The Impact of a Claim
By Bob Mackey
EAA Aircraft Insurance Plan
February 24, 2010 — Frequently I get questions from EAA members about claims, such as, “If I submit a claim, how will that affect my insurance? Will I have to pay more premiums? Will I get canceled? Will I be able to get coverage?” These are great questions. My answer: It depends.
Before discussing claims and their impact on your airplane insurance, we need to first consider the three basic types of claims.
Stuff happens – not your fault: You fly to another airport, properly secure your airplane, and head to the airport’s restaurant for a $100 hamburger. While you’re inside another pilot taxis his airplane too close to yours and the wingtips collide - not your fault. Your insurance company will likely recover some or the entire amount paid for repair to your plane from the other pilot’s insurance company.
I should have known better: You plan a cross-country flight and the destination airport has winds that are forecast to be close to 90 degrees at 25 knots, gusting to as high as 40. Regardless of the forecast you decide to make the flight with a friend. Instead of heading for home after two unsuccessful landing attempts, you try one more time, forcing the airplane onto the runway only to end up headed in the wrong direction, OFF the runway. The end result is substantial damage but fortunately no injuries - other than your ego.
Dummy - stupid pilot tricks: You’ve got a brand new $600,000 single-engine retract, one of those beauties from Wichita. You have a friend who owns a two-seat jet military trainer from Eastern Europe and you volunteer to be the photo-ship for some air-to-air. The cloud base is a mere 1,500 feet and the area you plan to do the photo work is rising terrain with valleys. Nonetheless the mission is launched. During the flight the usable airspace gets smaller and smaller to the point that the jet turns back, but you for some unknown reason continue into IMC. To make a long story short, you hit the rising terrain but don’t crash. You manage to make it back to the airport with substantial wing and airframe damage. The repairs are also substantial and there are plenty of pilots who know what you did so the insurance company has all the details. (Lucky for you the insurance company pays for the damage - and nobody died!)
So, what will the insurance company do and what impact will it have on you?
For claims in the “Stuff happens” category you may not see any impact on your airplane insurance. I say “may” because some insurance companies are locked into a structure that says if you have a claim, regardless of the circumstances, your premium will increase. This is where you and your aviation insurance agent should write up a straightforward and clear explanation as to what happened. Your agent may need to move you to another company if your current carrier is determined to raise the price of your insurance, but work with your agent and use the explanation to clarify that you are not a higher risk than a pilot/owner who has not had a claim.
For the “I should have known better” situations, this is where you and your agent (especially your agent) should be working to mitigate the impact of the claim on your airplane insurance. You likely will not be able to move to another insurance company, so using a strategy such as recurrent training may help you keep the cost of your insurance under control. This is where a good aviation insurance agent will shine, as your insurance should be able to minimize - maybe not eliminate - any premium increase.
For the third type of claim - caused by your dumb, stupid pilot trick - the good news is that the insurance company pays the claim. The bad news is it is going to be next to impossible to get airplane insurance for a while, maybe three years or so. You’ll have to sell your airplane or park it in a hangar.
f you want to fly you’ll have to join a flying club, or rent. You may be able to lease your airplane to the local flight school then rent back for flight time, but you’re probably not going to be able to get airplane insurance as an owner as you did before. Your best bet is to get yourself into some training regimen to make yourself insurable again. I recommend you work with your aviation insurance agent to find out what the insurance companies are looking for before they will consider insuring you in the future.
Having an insurance claim is not the end of the world but it can, depending on the situation, impact your airplane insurance and your insurability. Don’t lose faith - work with your aviation insurance agent to deal with the impact of a claim. Better yet, keep yourself current, take recurrent training when you can, and make sure you are dealing with an agent who knows and understands what type of flying you’re doing!
Let’s all fly safely!
If you would like to learn more about the EAA Aircraft Insurance Plan or finding the right insurance for the type of flying you do, call 866-647-4EAA (4322), or visit the EAA Insurance website 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 and youth education programs.