Many uninformed aircraft owners view their aircraft insurance no differently than their auto, homeowners, or commercial business insurance. They consider it a necessary evil of doing business and put little energy into working with their aviation insurance broker to fine tune the details of their coverage. That’s a huge mistake; one that hopefully will not come back negatively. Unfortunately, the only available test to discover if a policy was constructed properly is to actually have a loss. That’s when the counter on the time bomb may hit zero and the aftermath could be disastrous to you or your company.
A Case in Point
Consider this hypothetical aircraft accident. An aircraft with two pilots and 13 passengers on board had to perform a high-speed aborted take-off due to an erroneous gross weight calculation. The aircraft exited the end of the runway, impacted a berm collapsing the nose gear. Fortunately, there were no fatalities, but aircraft damage was approximately $9M. The owner reported the claim to his insurance carrier and that’s when the time bomb exploded! The insurance coverage was denied because the co-pilot had not attended the initial or recurrent training for the aircraft which was required by insurance.
To make the example even more compelling, imagine the worst-case scenario occurred, and the aircraft was destroyed and all passengers perished. A $9M uninsured loss would sink many companies but envision the same company also facing lawsuits for all the fatalities with no insurance coverage. Had the aviation insurance broker negotiated the policy pilot clause to the insured’s favor, it’s probable the claim could not have been denied. Details are paramount in insurance. Coverage being granted or denied has literally come down to the difference of one word between one insurance company’s policy vs. another’s.
Policy Forms Non-Standard
A little understood fact about aviation insurance policies is that they are all written on non-standard policy forms. Essentially this means every insurance company writing aviation coverage has a different policy form. Some are much broader than others. In order to craft a policy as bullet-proof as possible, the aviation insurance broker must have detailed knowledge of the insured’s operations, and be intimately familiar with each aviation insurance company’s policy wording and coverage offerings. There are many changes an insurer will make to broaden coverage under their contract, but you have to know to ask for them.
Call in the Bomb Squad
Any good aviation insurance broker that has audited numerous aviation insurance policies over the years will tell you they have seen many that are poorly or improperly constructed. Truly, time bombs that may never be discovered unless there is a need to put use to them.
So, what steps can an aircraft owner take to tilt the odds in their favor? First, since all aviation insurance brokers are paid the same commission, your mission should be to seek the most professional and experienced aviation insurance broker you can find to represent you or your company in the insurance marketplace. Second, if your current broker isn’t asking a lot of questions each year at renewal, you probably want to consider moving to one that does. Remember, it’s the details that count.
In the end, because business aviation has such a stellar safety record, even if you have a policy that is a time bomb, odds are in your favor it will not go off. That is, unless you are one of the unlucky ones that has an unexpected aircraft accident. In that case, steps taken now may salvage your financial future. You can act now or ignore it, at your own risk. An AssuredPartners Aerospace broker is available to discuss options, coverages, and discover the details surrounding your aircraft to get you the coverages you need.