What’s the impact of COVID-19 on your insurance?

When the FAA announced it would suspend enforcement against pilots who fly with expired medical certificates until June 30 because of the COVID-19 pandemic, pilots were alternately cheered and cautious.

Happy the agency was realizing that renewing a medical during a healthcare crisis is almost impossible, but cautious about what the impact of an expired medical would have on their insurance.

Because — as we all know — insurance requirements are often harsher and more relevant to pilots than FAA regs.

But the aviation insurance industry has stepped up during the pandemic to echo the FAA’s extensions for both medicals and training requirements.

For instance, Starr Aviation, which insures general aviation pilots around the globe, has given automatic extensions to policy holders who may see their medical certificates expire between March 30 and June 30. The extension also applies to training requirements in certain policies.

“When the World Health Organization (WHO) declared a pandemic and various states started social distancing, we began to get calls from customers worried about the requirements in their policies for recurrent training,” said Kyle Sparks, chief underwriting officer. “We immediately knew we needed to make a leadership decision and liberalize the requirements in some of the policies to accommodate pilots right now.”

The decision wasn’t spurred by the FAA’s decision, he noted. That’s because many of the requirements in policies are driven by insurance company requirements, not FAA regulations. These training requirements hit GA particularly hard, as many policies require annual training, according to Sparks. 

The automatic extensions to June 30 affect thousands and thousands of pilots, he added, noting Starr is one of the largest underwriters of general aviation insurance in the world.

And those pilots are responding — overwhelmingly — positively to the news.

“We’ve gotten an amazing response,” he said, noting many have reached out to thank the company for this action.

Other companies that provide insurance to general aviation pilots are also stepping up during these uncertain times, usually on a case-by-case basis, according to Jon Harden, founder of Aviation Insurance Resources (AIR), an insurance broker. 

“Most of the carriers have been very positive when we talk to them about it,” he reports. “In fact, a couple of the carriers actually came out with statements to all their brokers that they will extend the requirements as the FAA has extended it. So it does not violate their policy in any way if pilots fly on an expired medical for that time.”

But Harden advises pilots who may still have concerns to contact their broker or agent “and make sure it’s OK with your policy.”

He notes that most of the calls coming into his Fredrick, Maryland, office are from commercial customers, such as flight schools or companies that operate jets where the pilots have to attend training every 12 months or are required to have first or second class medicals.

“Whenever we have contacted an underwriter for an exception, they’ve been very open and very helpful in getting that done for us,” he reports. “Typically, we like to get something back from them in writing and then just document our file, so that there’s no question if there ever were a loss.”

He advises pilots to follow his lead.

“Have your agent get something in writing from your carrier, and then send it back to you so you’ve got documentation of that, and then everything should be fine,” he says. 

He notes there’s one good thing we’ve seen during this crisis.

“The whole country has been really good about trying to help each other,” he says. “And the underwriters have been the same. They’ve been great to work with.”

Don’t Panic

Harden offers pilots one other piece of advice: Don’t panic.

In fact, he’s says one of the most important jobs of an insurance agent is to put things in perspective for clients.

While some GA policy holders are taking the pandemic in stride, others are in panic mode, afraid they will go out of business if they can’t fly for a month or so.

“You could have two or three weeks of bad weather and you’re not going to fly,” he says. “The reality — so far anyway — is that it hasn’t really impacted things too much.”

He does admit his business has seen a bit of a downturn. People aren’t buying new airplanes right now, so they aren’t getting new insurance quotes.

“Overall, I would say our industry’s pretty solid,” he said. “We’ve seen some flight schools shutting down temporarily. Obviously, that’s going to have a short-term effect on their revenues. But like we tell our customers, we’re all in the same boat. We’re all getting hurt at some level. I think if it goes on long term, that will be a different scenario that we’ll be dealing with, but we have to wait to see what happens there.”

Cash Back

While many people across the nation received emails or letters from their automobile insurance companies promising a credit to policy holders since everyone is driving less, aircraft owners probably shouldn’t expect a similar email from their aviation insurance company.

“That’s an interesting question,” Harden muses. “So far we have not seen any carriers offer that sort of a credit back yet. I’m not sure that they will. It really depends upon how long this goes on perhaps.”

“With that said though, we have had some large commercial operators and flight schools that have requested some relief, and on a case-by-case basis we’ve taken it to the underwriters and they’ve agreed to certain credits retroactively,” he reports. “And some customers are putting their aircraft on ground-only coverage, so they still are protected for liability and damage if a storm or something happens.”

While that can save on premiums for flight schools or companies with lots of planes, it doesn’t make much sense for people who own just one or two aircraft, according to Harden. 

“The savings isn’t really significant,” he says. “And, quite frankly, we’re still seeing general aviation pilots flying. If they are careful and going alone, what harm is that really?”