Aircraft Registration, Title and Insurance - More than Meets the Eye
By Marci Veronie, Senior Vice President, Avemco Insurance Company
One important step in aircraft ownership is the registration of the airplane with the FAA. It is usually not a particularly complicated undertaking, and all information on airplane registration may be found on the FAA website.
When one of our current clients files an insurance claim, Avemco Insurance Company uses that same FAA registration record to confirm that we are defending the correct entities and making payment to the legal owner of the aircraft in the event of damage to the plane. Claim defense and payment for aircraft damages may be delayed if the FAA records report ownership other than what is indicated on the insurance policy.
If there are old liens on the aircraft, they will need to be cleared before payment for repairs or a payment for a total loss can be made to the policyholder. Many of the issues associated with old liens can be avoided if a title search is done as part of the pre-purchase inspection. If that is done, it is the seller’s responsibility to clear up outstanding issues before the sale.
In the event of a claim, it is the insured’s responsibility to provide a clear title - discrepancies may cost time and money during the settlement process.
Consider this scenario: A policyholder is involved in an accident resulting in third party bodily injury or property damage where they have not properly registered the aircraft with the FAA. In this situation, the registered owner (who thought they had sold the aircraft and no longer owns the title) may be brought into a lawsuit simply due to their apparent “ownership,” as indicated in the registration records. That prior owner is going to spend time, money, and aggravation trying to remove themselves from the suit. I don’t have to tell you who they are going to look to for reimbursement for the time and legal expense to defend themselves. This reimbursement would logically come from you, the current owner of the aircraft.
You also have to consider the FAA aircraft Re-Registration and Renewal rule that went into effect October 1, 2010. Per the FAA, you are now required to reregister your aircraft every three years.1
Failing to reregister your plane per FAA requirements, can hinder the settlement of a claim. There are also non-insurance issues. You may have difficulty selling the aircraft if it does not have a clear title, and the FAA may have problems with the owner who does not correctly record the ownership interests.
The inaccurate aircraft registration is an all-too-common occurrence in claims adjusting. It has been noted that old, unreleased liens and the Named Insured on the policy not matching are common issues that must be resolved ahead of claim settlement.
Please do yourself a favor; take the time now to make sure that your aircraft registration is what it is supposed to be. You may be delighted you did.
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Marci Veronie is the Senior Vice President of Sales and Marketing and has been with Avemco since 1986, serving the insurance needs of general aviation aircraft owners and pilots. She holds a property/casualty insurance and life health license in all 50 states and has extensive knowledge of aviation insurance and the aircraft that Avemco covers. Marci is active in Avemco’s loss prevention efforts by developing educational programs and training for her staff. She has been a member of Women in Aviation International (WAI) since 2001 and a member of the local DC chapter. In March 2015, Marci was elected to the Women in Aviation International Board of Directors and was selected as Vice-Chair of WAI in 2017.
Avemco® does not provide technical or legal advice, and is not affiliated with companies whose products and services are highlighted, advertised, or discussed in content contained herein. Content is for general information and discussion only, and is not a full analysis of the matters presented. The information provided may not be applicable in all situations, and readers should always seek specific advice from the FAA and/or appropriate technical and legal experts (including the most current applicable guidelines) before taking any action with respect to any matters discussed herein. In addition, columns and articles solely reflect the views of their respective authors, and should also not be regarded as technical or legal advice.