Looking at Aviation Insurance Lessons in the Rear View Mirror
It’s important that pilots receive annual recurrent training. It’s equally important that aircraft owners receive recurrent training in the financial aspects of ownership including insurance, asserts Stuart Hope in this review of 2015 issues in the December edition of AvBuyer Magazine.
Somewhere north of 85 percent of all aircraft accidents result from pilot error. Furthermore, if coverage under an insurance policy can only be denied when there is a claim presented and if more than 85 percent of aircraft accidents are related to pilot error, then the most likely area of claim denial will be an unapproved pilot flying the aircraft.
The savvy aircraft owner recognizes this fact and makes certain any pilot flying the company aircraft meets the pilot requirements of the insurance policy to the letter of the law.
Better Aviation Deal?
There is nothing wrong with shopping your aviation insurance for a better deal, but beware you are treading complicated territory. Getting a legitimate apples-to-apples quote on competitive policies is exceedingly difficult. All aviation policies are different.
Every aviation insurance contract is unique; some policies are much broader than others. Certain insurers play hardball on claims, other always look for a way to pay. Unless you are a VERY savvy and educated insurance buyer, you may save a few dollars only to discover after an accident that you’ve lost far, far more!
In layman’s terms this type of insurance covers legal liability for damage to a non-owned aircraft in the insured’s care, custody or control. Generally, this coverage is carried by commercial aviation businesses such as FBOs, Aircraft Repair Facilities and Airport Operators.
If your aircraft is damaged while in the care, custody and control of a third party vendor, the damage has to be a result of the vendor’s negligence in order for their Hangarkeeper’s coverage to respond. Otherwise, the owner’s insurance policy must respond, which means that there’s no coverage for diminution of value or loss of use since such coverage typically does not exist under the owner’s aircraft hull and liability policy.
Claims – Unexpected Curves in the Process
An understanding of the insurance claims process by the aircraft owner will eliminate the most common areas of misunderstanding and pave the way for a more hassle-free settlement of the claim.
Common claims that are not covered include mechanical breakdown, cracked windscreens, and betterment during repair. Be aware if you have a lienholder listed on the policy – their name will appear on the claim check and require their endorsement prior to deposit into your bank account unless you arrange early in the claims process to have them excluded.
Repetition – The Mother of All Skills!
Insurance companies obviously get it. They have a lot of money on the line and have the statistics to back up the fact that pilot training unequivocally lowers accident rates. As we mentioned earlier in the article, they know that 85 percent or more of aircraft accidents result from pilot error, and they realize their focus should be on reducing this number.
To that end, all insurance carriers require recurrent training for pilots annually in turbine and jet aircraft with rare exception. The smartest aircraft owners spare no expense training their pilot crews. After all, some of their most important personnel (including themselves) are riding around in the back of that airplane.
Trends in Aviation Insurance
Since 2005 and continuing today, the aviation insurance industry remains in the softest market in its history. There are now over 20 domestic insurance companies writing aviation policies in the USA. It is a full-out buyer’s market. All aircraft owners are getting a great deal on their insurance coverage.
To further differentiate themselves, many insurers have invested large sums of money into safety offerings to their clients that are in my opinion exceptional. Many of the gurus of the aviation insurance world feel the current market is the ‘new normal’.
Differentiate Among Aviation Insurance Carriers
Some aviation insurance companies have set up partnerships with experts in the fields of emergency response planning, fatigue management and human factors curriculum, and they will pay for their insureds to take advantage of one or more of these safety programs once per year on the insurer’s dime.
Surprisingly, many aircraft owners have not taken advantage of this benefit. Whatever the impediments, this is a no-brainer. If you are an aircraft owner who is insured with one of the insurance companies showing safety leadership, you should be jumping all over this!
BizAv Insurance – Caveat Emptor
Because aviation insurance is a product that many buyers do not understand, beware of misleading advertising and unscrupulous tactics by individuals promising a deal too good to be true. Questionable actors trash the market, creating the perception that better deals exist while indirectly implying current aviation insurance brokers and insurers have been “ripping clients off”.
Rather than competing on the basis of honesty, integrity and excellence, some sellers cannot escape the lure of easy money and adhere to the philosophy “a fool and his money are soon parted”. Don’t get caught in the web of deceit.
Your recurrent training regarding aviation insurance is now complete. If you would like to reread any of the articles in full click here!