Insurance isn’t sexy. And no matter how cool the cachet of being able to call oneself an aviator, you need to understand insurance if you want to own an airplane. Insurance comes with jargon, so it’s easy to get confused. What follows are a few pointers to better consider how to protect your airplane.
If you want to ensure that physical damage done to your airplane is covered, then you want Hull Insurance. This includes the aircraft’s instruments, radios, wings and fuselage, and any other equipment (so described in the insurance policy) that is permanently attached to the aircraft. The value of all the latter is established upfront; that is, you and the insurance company agree on a value for the aircraft that becomes the amount you’ll be paid if your aircraft gets written off.
The insured value to carry for your aircraft is the amount you’ll need to spend to replace it, to get exactly what you lost. Be careful, however, not to over-insure or under-unsure your aircraft. If you over-insure, you may get more in compensation for damage incurred to the aircraft; however, you’ll be paying too much in premiums, and you’ll end up fixing an aircraft that, in a major damage situation, isn’t worth fixing. If you under-insure, you simply won’t get another aircraft exactly like the one you wrote off.
You can insure your aircraft for In Motion well as for Not In Motion. In Motion is exactly what it appears to be: you’re covered for any physical loss to your aircraft that occurs while the aircraft is in flight. (It does, of course, beg the question: will you still be around to collect.) Not In Motion will cover any loss to your aircraft when the aircraft is on the ground, for any circumstance under which the aircraft is not being operated under its own power. (A twister sawing your fuselage in half would come under the provisions of the latter.)
Your Deductible is your insurer’s way of making you participate in the cost of a claim. It’s their way of giving you an incentive to be careful and not to prang your machine. Make a claim, and that deductible is coming out of your pocket. If you think that your aircraft’s insurance will drop if you choose to accept a higher deductible, it doesn’t always work that way. Airplanes are costly to fix, and insurers know that most claims will far exceed a higher deductible. Thus, the insurer incurs the same amount of administration costs regardless of the size of the deductible.
By law in Canada, you require Third Party Liability. This protects you, as owner, for damage done by your aircraft that causes bodily injury to third parties and/or their property. This coverage does not cover passengers injured in your insured aircraft. For the latter, you require Passenger Liability.
Passenger Liability will cover you if passengers in your aircraft want to sue you for injuries they sustained resulting from an accident while flying with you. Note that passengers are not actually covered for injuries as a result of the accident in your aircraft. Rather, you as the aircraft owner are covered should they sue you for their injuries.
A feature of some aviation insurance policies is their combining of Third Party Liability with Passenger Liability. Such a combined feature rolls the two into a single coverage which contains an overall financial limit – for instance, $1,000,000 – as the maximum pay-out per accident. This combined feature is generally called Combined Single Limit.
Does your experience count for something? Yes it does. Pilots with more experience and a better safety record get lower rates. Statistically, they pose a lesser risk. Higher logged flight hours, currency, time on the aircraft’s make and model, and an instrument rating will reduce what you pay for insurance coverage, or at the very least, prevent your premiums from rising.
Keep in mind that the descriptions above are only an overview of what owners should know, as the basics, when getting insurance for their aircraft. If you’re an aviator who rents or borrows an aircraft from a club or a friend, you’d best check deeply into the aircraft’s owner’s policy before flying it. And make sure you have coverage of your own.