Aircraft Acquisition Teams: The Insurance Broker

Choosing an insurance broker who specializes in Business Aviation is essential for anyone buying an aircraft. You should be able to rely on their sound advice relating to total risk management, insurance costs, premiums, and rates.

Not only should the preferred insurance broker demonstrate a clear understanding of your operation, but they ought to be able to match your business needs with the right policy coverage, giving you peace of mind that you are fully insured wherever your operation takes you.

Unfortunately, many aircraft buyers only devote a minimal amount of time to ensuring they are covered against the risks of owning and operating their aircraft.

Although most owners rate safety highly on their list of priorities, accidents can nevertheless occur that would potentially have a large financial impact. Therefore, it is worth consulting an experienced insurance broker at the time of the aircraft acquisition.

The amount of liability coverage you will need depends on several factors, including the total liability exposure, how much liability protection you require versus your desired risk coverage, and more. Aircraft insurance policies and premiums depend on the type of aircraft, pilot qualifications and the type of operation you plan for the aircraft, and ranges from more than one hundred thousand dollars upwards of one million dollars annually.

Finding the right insurance broker therefore becomes an important part of the aircraft acquisition process, and attention to detail and benchmarking potential candidates will be essential to you knowing you can operate your newly acquired aircraft safely, under a balanced risk coverage, at the right price.

While some insurance brokers work for larger well-established aircraft insurance brokerages, others work independently. Irrespective of the size of the organization, though, experience should always be ‘king’ when it comes to choosing the right one.

You should seek an aviation insurance broker with strong ties to the aviation underwriting market, since these relationships will enable them to negotiate the best coverage based on your budget and risk appetite. They should also network closely with other aviation insurance brokers and provide valuable insights into risk portfolios, both domestically and internationally.

But what are the tangible ways for the right insurance broker to pay their way as part of your aircraft acquisition team?

Matching your Aviation Insurance Needs with your Goals

A good aviation insurance broker will not focus on selling you their aviation risk portfolio. Instead, they should be asking you questions to understand your risk profile, operation (aircraft type, value, seat capacity, destinations, etc.), risk coverage budget and your business.

After the broker has established your profile, the next step is to identify the underwriters that meet your specific needs and budget, at which stage the insurance broker should walk you through the different policies that meet or exceed your operational and business goals. In terms of making savings, the savvy broker will know what can and cannot be negotiated and act accordingly on your behalf.

Knowledge of Aviation Insurance Underwriters

Niche underwriting companies focus on specific aviation risk areas. A smart insurance broker should understand which aviation risks are covered (and by whom), the underwriters’ product portfolios, and their rates.

An aviation insurance broker should recommend and help you negotiate insurance policies, including offering advice on reducing premiums, improving insurance coverage terms, adding additional coverage services (where necessary), and do so with the following goals in mind:

• Meeting your budget
• Meeting or exceeding your risk profile mandate, and
• Augmenting your coverage as much as possible, while diminishing your total cost of risk.

Alternative Risk Product Evaluation

As a supplementary alternative to the aircraft owner’s liability insurance and passenger liability insurance, a combined liability insurance may also be considered (known as a Combined Single Limit, or CSL).

One of the pros of combined insurance is that it’s possible for a lower premium and/or better rate to be negotiated. Nevertheless, a professional aviation insurance broker should know the pros and cons of combining two liabilities (under CSL) into one, and how these impact your operation.

And if you plan to charter your aircraft to lower your fixed operating costs, other customized solutions can be discussed too. Your insurance broker should be able to assist you in finding the right ones.

In Summary...

Owning and operating a business aircraft comes with several unique risks and potential liabilities, claims and litigation. While the aircraft itself may be costly to acquire, protecting it is likely to be expensive too.

But it’s always worth remembering that the goal of aviation insurance is to protect you from significant losses if you experience an incident or accident.

Whether you need insurance for your aircraft or other related aviation assets - such as a hangar - a savvy insurance broker should be able to guide you through the process and find the right coverage based on your risk appetite, budget and operational needs. Choose wisely!