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EAA Insurance Solutions: INSURABILITY – Nobody likes being told NO!
By Bob Mackey, Senior Vice President, EAA Insurance Solutions Administered by Falcon Insurance Agency, Inc.
November 18, 2015 - One of the first word we learn as a child is no. Regardless of how old or young you are, the word no isn’t what we want to hear. When it comes to aircraft insurance, whether you are buying an airplane or finishing a build, the last thing you want to hear from an aviation insurance broker is no you cannot get insurance.
Several things may impact insurability: aircraft, amount of insurance, pilot experience, intended use, airport, and geographic location. There are other elements that may come into play; however, these are the main factors that might make it difficult and/or more expensive for you to get aircraft insurance. Let’s break these down.
The airplane is probably one of the biggest factors when it comes to getting insurance. Airplanes that cost more to build also cost more to repair, or cost a bunch more if they are a total loss. Typically, high performance airplanes and airplanes that are rare or require specialized skills to repair may also be more difficult and/or expensive to insure. Think of it this way, pretty much anyone can get auto insurance for a 4-door Chevy but not everyone can get auto insurance for a Lamborghini. The same is true for pilots and airplanes.
Amount of Insurance
How much insurance are you looking for? If you are looking for $10,000,000 or more in aircraft liability insurance or if your airplane is worth $1,000,000 or higher you may find it a little more challenging. Insurance companies get nervous when there might be potentially large losses to pay. The high limits of insurance can be mitigated when the pilot experience and other factors like pilot recurrent training are favorable. Just remember high dollar limits might be a hold back if you are not qualified or the aircraft is significantly over-valued.
This can be a big factor! The right pilot for the right airplane isn’t going to be a problem. The wrong pilot—well that’s a different kettle of fish. I once had an EAA member call me when he was ready to buy a Piper Aztec. Great airplane except the EAA member was a private pilot with 100 total hours and no multi-engine experience or instrument rating. Talk about trying to push a rope up a hill! As it turned out, we were able to arrange aircraft insurance. It was not cheap and the insurance company required the EAA member to be dual flight instruction only until they completed their multi-engine rating and instrument rating, and had a total of 150 hours in the Piper Aztec. As it turned out the EAA member was okay with this arrangement because they realized this was the safe and smart way to go. The better a pilot’s experience matches the airplane, the better the results will be when it comes to aircraft insurance.
If you intend to use your airplane strictly for your own personal pleasure and non-aviation business use, you should have no problem getting aircraft insurance. On the other hand, if you intend to use your airplane for flight training, rental, air shows for hire, sightseeing for hire, sales demonstration, or any number of other commercial aviation uses, this will impact your insurability and the cost of your aircraft insurance. Commercial uses should not be a major hold-back unless you are marginally qualified for the commercial use you are considering.
If you have an airplane that is best suited for a 3,000-foot, hard-surface runway, but you have your heart set on keeping it at a 1,500-foot, grass strip, this could prevent you from getting aircraft insurance. Just remember, right airplane and right airport and you are good to go—wrong airplane and wrong airport and you might find it more difficult to get affordable airplane insurance.
If you live in a location with a history of adverse weather like the southeastern coastal regions with their history of hurricanes, you may find it a little more difficult or more expensive to get aircraft insurance. Insurance companies generally will not decline offering insurance where they think weather related losses might occur, they just might charge a little bit more for insurance.
So, how do you avoid hearing no, when it’s time to shop for insurance?
The best advice we can give you is to make sure you are working with an aviation insurance professional. You do not need to call a bunch of brokers. We all use the same insurance companies. What you need to do is find the right aviation insurance professional that listens to you, understands your needs, pulls together a range of insurance options to consider, and has the experience to help you make an informed decision.
When you work with a knowledgeable, experienced aviation insurance professional, they will know how to gather all of your information and present you and your aircraft to the insurance company to get you the right insurance at the best price!
Bob Mackey is senior vice president with Falcon Insurance Agency, 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.
For information on all of EAA’s insurance products, please visit the EAA Insurance Solutions Center