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Who’s on First?
Do you need to know the players to get the right aircraft insurance at the best price?
By Bob Mackey, EAA Insurance Solutions administered by Falcon Insurance Agency, Inc.
October 19, 2017 - In the late 1930s, the American comedy duo of Bud Abbott and Lou Costello created a hilarious routine entitled “Who’s on First?” The routine centers around Bud telling Lou the names of the players on an imaginary baseball team. As Bud goes through the names — Who, What, I don’t Know, etc. — Lou becomes more and more confused.
Buying aircraft insurance can also be confusing with all the insurance mumbo jumbo. But does knowing the players on the aircraft insurance field really matter? Is it just about the price or are there any differences from one aircraft insurance policy to the next, or hidden exclusions and traps that might be a problem later.
Knowing the roles of the players involved in aircraft insurance is important — not just to save money, but also to ensure you are buying the right insurance. What might be right for one aircraft owner may not be right for another!
For the sake of this brief article, we will focus on three players: the aircraft owner, the insurance broker, and the insurance company. Each player has a role and an objective.
The owner is the risk manager and decision maker (buyer). The owner must decide if he or she wants to buy insurance, what level of risk to self-insure, and where the limit is on insurance versus self-insurance. In addition, the owner needs to select a broker that he or she is comfortable with and trusts to help review the options and make the right decisions. The owner also must provide the broker with accurate information for his or her pilot qualifications, aircraft, and the type of flying.
The broker must be knowledgeable about aircraft insurance and have a good reputation within the aviation insurance community. The broker must be a good listener and be able to obtain various insurance options for the owner. Most important is the broker’s ability to breakdown the insurance mumbo jumbo so the owner can make an informed decision. Last but not least, the broker must be an educator who can help the insurer understand the individual risk, as well as trends in the personal aviation community. FAA BasicMed offers a perfect example of the role the broker plays in interactions with the insurer. Many insurers looked to leaders in the broker community to understand BasicMed and how it would or would not impact underwriting.
As for the insurer, well this is where the underwriting takes place. With the broker acting as a dealmaker, the insurer comes up with the options and pricing, and the broker may tell the insurer if they are competitive or off the mark. Keep in mind, the broker is working for the owner and it is the broker’s job to arrange the right insurance at the best price based on owner expectations. Not all insurers are interested in insuring every pilot, aircraft, or type of flying. The aviation insurance market is a niche market so the broker may only contact the insurer he or she knows will be competitive. At the end of this step, the insurer and the broker should be on the same page with the insurer satisfied with the risk and the pricing and the broker confident the owner will be pleased. The objectives of the owner, broker, and insurer are aligned from the standpoint that an acceptable arrangement for aircraft insurance is obtainable. There are times when this can be a little more difficult than others depending on many variables. Regardless with the right players the chances should be good for a win-win-win!
EAA members have a great resource with EAA Insurance Solutions administered by Falcon Insurance Agency, Inc. where you will be able to find the right aircraft insurance at the best price. If you would like to learn more about how EAA Insurance Solutions administered by Falcon Insurance Agency, Inc. can help you get the right insurance at the best price, give us a call at 866-647-4EAA (4322) or go online at www.EAA.org/insurance. One of the aviation insurance experts will be happy to help you with your aviation insurance needs.
Bob Mackey is senior vice president with Falcon Insurance Agency, Inc. the official administrators of EAA Insurance Solutions. If you have any comments about this article or if would like to see a specific aviation insurance topic addressed in a future article, send him an e-mail.