Does My Aircraft Have to Be Insured?
May 1, 2020
While there are no federal or state regulations requiring aircraft insurance, FBOs usually require your aircraft be insured to use their facilities.
Aircraft Insurance Requirements
If you’re planning on flying internationally, however, you’ll need additional international liability coverage. The amount of insurance coverage you need depends on the size and type of aircraft that you have, as well as the equipment you have on board.
Below we break down a few of the insurance requirements you may encounter as an aircraft owner.
Proof of Insurance
A Certificate of Insurance should be carried on the aircraft. The proof of insurance should show your insurance coverage meets all the requirements for the aircraft’s size and category, the equipment it is carrying, and the flight you’ll be taking.
Hangar insurance is the insurance that covers the hangar in which aircrafts are stored. Hangar owners must have hangar insurance. If you choose to rent a space in a hangar, you may need your own hangar insurance in order to cover any damage that could happen while it is in storage.
If you’re planning on flying internationally, you’ll need to make sure your aircraft’s insurance also includes international liability. While there is standard worldwide insurance that should cover your aircraft throughout most of the world, some countries may have specific requirements. You should check into additional requirements particularly when flying to Italy, Mexico, Hong Kong, Germany, or the EU.
Tip: Check that you have all of the required insurance before you leave no matter where you are flying. Landing permits may be denied if you do not have the proper insurance for your destination.
If you don’t own your own aircraft, you may still need to have insurance coverage for aircrafts that you or your company have used. Non-owned aircraft insurance covers individuals and companies that charter aircraft to protect them from any liability in the event of an accident. Non-owned aircraft insurance is also called aircraft rental insurance.
What Does Aviation Insurance Cover?
There are different types of aviation insurance that together cover the physical aircrafts, any damage it could cause to property, aircraft crew, and any passengers.
In-flight insurance covers any damage to the aircraft that is the result of an accident or other events that occur while the aircraft is in motion, generally while it is in the air.
Public Liability Insurance
Public liability insurance is the type of insurance most often required by law for aircraft owners. This is the type of insurance that covers damages to external property or people. It doesn’t include coverage for passengers or damage to the aircraft itself.
Passenger Liability Insurance
As the name suggests, passenger liability insurance covers any harm that may come to passengers.
Combined Single Limit (CSI)
Combined single limit insurance is a combination of public liability and passenger liability insurance.
Aircraft Hull Insurance
Aircraft hull insurance covers any physical damage to the aircraft itself while it is on the ground. This can come in two different types – motion and non-motion.
Non-motion coverage insures against:
- Damage as a result of vandalism
- Accidents with uninsured vehicles
- Damage from weather events
Motion hull insurance covers:
- Damage sustained during takeoff
- Damage sustained during landing
Aircraft crew members are typically insured by the company they work for. The pilot and cabin crew would have their own insurance through their company’s workers’ compensation and don’t need to be covered under your aircraft insurance.
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How Much Does it Cost to Insure an Aircraft?
The cost of your insurance policy does vary depending on the category and size of aircraft you own and the coverage your policy provides. Insurance for small aircraft usually costs between $1,200 and $2,000 annually.
The amount of coverage depends on your policy. Having the bare minimum policy may not be good enough in the event of an accident. What the insurance company pays may not be enough to fully cover the repairs, leaving you with the balance. It’s important to calculate how much insurance you really need in the event of having to repair or replace your aircraft.
Rate Increases After Claims
Whether your insurance premium rises after a claim depends entirely on the cause of the claim. If damage was caused by something like a lightning strike, then the insurance company may be more understanding than if there was an accident or if you or your crew were at fault in any way.
When purchasing a new aviation insurance policy, keep the following in mind:
- Purchase liability insurance if it’s necessary in your area or where your aircraft is stored
- Create a list of those who will be operating your aircraft and will need to be insured through the policy
- Consider the outcome from over-insuring or under-insuring your aircraft
- Look into the insurer’s history of resolving claims and don’t take out a policy with an insurer who has a bad reputation
You should review your existing policy once a year. Check to ensure that:
- You have any necessary extensions to your policy
- All your pilots are covered by your existing policy
- There are no exclusions that would be limitations on the use of your aircraft
- Your deductibles are reasonable
How Can I Minimize Aircraft Insurance Costs?
The best way to keep your aircraft insurance costs to a minimum is by remaining claim-free. However, that’s not always possible. There are other things you can do to try to keep costs down. These include using a hangar, completing pilot proficiency training, and increasing flight hours to name just a few.
Use a Hangar
The likelihood of damage to your aircraft is lessened when you store it in a hangar. For the same reasons that it’s better to park a car in a garage than on the street, a hangar is preferable to a tie-down for aircraft upkeep. The aircraft is protected from variable temperatures, the sun, wind, hail, and other weather.
In addition to lowering your insurance rates on your aircraft, storing your aircraft in a hangar also reduces the maintenance costs of the aircraft.
Pilot Proficiency Training
You may be able to lower your insurance rates through pilot training. The more training you have, the lower the risk of an accident. Annual training may be required to maintain coverage. In addition, insurance companies may have specific training programs they require in order to lower their premiums. It’s important to check with your insurance company to determine their requirements before embarking on any training programs.
Increase Flight Hours
Insurance companies use the total number of hours as a factor in calculating the risk of insuring aircrafts. Having more than 5,000 hours of flight time reduces the risk of a crash by up to 50%. The more flight hours you log the lower your rates may be.
Obtaining an instrument rating can not only improve your piloting but can also reduce your insurance payments. The FAA has specific requirements for any pilot that wants to obtain an instrument rating. There are specialized schools available as well as many private instructors who are certified to train you for the instrument rating. Check with your insurance company first to see if they have any recommendations or requirements.
Join a Flying Club
Some clubs and associations may be able to obtain discounted rates for insurance. Most clubs charge a membership fee, which then gets you access to not just a discounted insurance rate, but also access to the club’s fleet of aircraft, as well as contact with other owners and pilots.
Who Needs Aircraft Insurance?
Any person involved with the flying or operation of an aircraft should have some kind of insurance. That insurance should cover any person who is on board the aircraft, including passengers.
Aircraft owners must have insurance. Their insurance is the most comprehensive of the available insurance options, needing to cover the aircraft in the hangar, on the ground, and in the air, as well as any passengers on board the aircraft.
Those renting aircrafts are required to carry legal liability coverage. This protects you from legal fees in the event of an accident. Besides liability protection, renter’s insurance policies can also cover physical damage coverage.
Part-owners need to, between all of the owners, have the same insurance as a full owner. The insurance rates may be different for a group of owners rather than one owner.
Any pilot flying an aircraft they do not own should carry their own insurance. The aircraft owner’s insurance covers passengers and the aircraft itself, but not the pilot. Pilots should have the following:
- Medical payments coverage
- Aircraft liability insurance
- Aircraft physical damage coverage
What Happens if My Aircraft Is Uninsured?
If your aircraft is uninsured, you may be barred from using FBOs. Every airport with facilities for general aviation is operated by at least one FBO, which generally requires insurance. Whether you want to fly domestically or internationally, without insurance you may be denied landing permits.
Where Do I Get My Aircraft Insured?
There are many insurance companies that insure aircraft. Avion Insurance, for example, offers comprehensive and affordable aircraft insurance to cover your aircraft whether it’s in the air or on the ground. It’s important to research ahead of time exactly what coverage you need. This will then help you determine who can provide the best rates for the type of insurance policy you need to purchase.
But remember – even to keep costs down, it’s important not to have too little coverage.