April 27, 2017 – imagine if your plane could talk. What would I say? I could say that you enjoy a good cross-country flight to new places and make new friends (airplanes), or to familiar places and see old friends. your plane might tell you that you enjoy the twists and turns, or a nice short-field landing on that little strip of grass you visit every Saturday morning for coffee and donuts with friends. If your plane has floats, you may be surprised to find that you enjoy a dip and moor up on a sandy beach to soak up the sun, or take it to that remote fishing spot you love to frequent. Your aircraft can also tell you that you look forward to your annual condition inspection and that you know how important it is to stay in top condition at all times. your plane may share that you get scared when a storm rolls in and you’re tied up at an airport hundreds of miles from home, or the uneasy feeling you get every time your fuel tank runs a little low. These are just some of the things your plane could tell you if it could talk. and your expressed concern for your well-being is why you should consider “hull” insurance against physical damage to the aircraft.
Why helmet insurance?
please indulge me for a moment while I share a brief history lesson. immediately after the first world war, usa uu. offered surplus military aircraft for sale. government. these aircraft were purchased for mail routes, storm surges, flight training, movies, and other uses. many of these aircraft required financing from banks and those banks required that the aircraft be insured against loss. While numerous insurance companies offered all types of commercial insurance, those insurance companies had no knowledge or experience in aviation underwriting. Initially, insurance companies turned to marine insurance underwriters to set insurance prices. These marine insurance underwriters referred to physical damage insurance as hull insurance. the term stuck and is still used by aviation insurance underwriters around the world.
liability against helmet insurance
Aircraft insurance policies have several components; however, there are essentially two main elements of insurance coverage: aircraft liability and aircraft physical damage insurance (“aircraft hull insurance”). while aircraft liability insurance provides compensation to the aircraft owner/insured for their legal obligations for bodily injury and property damage, aircraft hull insurance provides financial reimbursement to the aircraft owner/insured by the “agreed” or “declared” value of the aircraft.
An airplane insurance policy, unlike most auto insurance policies, includes a stated or agreed value, which appears on the declarations page of the insurance policy. this is the amount the insurance company will pay if the aircraft is declared a total loss, less any applicable deductible. if the aircraft is repairable, the declared or agreed value will be the basis the insurance company will use to determine the repairable loss versus the total loss. Originally, insurance companies included deductibles in the insurance policy to ensure that the aircraft owner/insured had an interest in the care and protection of the aircraft. today, most aviation insurance companies have eliminated deductibles; although deductibles will still be used on risks where the insurance company anticipates a greater probability of loss or the possibility that a loss will be more significant (for example, a rotor wing or an aircraft equipped with floats).
what does aircraft helmet insurance really cover?
Aircraft hull insurance, as mentioned above, provides a specific amount of insurance protection that is agreed upon at the time the insurance policy begins. the amount of insurance can be changed during the term of the policy based on equipment added or removed (eg, adding new radios or removing floats), although an insurance company may continue to insure things like floats while they are removed and stored . Hull insurance typically covers all parts that would normally be fitted to the aircraft and labor to repair the aircraft after the incident. may also include portable equipment (eg, portable radios and headsets) if stated in the policy.
What does aircraft helmet insurance not cover?
There are three risks specifically excluded: depreciation, conversion (mechanical lien or other encumbrance of title), and mechanical breakdown, including wear. in case of mechanical failure, the component that fails would not be covered; however, any subsequent damage would be covered. for example: an exhaust valve breaks and the engine shuts down, resulting in a short-airport landing and damage to the aircraft. the exhaust valve would not be covered; however, the resulting damage would be covered.
what are my options?
Aircraft owners/insureds have options for aircraft hull insurance when purchasing an aircraft insurance policy: bare, ground still (gnim), ground and moving (non-flight) and all risk ( flight, taxi and land). The more risks you cover, the more aircraft hull insurance will cost you. for example:
– 2010 rv-6a van ($60,000 value), private pilot with 500 total hours and 250 hours on make and model:
- naked = $0 annual premium
- gnim = $500 annual premium
- ground (not airborne) = $600 annual premium
- all risks = $750 annual premium
- Over/Under Insurance: It is important for aircraft owners/insureds to select an insured value that is what it would take to find the same aircraft of equal value. this is easier to do with standard category aircraft and experimental or light sport category aircraft where large numbers exist. If the aircraft owner/insured insures aircraft hull insurance by selecting a value substantially less than the actual value of the aircraft, the insurance company may declare the aircraft a total loss. Keep in mind that when the insurance company pays a total loss, they take possession of the aircraft and can sell the salvage. about insurance is exactly the opposite. in this case, the aircraft owner/insured is insuring their aircraft at a value substantially higher than the actual value of the aircraft. if a loss occurs and the aircraft is overinsured, the insurance company may endeavor to repair the insured aircraft, which may also result in a history of substantial loss and decreased value after repairs.
- conditions: there is a very important part of the aircraft insurance policy that you should not overlook: the conditions. aircraft owners/insureds should carefully read their entire insurance policy, especially the conditions. the conditions section of the aircraft insurance policy addresses when and what aircraft owners/insureds must report to the insurance company, how and what the insurance company is liable for in payment of a loss (even if the aircraft owner/insured does the repairs themselves), how disagreements between the aircraft owner/insured and the insurance company are resolved, and the responsibility of the aircraft owner/insured to cooperate and assist the company insurance to recover from others. In short: read the policy.
(This is not an actual insurance quote, but an illustration for the purpose of this article.)
What should I take into account?
There are a few things aircraft owners/insureds should be aware of.
Aircraft hull insurance makes up about 65-75 percent of the total cost of an aircraft insurance policy, so it makes sense to understand what aircraft insurance covers and how you can maximize your protection without wasting your money . The first step is to work with aviation insurance people who understand you, what you fly, and the type of flight you take. EAA members have a great resource with EAA Insurance Solutions managed by Falcon Insurance Agency, Inc., where you can find the right aircraft insurance at the best price. If you would like more information on how EAA Insurance Solutions managed by Falcon Insurance Agency, Inc. can help you get the right insurance at the best price, call us at 866-647-4eaa (4322) or visit www.eaa.org/insurance. one of our aviation insurance experts will be happy to assist you with your aviation insurance needs.
bob mackey is senior vice president of falcon insurance agency, inc. the official administrators of eaa insurance solutions. Bob has been involved in the aviation insurance industry for over 35 years and is an Instrument Qualified Commercial Pilot. If he has any comments on this article or would like a specific aviation insurance topic to be covered in a future article, you can email Bob at firstname.lastname@example.org.