Getting over the aircraft insurance hurdles

By BOB MACKEY

Some people say the happiest days of owning an airplane are the day you buy it and the day you sell it. I couldn’t disagree more. Others might say buying aircraft insurance is a pain in the you-know-what. That’s not true either.

As an insurance agent specializing in aircraft, I have the opportunity to talk to pilots who are considering an airplane purchase just about every day and I can tell you finding the right aircraft insurance at the right price does not have to become a hurdle.

BobMackeyIf you will forgive the cliché, let’s put on our track shoes and knock down some hurdles.

A few factors can impact the availability and cost of aircraft insurance, such as the aircraft, pilot, location (airport), and type of flying. Any one of these can throw a monkey wrench into the works, but they don’t necessarily have to be a deal-breaker.

Some aircraft are more difficult and/or expensive to insure than others. A couple of driving forces are repairability and history. Typically a tube and fabric aircraft or a composite aircraft may cost more to insure than a metal aircraft. Why? Because not all maintenance shops have the skills to repair a fabric or composite aircraft, and parts may also cost more.

Another issue may be an aircraft’s rarity, which goes back to the point of parts availability or skill to repair.

Some aircraft may be more difficult or expensive to insure because of their accident history. As an example, the Piper Apache and the Cessna Cardinal with the 150 horsepower engine are not on the most desirable list with most insurance companies. I think these are both great airplanes; it is just that insurance companies have paid more claims with these models because a few pilots have gotten too far on the backside of the power curve, leading to accidents.

Other aircraft that have caused concerns for some insurance companies are high-powered, go-fast homebuilts (read: expensive), such as the Lancair IV or the Stewart 51. Again, in my opinion, these are super airplanes, but they are high-performance and high-valued birds.

How does the pilot become a factor? It really comes down to pilot experience versus the aircraft. The other day I got a call from a student pilot wanting to know how much it would cost to get insurance on a Culver Cadet. Nice airplane, retractable gear, tailwheel, and not too expensive. The problem is this airplane was not the right match for a student pilot.

During our conversation I could hear him coming to the conclusion that a student pilot cannot get insurance on any airplane. This is definitely not the case. What is true is that a student pilot can get aircraft insurance if the airplane is an appropriate training platform. Right airplane with the right pilot is good. Wrong airplane with wrong pilot is bad.

Something that can also be a factor is the location and airport where you plan to base your airplane. It can be more difficult or expensive to insure an airplane in places where losses occur more frequently or losses may potentially be more severe.

Places where weather may be an issue, such as hurricane-prone locations, can impact the availability and cost of insurance. Remote locations, such as Alaska — where an off-airport landing can quickly become a total loss due to the expense involved in recovering the aircraft — also factor in.

The airport you choose is another factor. If you are looking to buy a Piper J-3 Cub and base it on your farm where you have 1,200-foot grass runway, insurance may not be difficult or expensive. If you are thinking about buying a Mooney for your grass strip, now that’s a major factor.

The last factor that can impact your insurance is the type of flying you plan to do. If you are looking to buy an airplane to use for your own personal, non-commercial use you should not have a problem as long as some other factors mentioned above don’t come into play.

If, on the other hand, you are planning to use your airplane for some type of commercial operation, this may have some effect on the availability and cost of your insurance. You will need to discuss this with your insurance agent, which leads us to the four hurdles we will knock down next.

First Hurdle: When you start looking for insurance, start by finding the right aviation insurance agent. You want to look for four key characteristics: Professional aviation insurance agent; one who listens to you and understands what you are looking for; one who gives advice based on what you are trying achieve; and one who helps you learn about your aircraft insurance, laying out all the options for you to consider.

Where can you go to find the right agent? I recommend you ask other pilots and owners. You can also ask your association, such as the Experimental Aircraft Association, or if you belong to a type club you could check with some of the club members. You can also meet professional agents at events like EAA AirVenture Oshkosh or SUN ’n FUN. I usually present three or four forums at both events, plus we always have an outdoor exhibit.

Recommendation: Don’t ask several aviation insurance agents to get a quote for insurance. You don’t go to three different dentists to get treatment for the same tooth. Pick one aviation insurance agent and work with that agent to get your aircraft insurance.

Second Hurdle: Don’t wait until the last minute. You should find an agent before deciding on the airplane you want to buy. You don’t want to find out you can’t get insurance, or the cost of your insurance is substantial, or there are restrictions on the insurance because one or more of the factors we touched on earlier. You can go online to EAA.org/insurance and request a quote, or you can call the EAA Plan at 866-647-4322 to check out aircraft insurance availability and cost.

Third Hurdle: Make sure you know your options. If you’ve found the right agent, you most likely will be working with someone who will make sure you understand the basics of your insurance. Plus you’ll have a clear picture of your options when it comes to insurance coverages. If that’s not the case, go back to the first hurdle and knock it down again. Aircraft insurance is not rocket science; coverages are fairly simple, and understanding all the options will help you save money and reinforce your purchase decision.

Fourth Hurdle: Don’t go cheap…especially when you are buying insurance for an airplane that is new to you or one you just finished building. Do your own risk management. Identify the risks, mitigate the risks, and then buy insurance for the risks you cannot mitigate. With a new airplane, whether purchased or built, there are many risks that might be unknown to you or you may not be able to mitigate. Your agent can get quotes with and without aircraft physical damage insurance, but that’s not what I recommend the first year. Plan and budget for full insurance coverage the first year.

When year two rolls around you can consider going without the in-motion aircraft physical damage insurance, if you are comfortable, but don’t go cheap the first year. Also, make sure you get more than adequate transition training. Transition training is just another form of insurance.

I want to close with one final recommendation: Establish a relationship with the agent you select. Don’t treat your agent like the enemy. Your agent is working for YOU, not the insurance company. I’m not saying you need to send Christmas cards, just remember your agent should be part of your airplane ownership support group, just like your mechanic and fellow owner/pilots.

I hope you will enjoy airplane ownership as much as I have! Best wishes for safe flying!

Bob Mackey is senior vice president of Falcon Insurance Agency, which administers the EAA Aircraft Insurance plan. He has more than 35 years experience with aviation insurance and is a commercial and instrument rated pilot. You can reach him at bmackey@falconinsurance.com

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