EAA Insurance Solutions: Flying Club Aircraft Insurance
January 13, 2015 - There is no “one size fits all” approach to Flying Clubs. They come in all sizes, serve a variety of missions, and fly a full range of aircraft. But they all have one thing in common —every flying club needs the right aircraft insurance at the best price!
Before we get into insurance, it helps to look at the motivations for forming a flying club:
- a better proxy for aircraft ownership (versus renting)
- variety of aircraft
- shared responsibilities
Flying clubs offer a great way to fly when individual aircraft ownership may not be an option. Plus there can be an added advantage being part of a group of aircraft owners who share friendship and fun.
Flying clubs also give you options. You’re not limited to flying the same aircraft even when that aircraft may not fit the bill for the type of flying you want to do that day.
The concept of shared responsibility is at the heart of flying clubs and insurance can be a major financial factor in aircraft ownership. Flying clubs can spread the cost of aircraft insurance across a large group, lowering individual cost. However, there are a few important factors that must be considered to ensure the club and each individual member is properly protected.
Here is a list of some of the things that can impact the cost or availability of aircraft insurance for flying clubs:
Aircraft: The aircraft being insured will have a direct impact on the cost of insurance and also may impact insurability. Standard category, fixed-gear airplanes are cheaper to insure than gyrocopters. Why? It is simple. Gyrocopters are more likely to have a loss (claim) than a standard category fixed-gear airplane. Also, aircraft that cost more to repair, like a tube and fabric airplane, are going to cost more to insure. A flying club with a gyrocopter or an aircraft that costs more to repair may still be able to get insurance — they just might pay more.
Amount of Insurance: The amount of insurance will directly impact the cost of insurance. Higher valued aircraft or high limits of liability insurance will be harder to get and will cost more. The normal liability insurance limit, whether you’re an individual or a flying club, is $1,000,000 per occurrence for bodily injury and property damage subject to a $100,000 per-passenger limit. Increasing the passenger coverage will cost more, or might not be available. The same goes for aircraft physical damage insurance. Insurance underwriters may ask a lot more for insurance on higher-valued aircraft.
Club Structure: The structure of the club may impact the cost of insurance. Equity flying clubs, where each member has an ownership share in the club, may be considered a better risk than a non-equity flying club where members have no ownership. Insurance underwriters generally equate ownership with a greater sense of responsibility. Non-equity flying clubs are certainly insurable; they just might need to be prepared to show their members have the same pride of ownership as equity clubs.
Club Operations: This is probably one of the most important areas where a flying club can either help themselves or hurt themselves. Flying clubs that manage aircraft maintenance, use a scheduling process, and manage pilot records and pilot currency will find getting affordable aircraft insurance easy.
Number of Members: Bigger isn’t always better! Insurance underwriters typically get concerned when they see 20, 30, or more pilots per aircraft. It’s simple. The more pilots there are, the more the aircraft will be flown. Another issue with size can be managing pilot records and staying on top of pilot proficiency.
Pilot Experience: Matching pilots to aircraft applies to all aircraft ownership. Clubs with high performance aircraft are going to find it challenging to obtain affordable insurance if they have pilots that are not qualified. The same applies to clubs with pilots who have issues on their record (e.g., losses/claims, violations, suspensions, DUI convictions, etc.).
Club Experience: Clubs with a checkered history of losses/claims will find it much more difficult and more expensive to obtain aircraft insurance. Clubs with past losses/claims can overcome this hurdle by showing how they have taken steps to rectify their bad experience.
Airport: The airport and whether aircraft are hangared or tied-down will impact the cost of insurance. If the airport is suited for the aircraft, then the airport should not be an issue. Hangared versus tie-down will usually be a 5 to 10 percent difference in the cost of the aircraft physical damage insurance.
Since buying aircraft insurance in a way is like selling the quality of the club, make sure your club includes the following items when looking for insurance:
- Bylaws (and list of Officers)
- Operating Rules
- Member Roster
- Aircraft Information
- Airport Information
- Club History
- Scheduling Process
- Aircraft Maintenance Procedures
- Membership Application
- Club Promotional Materials
- Any other materials or information that demonstrate just how great your club is!
I’d like to share a couple parting thoughts on flying club insurance. First, you should know that some insurance companies have a less than favorable view of flying clubs. Why? Insurance underwriters, the people that set the price for insurance, are like elephants; they don’t easily or quickly forget! Flying clubs over time have had their share losses (claims). Some losses were due to the stuff that can happen to any aircraft owner; however, some losses have been due to things like: pilot currency, aircraft mechanical issues, pilot error, and other things that might have occurred due to shared ownership.
Second, one of the most important things to remember when your flying club is looking for aircraft insurance is to make sure you are working with an experienced knowledgeable aviation insurance professional. Finding the right aviation insurance broker can make the difference in getting a great deal on aircraft insurance for your flying club. You do not need to call more than one broker because the right one will know exactly how to help your flying club get the right insurance at the best price.
If your flying club needs assistance EAA Insurance Solutions administered by Falcon Insurance Agency, Inc. is here to help. Give us a call at 1-866-647-4322 or go online for a Free Quote. Also, remember when you insure through EAA Insurance Solutions you are supporting EAA’s youth, education and safety programs!
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.
By Bob Mackey, Senior Vice President, EAA Insurance Solutions Administered by Falcon Insurance Agency, Inc.