By BOB MACKEY
Whether you are building or flying, there are a few things you should know about aircraft insurance so you aren’t wasting your money and you have the insurance protection you paid for.
During the building phase you have essentially two risks: Someone gets hurt while working on the project and the project is damaged or destroyed.The first risk is your potential legal obligation for the medical and related expenses if someone is injured as a result of your ownership and/or building of an airplane. The second is your potential financial loss if the project is damaged, destroyed, or disappears.
If you are building your airplane at home or some other place where you already have insurance, you may not need insurance for this risk because it is already covered.
As an example, if you are building your airplane in a residential shop, your homeowners insurance should apply. You can check this with the insurance broker who arranged this insurance for you.
If you are building an airplane someplace where you do not have insurance, such as a rented hangar at the airport, then you will probably need aircraft liability insuranceI can pretty much guarantee you the potential loss or damage to the aircraft project itself is not covered by your homeowners insurance. You should check this with the broker who arranged your homeowners insurance policy. If your broker tells you that your homeowners insurance policy does cover the value of your project, GET THAT IN WRITING FROM THE INSURANCE COMPANY!
Here are a couple examples of a typical aircraft project insurance policy:
Example #1: 2017 Sonex Waiex
- Liability Insurance: (Not Needed)
- Physical Damage Insurance ($30,000): $250
- Total Annual Premium: $250
Example #2: 2017 AutoGyro Calidus
- Liability Insurance ($1,000,000): $250
- Physical Damage Insurance ($95,000): $950
- Total Annual Premium: $1,200
You want to make sure you switch from a project insurance policy to an aircraft insurance policy when you are ready to start moving your aircraft under its own power, such as taxi tests and ground handling.
Also you should make sure that your broker set up the insurance with no exclusion for in-motion coverage even though the aircraft does not have an Airworthiness Certificate yet.
Ready to Fly
Okay, you are ready to fly! Here is where you have options. Essentially there are two insurance coverage elements you will have in your aircraft insurance policy.
The first is liability insurance in case you hurt someone or you damage property that belongs to someone other than you. Typically liability insurance will provide $1 million per occurrence with $100,000 per passenger.
The other insurance coverage you will have to look into is physical damage insurance. Here you can consider one of four options: No insurance, ground only not-in-motion, ground only including taxi, and all risks, flight-taxi-ground. The more you cover, the more you will pay.
I always recommend that builders go with all risk physical damage insurance for their first insurance policy. Why?
Well, it’s simple: New pilot and new airplane — what could go wrong? Plenty!
After working so hard and making your aircraft perfect, why take the risk?
Next year or even two years downstream when you are comfortable with your airplane and your airplane is comfortable with you, then revisit maybe one of the ground only options, or you can even go naked…no physical damage insurance.
Whatever you do, make sure your broker gets all of the options for you to consider and then you can size up your own level of comfort with the risk.
I’m not going to include any examples for the flight coverage because there are so many variables, (i.e. aircraft, value, pilot skills, etc.). Just make sure you do not wait until the last minute to work with your broker to arrange your aircraft insurance.
Another thing: Make sure you are ready to fly. Transition training is a critical part of flying any new airplane.
Insurance companies know from their own experience that transition training is extremely important and most aviation insurance companies are going to make it a stipulation of coverage unless the pilot has ample and recent experience in the make and model aircraft.
One of the most important things to remember is to work with an aviation insurance broker who listens to you, has the knowledge and reputation necessary to get all of the options for you and arrange the right insurance, and then you are going to get the best price.
Bob Mackey is senior vice president with Falcon Insurance Agency, the official administrators of EAA Insurance Solutions. A commercial pilot with an instrument rating, he has been involved in the aviation insurance industry for over 35 years. You can email Bob at firstname.lastname@example.org