Insurance for Flying Clubs
By Bob Mackey, Vice President, Falcon Insurance Agency, Inc.
I recently took a call from an EAA Member who said he heard insurance had just been made available for flying clubs. I told him that's not new news; insurance has been available for flying clubs for as long as I can remember. However, insurance underwriters are not especially eager to insure flying clubs because experience shows they tend to have more claims. Nevertheless, we had a good conversion talking about the flying clubs and insurance. He agreed to gather all the necessary details about his flying club and I agreed to secure an insurance quote through the EAA Aircraft Insurance Plan for his club.
So, why is it insurance underwriters aren't particularly fond of flying clubs? There are several reasons: structure, procedures, ownership, losses, etc.
Before we get into the insurance discussion, lets define the term "flying club." There are several kinds. First, there's the flying club where every member is an equity owner in the corporation. This type of flying club generally is smaller with anywhere from one airplane to several. The key factor is ownership. Here the insurance underwriters are more comfortable with the risk exposure because each club member has a vested interest in the safe and successful operations of the club. If the club is small with one or two airplanes and 4 to 5 members per aircraft, the insurance underwriters generally offer insurance priced someplace between what they would charge for single owner and a larger non-equity ownership flying club or a commercial rental and instruction flight school.
The other type of flying club is a non-equity ownership flying club. Here club members buy a membership yet they do not own any part of the corporation. Generally these are much larger flying clubs with as many as twenty airplanes and 10 to 20 members per aircraft. Needless to say these larger flying clubs require much more management and there's a greater likelihood for breakdowns in operational issues. Unless the larger, non-equity flying club is run with a high level of control and discipline there can be a problem, which may result in losses, and that's what insurance underwriters are concerned about. In addition, because the buy-in price for membership in a non-equity ownership flying club can be substantially less than an equity ownership flying club the insurance underwriters often times have the perception members will not be as cautious with the airplanes and more frequent small losses may occur.
So is insurance available for flying clubs? Absolutely! Is the cost of insurance for flying clubs high? Yes, although a lot depends on the size, structure, operational procedures, and history of the flying club. Are flying clubs easy to insure? No, not particularly, and most insurance agents will shy away from the work it takes to arrange and handle insurance for flying clubs, however, that's not an issue for the EAA Aircraft Insurance Plan. If all the members of the flying club are EAA Members the EAA Aircraft Insurance Plan can arrange and handle insurance for flying clubs.
If you are a member of a flying club your club should check out the EAA Aircraft Insurance Plan. Insurance for flying clubs has always been available through the EAA Plan. Call today at 866-647-4EAA (4322).
EAA INSURANCE TIPS is a special EAA Member benefit. If you have an insurance related topic you’d like to see addressed or if you have any comments, please email firstname.lastname@example.org. If you need an insurance quotation call 866-647-4EAA (4322).