Aircraft Insurance companies have continued to increase premiums across the board in the aviation industry and this trend is likely to continue. Some insurers have made surprising, somewhat arbitrary changes to their policies regarding what they will and won’t cover. These stringent policy restrictions can even include provisions about which crew members they will allow to fly your aircraft!
If your renewal pricing is outrageously high or unusually restrictive, do you know what your options are? Aircraft owners who self-manage their aircraft and small aircraft management companies are finding out the hard way that it’s critical to have a thorough understanding of their insurance policies. It’s important for owners to understand what can impact insurance premiums and what alternatives are available to reduce insurance costs.
Aircraft Insurance Costs Aren’t Only About Accidents
Insurance companies are hyper-focused on reducing their risks and out-of-pocket costs. Did you know that your insurance premiums can increase even when an incident occurs that is not your fault? Bird strikes or foreign object damage (FOD) incidents are not things aircraft owners have much control over. Yet they still result in insurance claims that can have a huge impact on your insurance premiums. Prop hits that result in engine damage and costly repairs can also drive large premium increases. Random incidents like these can result in astronomical price increases for self-managed, single aircraft owners.
Think Bigger to Manage Insurance Challenges One is a lonely number when it comes to aircraft insurance. Premium costs for a single aircraft versus a fleet of aircraft are dramatically different. Groups that insure larger fleets of aircraft often have much more leverage with insurers than single aircraft owner-operators or small groups. They also have lower overall insurance premiums they can pass along to the fleet of aircraft they manage. The potential savings for single aircraft owners could be as much as half of what they are paying now.
Insuring your aircraft with a large group or a management company is a great way to benefit from increased flexibility and lower premiums. Larger groups may also be authorized by their insurers to make pilot clearance decisions without insurance company interference. Look for a group where the chief pilot can approve individual pilots for duty as long as they maintain a first-class medical.
Participation in safety management systems can also result in better insurance premiums and help reduce losses and claims. Active participation in risk reduction programs allows aircraft insurers to apply additional discounts to their insurance premiums. Professional aircraft management firms will have these programs in place for all the aircraft they manage, so be sure to ask about this when you compare groups and providers.
Maintaining a stellar service record of regular preventive maintenance is another best practice that can reduce the risk of insurance claims. Keeping your aircraft well-maintained is an important way to help prevent mechanical issues that could lead to incidents or accidents.
Human error is a major factor in most aircraft accidents. Prioritizing skills development and ongoing training for your crew is another strategy to help manage risks associated with operating your aircraft. Be sure to allocate money in your budget each year for incremental training, certifications, and flight hours to actively demonstrate your ongoing focus and commitment to flying safely and securely.
In summary, be proactive about getting on the right insurance plan now for increased peace of mind, lower costs, and reduced operational issues. Take to the skies knowing you have the right aircraft insurance program and management strategy in place now and for the future.