Stuart Hope is a co-owner of Hope Aviation Insurance. His career as an aviation insurance broker... Read More
Boardroom 6 Climbing the Corporate Aircraft Ladder Aug 14 Main Image
Important Business Aviation insurance considerations
Is your company transitioning to a more capable aircraft? Depending on the circumstances, the insurance perspective of that move can range from a non-event to an all-out debacle, warns Stuart Hope.
The wild card in obtaining coverage for a company aircraft resides in the hand of who will be its pilot. For an insurance underwriter, the primary controlling factors include the pilot’s overall experience-level relative to the category of aircraft you are acquiring; whether he, she or they are professional aviators or owner-executive pilots; and the nature of their training and transition plan. Other contributing factors involve the limit of liability and the insured value of the aircraft.
If the pilot is well-qualified, experienced in the category aircraft under consideration, is a professional pilot (i.e., someone who makes his/her living flying airplanes), and will complete the manufacturer’s approved initial ground and flight school for the aircraft, obtaining insurance will be a Non-Event.
Upon completion of a suitable training program and earning a type rating (if required) from the FAA, the pilot(s) may commence operating the aircraft. However, if the pilot to be insured has no experience in the performance class of your proposed aircraft (e.g., has been flying reciprocating twin piston aircraft, but has no turboprop or jet experience), is an owner-executive pilot, or doesn’t want to complete an underwriter-approved training school, the degree of difficulty will multiply. Indeed, any combination of the above factors, particularly when coupled with a high limit of liability or hull value, produces the possibility of an All-Out Insurance Debacle.
The first and most important offensive weapon in your quest for coverage is a broker experienced in aviation insurance. I tend to harp on this point in my articles, which may come across as self-serving, but it is simply the truth. If your situation in climbing the corporate aircraft ladder places you in the Non-
Event scenario described above, the importance of an aviation insurance broker is not critical. However, if your situation is in the ‘All-Out Debacle’ category, a knowledgeable broker can be the difference between getting insurance at a reasonable rate, being placed with a top-tier insurer, acquiring adequate liability limits and obtaining sensible pilot training/transition requirements, and not obtaining adequate (if any) coverage.
Generally speaking, from an insurance viewpoint, it is easier to negotiate approval for a professional pilot than for an owner-executive pilot. In theory a professional pilot is safer because the only job he or she has is flying the aircraft; therefore the aviator isn’t distracted by meeting deadlines, managing project costs, etc. Because of this perception, underwriters are more liberal with terms for professional pilots without experience in a higher echelon aircraft.
The required pilot training depends on the level of “the jump” (are you moving from a Citation 525 to Gulfstream G280 or from a King Air B200 to a G550?) and the pilot’s overall experience level. The required training can range from the pilot simply completing the initial ground and flight school/type-rating to him or her flying a stipulated number of hours with a well-qualified co-pilot after completing the OEM-approved transition course.
On the other hand, an owner-executive pilot presents a greater challenge to the aviation insurance broker (AIB). Insurers underwrite this category of pilot much more strictly. Higher liability limits are very difficult to obtain, transition training requirements can be extensive, and the premium much higher. This is where having a broker experienced in aviation insurance on your side is essential.
Insurance underwriters consider hundreds of quote submissions each day. A good AIB knows how to navigate the system and ‘help’ the underwriter identify and grant reasonable terms on their accounts. They know not only which insurers will be likely to give favorable terms, but which specific underwriter at a given insurance company is the most experienced and knowledgeable with whom to work; in other words, who are the ‘dealmakers’.
In addition, most AIBs are pilots; when negotiating the pilot training requirements, they can ‘assist’ the underwriter (many of whom aren’t pilots) by designing a coherent and rational training program. Many underwriters will simply decline a quote submission where the required training is left up to them because time is of the essence and too much work is required to think through what would be a good transition plan for a given pilot.
A Word To The Wise
When creating your list of action items for the purchase of your new aircraft, put insurance at the top of the sequence to be tackled. It takes your insurance broker time to obtain the right coverage. I get far too many calls from clients who are literally getting ready to taxi out in their new aircraft and “just remembered to question their insurance”.
Although the AIB wants to help, the adage, “Poor planning on your part does not constitute an emergency for me”, is particularly relevant in aviation insurance.