Aviation Insurance - More Than Sky- High For The Fly Boys
"Those magnificent men in their flying machines..." Ever since
the Wright brothers pioneered our ascent into the skies we have
strived to fly higher, faster, further with aeronautical
advancements surpassing one another at an ever-increasing rate.
Taking to the skies is, of course, much more than the romantic
notions upheld in quaint versions of "Up, up and Away" or "Come
fly me, let's fly, let's fly away..." It is, for most aircraft
owners, a significant part of their livelihood and not to be
contemplated without the proper insurance.
Aviation insurance is different from other forms of insurance in
that it is very subjective. Due to the vast array of aircraft
types, uses and pilot experience, policies should always be
specifically tailored to suit the unique requirements of each
individual applicant. For this reason it is recommended that a
broker, specialising in aviation insurance be engaged to arrange
cover.
When applying for aviation insurance, several matters will be
taken into account including:
* Sum insured: Aviation policies are divided into
i. Hull: The loss of or damage to the aircraft.
ii. Liability: Loss of or damage to property belonging to others
and/or bodily injury to others as a result of the insured's
negligence
Aviation insurance is based on "agreed value". This means that,
in the event of a total loss in respect of the hull, the amount
agreed to in the policy is what will be paid upon acceptance of
the claim.
It is vital that the aircraft be insured for its true value as
major difficulties can arise for the owner if the amount is
under or overinsured. For example, if an aircraft is grossly
underinsured, the agreed value will not be enough to enable the
owner to replace it.
In the case of overinsurance, the insurer may decide to approve
a lengthy repair process, costing more than the market value but
less than the agreed value. This will result in major delays to
plans of getting "back in the air".
Liability is a different issue with settlements determined in
most large cases by the courts.
* Type of aircraft: Generally, helicopters cost more to insure
than fixed wing aircraft. Here in Australia, this is partly due
to the manners in which they are employed, for example,
mustering livestock and heavy industrial use.
Helicopter accidents are also more likely to result in a total
loss of the aircraft than fixed wing accidents. What would seem
a relatively minor "heavy landing" in a fixed wing aircraft
would most likely write-off a helicopter.
The best way to ensure the lowest price possible is quoted for
the aircraft, fixed wing or rotary, is to be clear with the
insurer exactly what it will be used for. For business owners,
it may be worthwhile considering whether diversifying from the
central business function is worthwhile if diversification
results in more hazardous usage of the aircraft.
* Pilot Experience: Pilot experience and qualifications are the
most important aspects of determining the amount of the premium
and level of coverage. In some cases, cover may not be extended
if the pilot has not enough hours in the air logged.
If any persons other than the owner are to be flying the
aircraft it is the owner's responsibility to ensure all details
regarding additional pilots be accurate and up to date.
Inaccurate information can lead to a claim being rejected. There
are basically three types of pilots able to fly the insured
aircraft:
i. Owner: Self explanatory
ii. Open Pilot Warranty: The Open Pilot Warranty (OPW) is the
minimum standard of requirements that must be met in order for a
pilot to fly the insured aircraft. Although names of OPW pilots
do not have to be notified to the insurer, it is crucial to
ensure that all OPW pilots meet the requirements for the insured
aircraft. Remember that the OPW for one type of aircraft may not
be satisfactory for another.
iii. Named Pilots: These are persons you will be permitting to
fly the aircraft but who do not meet the OPW standards. Using
Named Pilots will generally mean a higher premium.
It is useful to consider the insurer's position here. An
aircraft is a high level of risk to the insurer. In order to
underwrite that risk it must be worthwhile. Since most aircraft
accidents are statistically due to pilot error, more premium
must be charged for less experienced pilots to justify the risk.
Once cover is granted, renewal after one year is not always
automatic.
As the renewal date approaches, cover is re-evaluated along with
the premium. This can have a positive outcome as pilot
experience and any additional training undertaken will be
considered when calculating the new premium.
Overall, the main issue to be understood is that all information
given regarding the aircraft to be insured and its pilot(s) is
to be as accurate and up to date as possible. Whether or not
this leads to a premium one may deem "cheap" is irrelevant. What
is relevant is that the premium will be a true reflection of the
risk.
And that is as insurance should be.