Sky Aviation Insurance

Protecting Your Aircraft and Your Investment: A 2024 Guide to Aviation Insurance

Our 2024 Aviation Insurance Guide is designed to equip you with the knowledge needed to safeguard your investment and make informed decisions about your coverage.

August 23, 2024
Pompano Beach, FL

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While certain types of aircraft insurance isn’t legally mandated in some states; coverage of the aircraft itself is usually required by law to fly. However, having the right policy in place is crucial for shielding yourself from potential financial catastrophes.

At Sky Aviation Insurance (SAI), we understand that the last thing an aircraft owner should worry about is the legal and financial fallout from an accident or incident. Our 2024 Aviation Insurance Guide is designed to equip you with the knowledge needed to safeguard your investment and make informed decisions about your coverage.

The Aviation Insurance Landscape

In the U.S., the car insurance market boasts nearly 6,000 companies. In stark contrast, only 16 companies currently offer aviation insurance, making this industry a highly specialized niche.

This smaller market experiences more significant fluctuations in rates compared to broader sectors like car insurance.

Starting in mid-2018, after a decade of declining rates, the aviation insurance market began to harden. This resulted in annual rate increases of 20% to 50%.

In such a challenging market, aircraft owners often feel the need to shop their insurance policies aggressively to manage costs.

However, with a limited number of underwriters and companies, this increased shopping activity can overwhelm the industry, leading to fewer available quotes and even higher rates.

The cycle of higher rates and limited options compounds the challenges of insuring your aircraft.

Strategic Shopping: When to Shop and How to Get the Best Rates

How can you ensure you get the most competitive rates and comprehensive coverage?

While it’s generally advisable to stick with a trusted broker, there are specific circumstances when shopping around becomes necessary.

When to Consider Shopping for a New Policy

Value of Aircraft or Liability Limits: If the value of your aircraft has significantly increased or you’re considering raising your liability limits, it’s worth exploring new quotes. As your aircraft’s value grows, the potential financial loss in an accident increases, which might necessitate adjustments in your coverage.

Different Type of Aircraft: Transitioning from a propeller-driven aircraft to a jet is a major change that can impact your insurance needs. Jets typically have higher values and operational risks, which means you’ll need to reassess your policy to ensure it adequately covers the increased exposure.

Change in Usage: If you’ve changed the way you use your aircraft, such as moving from private use under Part 91 to commercial operations under Part 135, your insurance needs will also change. Charter operations carry different risks and liability exposures, requiring specialized coverage that reflects these new responsibilities.

The Right Time: The best time to start shopping is 60 days prior to renewal date. Also know that mid-term changes are only acceptable on a rare occasions such as the examples above.

Working With A Broker

Outside of these significant changes, the key to success in aviation insurance is finding a broker you trust to navigate the market for you.

Unlike the car insurance industry, where shopping around is encouraged, the aviation insurance market operates differently, and multiple quote requests can actually work against you.

When a broker submits your aircraft details, like your N-number and pilot information, to the insurance companies, about half of these companies will block any further quote requests from other brokers.

This practice, known as “blocking,” limits your options. If multiple brokers submit requests for the same aircraft, underwriters may decline all requests due to the overwhelming workload.

This can leave you with fewer options and potentially higher rates.

Setting Up Your Broker for Success

Once you’ve chosen a broker, it’s vital to provide them with all the necessary information to secure the best terms possible. With thousands of aircraft models, various pilot qualifications, and different usage types (Part 135, Part 91, and pleasure/business use), ensuring your broker asks the right questions is crucial.

Specialized brokers, like those at Sky Aviation Insurance, have deep expertise in specific types of aircraft. We are an Aviation Insurance company that was founded by Aviation Professionals just like yourself.

A broker unfamiliar with these nuances might overlook important details, leading to higher premiums or even worse, leaving you without valuable coverages.

The Importance of Accurate Information

Providing your broker with accurate and complete information is essential, especially since aircraft insurance rates are locked in when the policy is bound and are not revisited until renewal. If you earn new ratings or certifications after your policy starts, such as an instrument rating, this won’t affect your rate until the next renewal. Top brokers will discuss your future plans and advise you on timing your insurance purchases to get the best rates based on anticipated qualifications.

Understanding Your Coverage Options

Aircraft insurance is designed to protect you from the increased risks associated with ownership.

The two main types of coverage are liability and physical damage (hull coverage).

Owned Aircraft Liability Coverage

For single-engine aircraft, the standard liability coverage is typically $1 million per occurrence, with a $100,000 limit per passenger.

This coverage protects you if your aircraft causes bodily injury or property damage. Higher limits, such as $1 million with $250,000 per passenger or a “smooth” $1 million limit, may be available but are harder to obtain in today’s market.

Owned Aircraft Physical Damage Coverage

Physical damage coverage, or hull coverage, is optional and protects the aircraft itself. Unlike auto insurance, where depreciation is considered, aviation insurance often uses an “agreed value” system.

If you insure your aircraft for $300,000, the insurance company agrees that this is the value they will cover in case of a total loss, minus any deductibles. Deductible options vary based on the aircraft and pilot’s experience, with lower deductibles available for more qualified pilots.

Comparing Quotes and Making the Right Choice

After your broker submits your information to the insurers, you’ll receive quotes to review.

It’s important to consider not just the price but also training requirements, deductibles, the insurer’s reputation, and how these align with your future plans.

For example, a lower-priced policy might require significantly more flight training hours, which could end up costing more in the long run.

Preparing to Activate Your Coverage

Once you’ve selected a policy, activating coverage with Sky Aviation Insurance involves reviewing and signing the insurance application.

We also require a 20% down payment, and we offer flexible monthly financing options to help manage your costs.

If you need a Certificate of Insurance for an airport authority or training facility, we can provide that at the time of binding.

Our PROMISE To You...

Our first-class service team is experienced in researching and negotiating with different insurance carriers to get the best aviation insurance terms and coverage for your needs.

By devoting time to getting to know our clients and working with a team of reliable underwriters, we at Sky Aviation Insurance Services have been able to create a proven track record benefiting anyone who becomes our client.

We know how crucial it is for you to have private aircraft insurance, which is why our team works diligently to keep your business! Allowing us to take care of your aviation insurance needs means that you can be confident knowing that we will take good care of you.