What is considered “Pleasure & Business” use of my aircraft?
A: Pleasure & Business use includes your personal flying and flying within the scope of your business or occupation. One way to think about the business aspect of this use is that you are covered for taking your aircraft on a business trip instead of taking your car or an airline. Most policies allow for you to be reimbursed for the actual cost of the flight involved, you cannot make a profit. This use does not cover you for any commercial or specialty use. Check your policy for your carrier's definition of this use.
What can I charge other pilots for the use my aircraft?
A: This varies with different insurance companies. Some policies state that you can only be reimbursed for the direct operating costs associated with the flight. This would include fuel, oil, airport fees, tie-down or hangaring (while away from the home airport) and any special insurance needed for the flight. They cannot reimburse you for your ownership costs such as insurance, maintenance, or tie-down/hangaring. Other insurance policies state that you can charge whatever you want as long as you are not making a profit. While still others state that if the pilot is named on the policy you can charge them whatever amount you wish. This only applies to named pilots to your policy and does not apply to pilots who are flying under an Open Pilot Warranty.
What is an Open Pilot Warranty?
A: Open Pilot Warranties are added to policies to make it convenient for the policyholder to allow non-named pilots to fly the aircraft. If a pilot meets the specific minimum requirements of the Open Pilot Warranty (such as “Any Private Pilot who has 300 hours total time and 25 hours in the same make and model aircraft”), then you do not need them to be named on the policy. This comes in handy when you need a pilot to do a maintenance test flight, or pick up, or deliver the aircraft for you. If you are going to let another pilot fly your aircraft, be sure to check and make sure he meets the minimum requirements. It is your responsibility to do so. If the pilot does not meet the warranty then he would need to be added as a Named Pilot.
Will my business liability or personal umbrella policy extend coverage to my aircraft?
A: Aviation risks are excluded from business, homeowner’s, and umbrella insurance policies. Higher limits are addressed either by the current aircraft policy or a special Aviation Excess Liability Policy.
Can I fly my aircraft outside of the USA?
A: Every insurance company has different approved territories defined in their policies. The majority of them include the continental U.S., Canada, Mexico and some parts of the Caribbean. If you are planning a flight outside of the continental U.S., it is important that you check your policy or call your agent.
Do I need to take out a Mexican Liability Insurance policy to fly in Mexico?
A: Mexico is usually included in the territory of your insurance policy. However, if your aircraft is involved in an accident while in Mexico, the Mexican Government may keep you (or the pilot) and your aircraft in Mexico until any claims are settled. If you have a Mexican Liability policy in force they are more willing to allow you to return to the US. Some US insurance companies offer this coverage for an additional premium, but some do not. We do offer a “stand alone” Mexican Liability policy that can be written for as few as a couple of days to a full year. The annual premium currently runs $261.
I have heard the terms “CSL” or “Smooth” limit. What do these mean?
A: “CSL” and “Smooth Limit” mean the same thing. Liability coverage has four separate limits. One limit is for bodily injury of persons who are outside the aircraft; another limit is for Property Damage; another for Bodily Injury to a passenger; and the final limit is the total policy limit which is known as the Occurrence Limit. A Combined Single Limit means that the total liability limit for each of these categories is the same. For instance a $1,000,000 CSL means that you have $1,000,000 total for the policy which is to be divided up between Bodily Injury, Property Damage and Passengers. A CSL limit normally has a much higher premium associated with it. Most insurers will not offer more than a $2,000,000 CSL for piston aircraft. A common liability limit for piston aircraft is one that has a passenger sub limit. These policies still have the same Bodily Injury, Property, and Occurrence limit but it includes a “per passenger sub-limit” which is normally $100,000 per passenger.
Can I add my airport or hangar landlord as an Additional Insured on my policy? How does this affect my coverage?
A: Many airports and hangar owners require you to add them as an Additional Insured on your policy. This is common practice and gives them protection arising out of the operation of your aircraft while on their premises. There is no charge for adding them. Be aware that any Additional Insured that is listed on your policy will have access to your insurance coverage and could dilute the liability limits.
My Lienholder wants a Breach Of Warranty (BOW) added to my policy. What is it?
A: All leinholders are listed as a Loss Payee when they are named on an insurance policy. This means that their name will be on any claim check that is issued by the insurance company. A BOW goes a little further and states that if the policyholder breaches one of the policy warranties (such as allowing a pilot to fly the aircraft who is not qualified, and thus violates the Pilot Warranty), and the insurance company declines to pay the claim, the insurance company will pay the lender the insured value; the company assumes the loan, and continues to collect payments from the policyholder.
Can I insure my aircraft for whatever value I wish?
A: No. One of the main principles of property insurance is indemnification. To "indemnify" means to make whole again, or to be reinstated to the position that one was in, to the extent possible, prior to the happening of a specified event or peril. The policy is not designed for you to make a profit from a loss.
Unlike auto policies that are written on an “actual cash value” basis (they only pay what the current “Blue Book” value of the car is), aircraft policies are normally written on a “stated amount value”. You and the insurance company agree on a value prior to insuring it and that, less any deductible, is what you would be paid if the aircraft is totaled. You want to have the aircraft insured to as close to the value of how much money you have invested in it. There are times when an aircraft owner wants to carry a value that is lower than the aircraft is worth, in order to lower his premium. A rule of thumb when it comes to totaling an aircraft is that when the cost of repairs for an accident equal approximately 70% of the insured value (check your policy for the definition of a total loss), the insurance company can total the aircraft and then they retain the salvage. For example: Your aircraft is worth $100,000. If you have it insured for that amount it would take a $70,000 loss to total it and you would be paid $100,000. If you only insured it for $50,000 then a $35,000 loss would total it and the salvage goes to the insurance company.
Southwest Aviation Insurance Group
Mark Nichols - Dave Monaco
14415 N. 73rd Street, Suite 115 Scottsdale, AZ 85260
Telephone: 480-483-7844 | Fax: 480-483-8299
Toll Free: 800-324-6787