What Do You Know About Aircraft Liability Insurance?
By Bob Mackey, Vice President, Falcon Insurance Agency, Inc.
When you buy aircraft insurance did you know you are entering into a legal contract between you and the aircraft insurance company? And that it’s the responsibility of your aircraft insurance agent to make sure you are getting the right insurance at the most competitive price? That’s why you need to deal with a professional independent agency that specializes in aircraft insurance when you buy aircraft liability insurance. Aircraft insurance policies, even the ones that claim to be simple and easy to read, are confusing. A licensed independent insurance agent with a background in aviation insurance can ensure you are buying the right insurance for the best price. One word can change your policy from having what you thought was adequate insurance coverage to finding out you’re covered to only 10 percent of the amount you thought.
One of the most significant parts of your aircraft insurance is liability. Knowing how much liability insurance to buy can be confusing. Even more difficult to understand is the explanation of coverage. How much aircraft liability insurance do you need and what do you need to watch out for?
The amount of aircraft liability insurance do you need depends on the type of aircraft you fly and the type of flying you do. For example, a pilot/owner with a J-3 Cub that seldom takes any passengers needs a lot less aircraft liability insurance than a pilot flying a 5- or 6-place aircraft flown for business as well as pleasure.
Aircraft liability insurance is usually sold in a lump sum amount for each occurrence that happens during the term of the insurance policy. And this insurance applies to bodily injury (including resulting death) and property damage. The insurance industry term for this insurance is; combined single limit.
Think of it this way; if you purchase a $1,000,000 combined single limit, the insurance company essentially tells you that they will pay up to $1,000,000 per occurrence for bodily injury or property damage arising out of single loss. Sometimes insurance companies put what they call a sub-limit on the aircraft liability insurance. This stipulation limits the combined single limit insurance to $100,000 per passenger. Be aware of policy wording that states the sub-limit is “per person.” When you have an aircraft insurance policy that sub-limits the liability insurance to $100,000 per person that means all persons, everyone, passengers and non-passengers alike, are limited to $100,000. The only acceptable sub-limit is per passenger. An aircraft insurance policy with a per-person sub-limit is a red flag. Don’t buy it!
You also need to watch out for the hidden policy language. Because aircraft insurance policies are not regulated like automobile insurance policies, there may be major differences in the policy wording depending on the insurance company. (This is another reason to be dealing with an independent insurance agent.) At least a couple insurance companies include a limitation as to how much they will pay for claims arising out of injuries to family members. This limitation, commonly referred to as the “family restriction” usually limits insurance coverage to $25,000 for anyone family member. You may be given the opportunity to pay an additional premium to have this limitation removed and if so, you should make sure it is completely eliminated, not just raised to a higher amount.
Aircraft insurance shouldn’t be confusing, but it is. The only way you’ll ever know if you are getting the right insurance at the best price is to have an expert on your side, a professional licensed independent agent with an extensive background in aviation insurance. Falcon Insurance Agency is an independent insurance agency that has been serving the entire aviation community for more than 25 years. Falcon and EAA have developed the EAA Aircraft Insurance Plan designed exclusively to meet the aircraft insurance needs of EAA Members.
If you would like to ask questions about aircraft liability insurance or if you are looking to find out about the many aircraft insurance options your have through a professional independent aviation insurance expert, contact the EAA Aircraft Insurance Plan at 866-647-4EAA (4322). Make sure you’re getting the right insurance at the best price along with outstanding service…call the EAA Plan today.
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).