Question on Project Insurance
By Bob Mackey, Vice President, Falcon Insurance Agency, Inc.
The other day I received e-mail from an EAA Member with a question about insurance coverage under his homeowner's insurance policy for the airplane project he was building at his home. I want to share his question and my response in hopes that this will perhaps answer the same question other EAA Members might have.
I was wondering if my regular homeowner's policy covers my kit aircraft as "contents" in the event of a fire, while I am in the process of building? I am under the understanding that it becomes an airplane (or motor vehicle) once it is flyable and then needs appropriate "motor vehicle" insurance. Is there any history or precedent? I have heard there is Builder's Risk Insurance, and I am quite familiar with this in the construction industry.
This question is a common one among EAA Members who build airplanes at home or in surrounding buildings.
A homeowner's insurance policy is not intended to provide insurance coverage for the value of an aircraft kit under construction or while stored in your home or surrounding buildings. Commonly there is a clause within the homeowner insurance policy that states this exclusion. On a rare occasion I heard builders say they were told by their local insurance agent that their homeowner's insurance policy would cover the value of an aircraft kit, however, usually when the builder requests an endorsement to their policy or a letter from the insurance company to confirm this insurance coverage. The local agent finds out the coverage does not apply. To properly insure the value of an aircraft kit, you should purchase aircraft project insurance, which normally costs about 1 percent of the value of the aircraft kit. This insurance is based on the documented value of the aircraft kit. All records and receipts applicable to the aircraft kit should be kept in a fireproof safe or container and if possible at another location to avoid loss due to fire.
Your homeowner's insurance policy includes liability insurance coverage to protect you in case someone is hurt or his or her personal property is damaged due to your negligence. While the value of an aircraft kit is not covered by the homeowner's insurance policy, it is very likely bodily injury, including death, or property damage caused by you would be covered under your homeowner's insurance policy. This is a bit of a gray area and you should confirm this liability insurance coverage with your local insurance agent. In the event your local agent tells you the liability insurance coverage under your homeowner's insurance policy will not protect you for anything arising out of the aircraft kit being built or stored in your home or surrounding buildings, you may add liability insurance coverage to your aircraft project insurance. This additional insurance coverage will normally run between $150 and $300 depending on the limit of insurance you purchase.
You can set up your aircraft project insurance with one call to the EAA Aircraft Insurance Plan 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 email@example.com. If you need an insurance quotation call 866-647-4EAA (4322).