You are on page 1of 3

AIRCRAFT INSURANCE

PREMIUMS
Every aviation insurance underwriter has slightly different guidelines he or she follows to
arrive at a rate, but virtually without exception, they all take the following key factors into
consideration somewhere in their deliberations. Each factor, to the underwriter,
represents a change in the chance of an accident or affects his or hers chances of profit
from an aviation policy.

Key Factors:
A) What kind of aircraft? Older or rare aircraft do take higher rates. Parts for repair are
harder to find and maintenance can be an issue. Some aircraft take higher rates due to
known statistical evidence that they have more accidents, are harder to handle or are
prone to certain failures. You will find that homebuilts and ultra-lights are penalized even
more.
B) Undercarriage? The configuration counts. In order from least costly to most: wheels,
skis, floats, amphibians. If wheels are the base then anticipate that floats may take up to
a 25% loading and amphibious floats 5% to10% over that. Taildraggers are often loaded
special as well.
C) Value? The higher the value then generally the better the rate. In the event of a
partial loss to the aircraft more money is available within the insured value to consider
repairs instead of a total loss. Because of the higher value insureds will pay more
premium overall and that makes the underwriter feel good. If you insure an aircraft for
less then the market value you can suffer in several ways. First, the rate applied to the
value may be loaded to adjust for your under-insurance. If there is a serious accident
the underwriters can declare a total loss at the lower value you set and then take over
the salvage as theirs.
D) Location? Where the aircraft is based and typically operate is a factor. Not only
does the location affect the chances of an accident but can have a major bearing on the
cost of salvaging the aircraft after an accident and getting to a place for repair. Imagine
getting a Bonanza off the North Pole! While there are variations, the general scale from
best location to worst is: the southern prairie provinces and southern Ontario; the
Maritime's (excluding Newfoundland and Labrador); Quebec; southern British Columbia;
Newfoundland and Labrador; most anywhere north of 55; the high arctic.

E) Who are the pilots? Pilot skills need to match the plane. The underwriter wants to
be confident that the pilot or anyone flying the aircraft knows how to fly and he or she
asks a lot of questions about this. Generally, the rate is set based on the least
experienced pilot you declare even if you say that they are not going to use the aircraft
much. The common factors considered: total first pilot time; time on the make and
model; time on the specific aircraft you have; time on the undercarriage declared;
advanced endorsements - instrument rating for example; multi-engine time if applicable.
And the big one - accident record. It has been statistically proven that pilots who have
had one accident are more likely to have a second then pilots with no accidents are
inclined to have their first one. Violations are considered although minor infractions are
rarely given much weight.
F) How are you using the aircraft? Corporate business use and just plain mostly for
business are considered a better risk than ordinary private use. The business use tends
to imply that there is some money available for a higher standard of maintenance and
that since customers may be involved, a higher degree of care is exercised. Easier to
understand is that uses such as rental of the aircraft and ab initio instruction take much
higher rates. Some specialty uses like timber cruising are loaded as well.
The number of hours a pilot anticipates flying each year can be a factor but with a
sometimes contrary result. More flying then average can load the rate since the
chances of something happening are increased. On the other hand, too little flying may
result in a loading if the underwriter does not think the pilot is going to stay fully current.
G) Where is the aircraft kept? Most underwriters prefer a hangared aircraft but what of
the World War II wooden hangar where a fire is probable most anytime. Tied down is
acceptable but moored which, of course, means a floatplane takes a higher rate.
H) Lastly is the underwriter!
At different times, companies are more aggressive to put business on the books than at
others. Sometimes they are in a mode to increase all their rates if the marketplace
competition will let them. It depends so much on what the overall loss record in the
country has been and how the particular underwriter has been hit. There is no "rate
book" so all the rate setting can be somewhat subjective.

BLAIS AVIATION INSURANCE SERVICES


DALLAS

14643 Dallas Parkway, Suite 700


Dallas, Texas 75254
Ph: (972) 818-4090 Fx: (972) 818-4088
Email: phil@blaisexcess.com
HOUSTON
Two Memorial City Plaza
820 Gessner, Suite 1750
Houston, Texas 77024
Ph: (713) 780-7787 Fx: (713) 780-3533
Email: nhu@blaisexcess.com

WEBSITE
www.blaisaviation.com
C:\Documents and Settings\Phil\My Documents\Aviation Insurance Premiums.docx

You might also like