombardier would not care about flying dangerous missions, he’d be insane. Therefore, because he realizes the missions are so dangerous, he must be sane.
Sometimes it must seem there’s a Catch 22 when it comes to getting airplane insurance.
Companies establish their underwriting guidelines, or criteria, based on various data points and some seat-of-the-pants (gut) feelings. There are four primary underwriting elements when it comes to airplane insurance; pilot, airplane, purpose of use, and airport. These components are the first stops in the underwriting process.
The pilot element includes several points; experience (accidents, etc.), qualifications, and health (and age). Any one of these points may cause an insurance company to decline to offer insurance terms.
The airplane element includes type (standard, experimental, vintage, warbird, helicopter, gyrocopter, and sometimes a specific make and model), engine, modifications, and configuration (tricycle, tailwheel, floats, etc.). Here again, red flags in any of these elements could cause an insurance company to say thanks…but no thanks.
How you plan to use your airplane can also come into play when seeking airplane insurance. Most individual airplane owners fly for their own personal use; however if you use your airplane for aerial photography, flight instruction, glider or banner towing, pipeline patrol, etc., any of these uses could make it difficult or perhaps impossible to obtain insurance.
Lastly there is the airport. Perhaps I should say “environment.” The airport, and for that matter the state, each may have an impact on insurability. Runway length, type of runway surface, elevation, and airport location are considered by the insurance companies in the underwriting process. Some insurance companies have minimum runway lengths for a given airplane, while other insurance companies use an across-the-board approach to runway length requirements. The runway surface is also a factor and some insurance companies set their criteria for hard-surface runways only.
The bigger issue of where the airplane is located is also key. Very few insurance companies offer insurance for airplanes based in places like Alaska because the insurance company views this as a more hostile environment, and that equates to more claims and more expensive claims.
Where it becomes really challenging is how the four primary underwriting elements interact. Here are a few combinations:
- Airport, Airplane, Use - OK; Pilot - Not OK
- Airplane, Use, Pilot - OK; Airport - Not OK
- Airplane, Pilot, Airport - OK; Use - Not OK
You get the picture. As an insurance agent (and a pilot) I arrange airplane insurance every day for many EAA members. It can get frustrating when I’ve got three “OKs” and one “Not OK” and a company denies coverage. I’ll try and make a case when there’s a chance to persuade the insurance company underwriter to make an exception, but it doesn’t always happen - especially if the underwriting criteria used by an insurance company are the result of some very bad experiences that cost the insurance a significant amount of money.
It’s just as frustrating when an insurance company changes its underwriting criteria, forcing me to move a client to a different carrier at renewal. This may result in a premium increase, additional restrictions or recurrent training requirements, etc.
My advice: always look ahead and work with your insurance agent. If you are thinking about making changes to your airplane or moving to a different airport or state, talk to your insurance agent to find out if there are any issues, options or tradeoffs to consider. The worst-case scenario is being considered uninsurable. It’s a possibility but hopefully, a very limited one.
Lastly, before you say it I’ll say it for you: “It doesn’t seem fair!” You’re right, but as an industry, aircraft insurance companies worldwide have had poor financial results for a number of years, and I don’t see that changing anytime soon. Nonetheless insurance will continue to be available; some airplane owners will pay a little more for their insurance than others, and some airplane owners will be uninsurable. These are the facts. Work with your agent and together you will know all your options, even if there’s only one, but hopefully not none.
If you would like to know more about EAA Insurance Solutions, or find the right insurance for the type of flying you do, call 866-647-4EAA (4322), or complete an online quote request form. When you insure your airplane through EAA Insurance Solutions you’re helping support EAA member programs for safety, advocacy and youth education.