My 4-year-old granddaughter is fascinated with my airplane nuttiness. Every time she hears an airplane, she looks up to find it. We make paper airplanes together, and I have collected paper airplane diagrams for years.
It is amazing how many perfectly good-looking paper airplanes never get very far from the launch point. Sometimes you can see what went wrong. Other times, the darn thing looks exactly like an airplane ought to look. It just won’t fly.
That reminds me of an email I recently received from a client. He sent me a copy of his homeowners policy, which clearly identified the address of his airport hangar as a second “additional dwelling rented to others.” The address was correct. It was printed right there on the policy. Somebody had obviously intended to insure the hangar location.
There was just one problem: This thing isn’t going to fly. Calling an airport hangar a dwelling doesn’t make it one any more than folding a piece of paper into something that looks like an airplane guarantees it will fly.
Insurance policies are designed around exposures. Your homeowners policy is intended to insure your home base, your personal property, and many of the liability exposures that come with ordinary life. It can extend to other property and locations under certain circumstances, but that doesn’t mean everything you own or do can simply be added to it.
A pretty good rule of thumb is that if something is designed to carry you from one place to another, it probably has insurance designed specifically for the exposures it creates. If it is designed to drive, ride, float, or fly, don’t assume your homeowners policy goes along for the trip.
There are plenty of exceptions beyond the scope of this discussion, but the general concept works. For now, we are just talking airplanes and airports.
The biggest challenge with any specialized insurance policy is understanding its limitations. We tend to assume insurance policies are broad and intended to protect us from most of the things that can go wrong. Reaching back to a recent discussion about insurance policies as contracts (A Pilot’s Guide to Aviation Insurance Policies), an insurance policy defines not only what it covers, but also where that coverage stops.
Aviation policies are no different. In fact, because the exposures are so specialized, understanding the limitations can be every bit as important as understanding the coverage.
Aviation is so thoroughly separated from most other insurance that sometimes the result seems almost silly. Say you take the wings off your airplane, remove the engine, and put the entire project in pieces in your garage at home. Your homeowners policy doesn’t suddenly consider those airplane parts household personal property simply because they are sitting next to the lawn mower.
If it is an aircraft or aircraft equipment, you will need to look to aviation insurance for the coverage. Even your toolbox at the hangar may not be covered.
Liability works much the same way. Owning or renting a hangar at an airport does not make it the insurance equivalent of a detached garage behind your house, a storage unit, or a rental home.
An airport creates different exposures. Aircraft are moving around, and people are fueling, maintaining, and operating them. There may be tenants, commercial activities, or other airport operations involved. Those are risks a homeowners policy was never designed to evaluate.
The same separation shows up in personal umbrella policies. Many people buy an umbrella policy to provide additional liability limits over their home, auto, or boat insurance coverage. Some umbrella policies can provide additional coverage when the proper underlying insurance is maintained. Aircraft or aviation liability, however, is commonly excluded.
Some umbrella policies can provide excess aviation liability when specifically written to do so, but you should never assume the extra $1 million of liability protection you bought for everything else automatically follows you into the airplane.
Businesses can make the same mistake. A commercial general liability policy may provide excellent protection for an ordinary business, but that does not mean it becomes aviation insurance when the business starts maintaining aircraft, providing flight instruction, operating an airport, manufacturing aircraft parts, or taking custody of somebody else’s airplane. If you have a mixed business, some aviation and some non-aviation, two policies will likely be required.
There is a reason aviation has its own insurance industry. For example, as an aviation insurance broker, I buy my own home and auto insurance from a local agent who does that stuff. We aviation insurance folks generally know very little about non-aviation insurance products because we aren’t exposed to them in the regular course of our work. Likewise, your homeowners agent probably won’t touch your airplane or airport hangar and likely has few, if any, products designed to insure either.
That separation isn’t a problem as long as everyone understands where one insurance world ends and the other begins. Problems occur when something that looks right on paper is assumed to provide coverage it was never designed to provide.
Talk to your insurance agent about where one policy stops and another begins. A bent paper airplane is easy to fix. A hole in your coverage after the proverbial crash may not be.
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