Aircraft insurance is generally a necessity, however, all too often, once the initial policy is bound, the policy finds itself in the back of the lowest drawer of the filing cabinet. It is common for us to get calls about what coverages “should” exist, but when the event or cause of loss has already happened, insurance carriers are quite reluctant to apply retroactive coverages. To prevent surprises and mitigate damages, we have a few tips and considerations to keep you on the right side of claim.
KNOW WHAT YOU ARE PAYING FOR
Insurance brokers are great at asking questions up front and placing owners and operators into the perfect insurance product and coverages. However, with insurance premiums on the rise, many underwriters are cutting back on annual renewal coverages to project the mindset that premiums remain unchanged. Some common areas we see getting modified to the detriment of the owner are:
- Addition of deductibles.
- Decrease in ancillary coverages, especially those related to alternate lift options.
CHANGE = CHANGE
With the private aviation and business jet markets booming, ownership and operating structures are changing on a daily basis. It is common to form operating structures that maximize the use of the aircraft or obtain financing as part of the acquisition, both which raise the importance of tuning up your insurance on an as needed basis. A few considerations:
- If you are dry leasing, either as lessee or the lessor, do your policies have adequate “non-owned” aircraft coverages? Alternatively, are you and your organizations properly listed as additional insureds?
- Has your aircraft gone up in value to the extent your hull coverage is inadequate? With some aircraft going up $500K a quarter, a total loss could leave you exposed and possibly place you into a default under loan documents.
- Do you have operations that require war risk insurance or other specialized endorsements? This type of coverage has traditionally been looked at as over the top and a waste of money, however, with the claims paid due to aircraft lost in the Ukranian/Russian war, it is a reminder that insurance is for the unexpected so the potential for fringe losses should be considered.
BEST ADVERSARY OR WORST ENEMY
In summary, working with your insurance advisors and legal counsel on a pre-closing, annual, and tune-up basis can make the insurance aspects of aircraft ownership and operations neutral or possibly even a positive experience. Aside from engaging in best practices for training, maintenance, and operational decision making in general, insurance is your main defense against the unforeseen and accidents. Keep your policies current and in line with your operations and avoid the nightmares scenarios we see come through our door.