Key Considerations when Purchasing Aviation Insurance
An aircraft must be insured before it can fly. Hence, operators of aircraft are required by law to have a certain minimum level of insurance in place. The amount of insurance coverage you need depends on the size and type of aircraft that you own, as well as the equipment you have on bord. Basically, the insurance must cover passengers, baggage, third party cover, cargo and risk of war and terrorism (war risk). If you are planning to fly internationally, you will need to make sure your aircraft’s insurance also includes international liability coverage.
Therefore, it’s critical that you understand what you need and what you are getting when purchasing your aviation insurance policy. The below pointers will help you avoid purchasing a policy that doesn’t meet your needs.
Be aware how aviation insurance is sold – Aviation policies are underwritten by insurance providers but sold by independent insurance producers, which are mainly referred as insurance brokers. It is important that the broker behind the policy has strong balance sheet and demonstrated expertise in aviation, who will help you choose the policy you need and be able to represent your interest in the insurance aviation market properly.
Consider the consequences of an “agreed value” basis – Aircrafts are insured on an “agreed value”, which means that premiums charged for physical damage to the aircraft are a percentage of the value on which you and the insurer agree. Being aware of that, you might be tempted to insure to a value less than true value of your aircraft to save on the premium. Nonetheless, it might seem right to select a higher value, so you would have more options in the event that damage sustained cannot be repaired.
Consider liability insurance and whether you are required to have it in your area – This type of insurance is not required by law, and you might consider not to add it into your policy. However, in case your aircraft is involved in an incident causing an injury, death, or significant property damage the legal liability you could face might be substantial. If you have in place liability cover, the insurer will also pay for your legal defence if you are sued for these losses.
Have market research on how much insurance will cost – Before you begin the purchase process, having a rough idea of what you will likely be paying can be helpful. The airlines insurance market was challenging in the first quarter of 2022, and will likely remain so for the near term, continuing a trend that began in the fourth quarter of 2018. Rate increases have been driven in part by the fallout from the COVID 19 pandemic, challenging insurance market conditions across all major product lines, and factors unique to the airlines market as well as the wider insurance market.
How to minimise aircraft insurance cost?
The best way to keep your aircraft insurance costs to a minimum is by remaining claim free but that is not always reachable. On that account there are other things you can do to try to keep costs down. Using a hangar might be a good choice as the likelihood of damage to your aircraft is lessened when you store it in a hangar. In this way the aircraft is protected from variable temperatures, the sun, wind, hail, and other weather. Pilot proficiency training might be able also to lower your insurance rates. The more training you have, the lower the risk of an accident. Annual training might be required to maintain coverage. Increase flight hours as many insurance companies use the total number of hours as a factor in calculating the risk of insuring aircraft. Having more than 5,000 hours of flight time reduces the risk of a crash by up to 50%.
Brookfield Support in purchasing or renewing your policy.
Brookfield Aviation has partnerships with different insurance brokers to offer you access to a high-quality product that can be tailored to fit your needs. Insurance coverage for your specific aviation need. Our partners are specialised in any type of aeronautical risks starting with aircraft operations (from turboprops to wide body airliners, as well as helicopter operations), used for regular, governmental, offshore, firefighting, Medevac, VIP transportation, cargo operations, and charter flight, among others. If there is interest, please contact email@example.com