Owned Aircraft Insurance FAQ's

Introduction to Owned Aircraft Insurance.

How can I recognize the differences in aviation insurance policies?

What is liability insurance?

What limits of liability should I carry?

What is a "Combined Single Limit of Liability" or "Smooth" Limit?

Are my legal costs included in the liability coverage?

How do I ensure my family is protected when they fly with me?

What is the difference between a direct writer and an independent agent?

What is the difference between per person and per passenger liability coverage?

What is the highest limit of liability that Avemco will provide?

Is there liability coverage if I injure a co-owner of my aircraft?

What coverage options are generally available on an aviation insurance policy?

How can I reduce my insurance costs?

Is there any type of additional training that would lower my premium?

What factors do insurance companies use to determine my premium?

Is there a premium difference if I register my aircraft in the name of my business?

Does your policy allow me to make a profit from an approved pilot who uses my aircraft?

If I start a policy for a pending purchase will there be a penalty for canceling if the deal falls through?

In the event of a total loss to my aircraft during the policy period, am I entitled to a premium refund for the remainder of the policy period?

What is an A. M. Best rating? What rating should I look for in an insurance company?

How does your company define a "non-commercial" flying club?

What are some common exclusions that can void my coverage?

What happens if I have to report a claim?

Do I have liability protection after I sell my aircraft? Why would I need it?

Are personal belongings of an occupant covered?

Who is permitted to fly my aircraft?

Does your policy have any exclusion against landing on a private grass strip?

Can I get coverage for aircraft damage on my homebuilt if I equip it with an automobile engine?

Does your company offer coverage for rotorcraft, balloons, ultralights, gyroplanes, or gyrocopters?

Does Avemco insure fractional ownership arrangements?

Are you able to provide coverage for my flight instructor?

Do I need to add my CFI to my policy in order to receive dual flight instruction?

Are you able to provide liability coverage for a hangar that I own?

Introduction

Many pilots have a misconception that aviation insurance policies, like automobile policies, are "standardized", and that all policies are alike. In addition, many non-owner pilots think they are covered under someone else's insurance policy when they use an aircraft they do not own. This is far from true, which is why we havewe've developed these frequently asked questions to help you to make an informed decision when purchasing protection for yourself. Your own needs may vary from those of other pilots, and you should take them into account when choosing which coverage and policy to buy.

An important factor to consider when selecting an insurance policy is the financial stability of the company that writes your insurance. Request a sample policy prior to making a purchase, and compare it to your current policy if you areyou're already insured. (Click here to view Avemco's policy) Do the necessary research to ensure you are making the best decision. If you need any further information after reviewing these questions and comparing sample policies, please give us a call toll-free at 888-241-7891, and we'll be happy to help you sort through your options.

Q: How can I recognize the differences in aviation insurance policies?

A: Because state law does not regulate aviation insurance extensively, policy language varies considerably. Be sure to ask for a sample policy in an easy-read format and review it to understand what is and is not covered. Since every aircraft owner has different coverage needs, be aware that the least expensive policy may not provide the best protection to meet your needs. It is important for the insured to read the policy fine print because while coverage may appear to be similar from one policy to the next, the policy's exclusions may cause you to pay more for uncovered losses. Avemco's policy is clear, concise and comprehensive and it focuses on inclusions, not exclusions.

Q: What is liability insurance?

A: Liability insurance protects you against claims arising from bodily injury or property damage you may have caused to others. Your insurance company's commitment is to defend you if you are sued, and if you are at fault, to pay for the damages according to the terms of the policy. This coverage is not first party medical or life insurance (the policyholder/insured pilot would be a first party), but rather, liability coverage for claims made against you by third parties for which the law holds you legally liable.

Q: What limits of liability should I carry?

A: Because different people have different needs, there is no standard recommended amount of liability coverage you should carry. You need to consider factors such as your personal assets, earnings the liability limits you carry on your other insurance policies such as auto or homeowners, whom you carry as passengers, how the aircraft is used, and how much insurance you can afford or that is available, among others. You might also want to ask your insurance representative about the most popular limits purchased by owners of comparable aircraft, although this will probably not be the principal factor on which you rely. Obviously, buying the most coverage you can reasonably afford and that is available is your safest bet.

Also, remember that as important as the limit of liability is, the ability of your insurance company to resolve claims within those policy limits is just as important. You want to be sure that the company defending you has a proven track record of success in the complex world of aviation litigation.

Q: What is a "Combined Single Limit of Liability" or "smooth" limit?

A: Most aircraft insurance policies contain liability coverage sub-limits. An example would be, $100,000 each person for Bodily Injury, $1,000,000 Property Damage, with an overall Occurrence limit of $1,000,000. A combined single limit (CSL), often called a "smooth" limit, has no sub-limits for Bodily Injury or Property Damage claims and the amount is the same for each category of coverage, for example $1,000,000 CSL."

There is no question that a "smooth" limit is the broadest coverage if you only injure one person. However, if more than one person is injured in an accident and you are legally liable, the absence of a specific Bodily Injury sub-limit might result in the injured claimant who has the fastest or most skilled attorney obtaining judgment for the entire $1,000,000 policy limit. If this were to occur, you would still be personally responsible for paying injury claims for the remaining claimants, or for any property damage you may have caused, yet the insurance policy limits would have already been awarded.

Q: Are my legal costs included in the liability coverage?

A: Under Avemco's policy legal costs are paid over and above the policy limits. In addition, Avemco's policy continues to pay your legal defense costs even if your limits of liability have been exhausted by the payment of judgments or claims. Our policy also provides up to $5,000 for legal defense costs if a pilot enforcement or civil penalty action is brought against you as a result of a covered accident. Since you may have an FAA action brought against you if you have an accident, this coverage is important. While most policies provide for a legal defense for claims by passengers, very few provide protection for FAA enforcement actions.

Q: How do I ensure my family is protected when they fly with me?

A: The same way you protect your family when they are in your automobile. Check that when you are flying your aircraft your medical and life insurance policies provide protection in the event of injury or death to you or your immediate family. These are "first party" policies that provide needed coverage regardless of fault. In additionAlso, most insurance policies offer medical expense coverage that can provide you with additional medical coverage. Remember aviation insurance is "third party" liability and only responds if you are legally liable for the accident. In many cases, a lawsuit may need to be brought against you for negligent actions to collect for third party injuries, even if the "third party" is a family member.

Some policies exclude liability coverage for family members. Others may limit coverage to an amount below the full policy limit. The Avemco insurance policy does the latter. If you want additional protection for claims and lawsuits brought against you by your own family members, you may request that it be added to your policy for an additional charge. Many decide instead to use that extra money to purchase first party medical or life insurance coverage that applies at all times, not just when the family members are in your aircraft, and not just when you are legally liable for their injuries.

Q: What is the difference between a direct writer and an independent agent?

A: With a direct writer like Avemco, you deal directly with the insurance company. Avemco's Insurance Counselors are salaried employees of the company who specialize in aviation insurance. Most requests can be handled or resolved immediately with one telephone call. In addition, Avemco has a national network of claims representatives on immediate call throughout the U.S. Moreover, Avemco specializes in aviation insurance coverage, serving the needs of general aviation pilots for over 40 years.

An independent agent, on the other hand, is a commissioned sales person who deals with many companies who offer different policies. Remember that aviation insurance policies are not standardized, and therefore independent agents may find it more difficult to be intimately familiar with all of the coverages and policies of the companies they represent. The agent acts as an intermediary between you and the insurance company so you never communicate directly with the company that is providing the insurance coverage(s).

Q: What is the difference between per person and per passenger liability coverage?

A: Since occupants of an aircraft are more likely to incur injuries, it is not advantageous to limit an occupant to a lower limit of liability, and allow a non-occupant to possibly receive a greater portion or even the entire policy limit. If you need higher limits for bodily injury, you should have it for both occupants and non-occupants.

Q: What is the highest limit of liability that Avemco will provide?

A: For qualified exposures, we currently offer liability coverage up to $1,000,000 each Occurrence subject to bodily injury sub limits of up to $300,000 each Person and hull coverage up to $1,000,000 on single and twin piston-engine aircraft and gliders. Avemco is continuously reviewing the limits offered to ensure they meet the needs of the general aviation marketplace.

Q: Is there liability coverage if I injure a co-owner of my aircraft?

A: Coverage varies significantly among insurance companies. The Avemco policy does provide liability coverage between insured persons like partners or flying club members when they fly together. This is a very important feature to look for since it is likely a partner or another flying club member will be with you in the aircraft on numerous occasions.

Q: What coverage options are generally available on an aviation insurance policy?

A: Coverage options vary widely from company to company. The most common coverages available through Avemco are as follows: · Liability for bodily injury and property damage to third parties that can be purchased as including or excluding occupants of the aircraft. · Aircraft Damage (hull) which can be purchased as including or excluding in-flight. · Medical Expense, which includes payments for medical bills and funeral expenses of an occupant of the aircraft, including the pilot. Avemco's policy also includes payments of $100 each day you or other occupants are hospitalized, up to the medical expense policy limits.

Q: How can I reduce my insurance premium?

A: There are many options, depending on your needs. For instance: remove occupant liability coverage if you don't carry passengers; change "including in-flight" aircraft damage coverage to "excluding in-flight" aircraft damage coverage during extended periods of time that you're not using your aircraft; select a higher deductible; or hangar your aircraft. You may also participate in the Avemco Safety Rewards Program and be eligible to save up to 10% on your premium and become a more educated pilot at the same time. (Click here for more information)

Q: Is there any type of additional training that would lower my premiums?

A: Avemco's Safety Rewards program is designed to reward you with additional premium credits for taking additional training above and beyond the FAA-mandated minimums that add to your pilot skills and risk management awareness. The program is comprised of two parts. Successful completion of the Avemco/King Schools Practical Risk Management course entitles you to a 5% premium credit. Once this course is completed, you can earn up to an additional 5% premium credit by completing any Avemco-approved recurrency training, above and beyond the FAA-mandated minimums. This training may include real-world scenarios with your CFI, FAA Wings program, crosswind training, tail wheel training, aerobatic training, or a mountain-flying course. You are also entitled to the additional premium credit if you obtain additional certificates or ratings, such as an Instrument Rating.

Q: What factors do insurance companies use to determine my premium?

A: Each insurance company uses different criteria to determine your premium. Some of the most common factors include logged flight experience, aircraft make and model, limits of coverage, whether the aircraft is hangared, possessing an instrument rating, claims-free experience, deductible, and how the aircraft is used. The insurance company then applies prior experience in these various "classes" of business to predict future results, and the premium is determined.

Q: Is there a premium difference if I register my aircraft in the name of my business?

A: If the aircraft is to be used for pleasure and business, the premium is the same for you or your business as long as your business is not an aviation business.

Q: Does your policy allow me to make a profit from a named approved pilot who uses my aircraft?

A: Yes, Avemco's policy allows the insured to be paid by any pilot named on the data page for their personal, non-commercial use of your insured aircraft. This is provided to allow you to be reimbursed by pilot friends who use your aircraft. It is not meant to be an aircraft rental policy and Avemco monitors the number of pilot changes made to avoid such a situation.

Also, the policy allows the sharing of expenses of the ownership, maintenance and use of your insured aircraft among the policyholders shown on the policy data page. You can name up to three (3) pilots on your policy as approved pilots.

Q: If I start a policy for a pending purchase will there be a penalty for canceling if the deal falls through?

A: You may start a policy for any effective date that is in the future. If the purchase of the aircraft is not finalized, inform Avemco the next business day, and we will cancel the policy with no penalty. Avemco's normal business hours are Monday through Friday, 8:00 a.m. to 7:30 p.m. ET and Saturdays from 10:00 a.m. to 6:00 p.m ET.

Q: In the event of a total loss to my aircraft during the policy period, am I entitled to a premium refund for the remainder of the policy period?

A: Not always, it varies from policy to policy. With Avemco, you do receive a refund of the unearned premium. Other policies may fully earn the hull premium in the event of a loss; which means no premium is refunded.

Q: What is an A. M. Best rating? What rating should I look for in an insurance company?

A: The A. M. Best rating reflects an insurance company's financial strength and its ability to meet contractual obligations. The rating categories range from A++ and A+ (Superior) to F (in liquidation). It is recommended that you select an insurance company that holds at least an A+ rating, and specializes in aviation insurance. Avemco's A. M. Best rating is A+ (Superior). Standard and Poor's also rate us AA.

Q: How does your company define a "non-commercial" flying club?

A: A non-commercial flying club is defined as being one or more aircraft owned by more than five individuals, operating under by-laws, and being used for personal and not-for-profit use.

Q: What are some common exclusions that can void my coverage?