The Most Valuable Step in Buying A High-Value Airplane Is the Call to Your Insurance Company
by Mike Adams, Senior Vice President, Avemco Insurance Company
Are you considering a change of aircraft? Don’t forget to check your insurability!
When given the opportunity, most of us will jump at the chance to move up to a plane that may be more modern, faster, complex, and might have a state of the art instrument panel. However, before committing to that plane, you should check your options for insurance. Aviation insurance companies offer coverages based on several factors of the pilot, the plane, and what the insurance company’s exposure will be in the event you have an accident. Don’t assume that because you are insured in an aircraft with a hull value of $100,000, you’ll be able to get insurance if you move into a $500,000 plane, even if it is just a newer better-equipped model of your current plane. While you may be insurable in an aircraft valued at $100,000, that doesn’t automatically mean you will be insurable in a more expensive plane.
Your pilot experience will have a lot to do with what insurance may be available to you. You could purchase a plane only to find out you can’t get insurance for it at all. As the exposure increases, the insurance company will have higher thresholds regarding what they will or will not insure. An example of this is a student pilot owning a lower-value Cessna 172 and taking their lessons in the plane. While insurance companies are comfortable with this aircraft and, say, a hull value of $100,000 if you were to have a brand-new Cessna 172 at $398,000 hull value, you might have trouble getting insurance as a student/low time pilot. Now the insurance company is looking at the possibility of a hull claim that could amount to $398,000, which is very different than settling a claim at $100,000. Remember, to an insurance company, the phrase “high value” translates into “high risk” if something goes wrong. So, they are going to do everything they can to minimize the odds of something going wrong.
While the value and complexity of the aircraft can be factors that affect whether you can get insurance or not, the type of aircraft may also be a factor even though the hull value may be relatively low. We’ll assume $75,000 as a low hull value as an example. If there aren’t many of the aircraft in the country and parts are difficult to obtain or expensive relative to the overall value of the aircraft, or qualified CFIs or mechanics are far and few between, you could have problems. The insurance company may offer only liability coverage or may not insure this airplane at all.
In addition to checking the insurance options as you shop for aircraft, you can help yourself by investigating type clubs for the plane(s) you are considering. Type clubs are knowledgeable about the aircraft and often also are resources for specialized training, which may help persuade the insurance company you are a good match for the plane. In addition to type clubs, many manufacturers also provide resources for training and maintenance.
Just like we familiarize ourselves with all the available information before a flight, it pays to do the same when purchasing a plane or moving up in value and complexity.
In closing, I want to take this opportunity to inform our valued current, past, and future Avemco policyholders, as well as all our aviation friends, that I will be retiring in early April. It has been an honor to have the opportunity to serve you for three-plus decades here at Avemco. I hope that my safety presentations at airshows and communications with you have, in some small way, contributed to you becoming a safer and better pilot. Thanks for joining me on this journey.
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Mike Adams, Senior Vice President of Underwriting, is an instrument-rated pilot, a Northwest native and a former President of the Oregon Pilots Association. Mike holds a property/casualty insurance license in all 50 states. His more than 36 years of combined experience with general aviation and the aviation insurance industry helps pilots to understand why many of Avemco’s coverages and underwriting decisions are designed to help keep them safe.
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.