If it Costs More to Repair, it Costs More to Insure
By Bob Mackey, representative for the EAA Aircraft Insurance Plan, Administered by Falcon Insurance Agency
January 7, 2010 — Life is full of trade-offs. Want to be a world-class athlete? You’ll have to commit yourself to a strict training regimen and make other sacrifices toward your goal. Want to become a concert pianist and play with the best orchestras in the world? Then you’ll have to spend hours and hours practicing, taking lessons with the best instructors, and sacrifice some other activities you might also enjoy.
Say you want to own a rare, beautiful vintage tailwheel airplane, a highly sophisticated plans-built homebuilt, or a warbird. You can expect the cost of your airplane insurance to be significantly higher than coverage costs for a “spam can.” But why is that?
There are two major parts to an airplane insurance policy; liability insurance and physical damage insurance, (a.k.a. “hull” insurance). These two segments comprise about 99 percent of your total premium. Liability insurance is about a quarter of your overall premium cost, meaning if you’re an average pilot with the typical liability insurance of $1,000,000 combined single limit subject to $100,000 per passenger, you’ll likely pay in the neighborhood of $275 on your spam-can.
If you are an average pilot and you own one of the airplanes I mentioned above you can expect to pay anywhere between $400 and $1,200 per year for the same amount of liability. That’s primarily because there are fewer aviation insurance companies insuring vintage, homebuilt, and warbird airplanes. Also, according to the statistics aviation insurance companies use to establish their rates, these types of airplanes are more likely to have an accident, with a greater likelihood of a liability insurance claim.
What about the cost of hull insurance (roughly 75 percent of a policy premium)? This is where the cost of insurance can really increase. If you own one of the more common or widely flown vintage, homebuilt, or warbird airplanes - like a Champ or Cub, RV-6A, or Beech T-34 Mentor - you’ll see a slightly higher cost for your hull insurance as opposed to a Cessna 182 or Beech Bonanza. However the price really jumps for hull insurance for an airplane like a Beech Stagger Wing, Lancair IVPT, or Supermarine Spitfire.
Primary factors that drive up the cost of hull insurance include availability and/or cost of parts and reparability, or finding a qualified shop that can do the repairs properly. Most any shop can repair a Cessna 172, but you can’t just take a tube and fabric or composite airplane to any shop because of the specialized skills required for those methods of construction. Further, with a rare airplane it may be necessary to fabricate parts, and those skills aren’t often easily found. The bottom line, if it costs more to repair it’s going to cost more to insure.
You can control your insurance cost by looking at options like not buying in-motion hull insurance. You can also help and work with your insurance agent by providing information about where parts can be obtained and repairs handled if something should go wrong. Your insurance agent should use this information to persuade the insurance company to make the cost of insurance a little more reasonable. But there are no guarantees here…
Yes, you are going to pay more for your airplane insurance if you choose to own a rare vintage airplane, high performance plans-built homebuilt, or Warbird. But working with your insurance agent you may be able to minimize the higher cost. You can also make sure you keep your pilot skills up to speed by flying at least 50 or more hours a year. (Not keeping proficient is another factor that can cause the cost of your airplane insurance to go up…but that’s the topic of another article.)
Happy and Safe Flying!
If you would like to know more and the EAA Aircraft Insurance Plan, or if you would like to know more about finding the right insurance for the type of flying you do, call 866-647-4EAA (4322), or visit www.eaainsurance.org and complete the online quote request form. When you insure your airplane through the EAA Aircraft Insurance Plan you’re helping support EAA Member Safety Programs and EAA Youth Education Programs.