The typical single-engine airplane costs anywhere from $15,000 to $100,000. A private jet comes with a price tag that can range from $10 million to upwards of $20 million. To say that either option is an investment would be an understatement. And as is the case with any significant investment, it’s important to insure it in the event that the unthinkable were to happen.
However, unlike automobiles and homes that you intend to take out a loan on, there are no federal or state regulations that require plane owners to have aircraft insurance. There are a few exceptions, which we’ll get to later in this piece.
So, does taking out an insurance policy on your plane make sense? In this post, we’ll get to the bottom of things to help you make the best decision for your situation. Here’s a closer look at what you need to know about aircraft insurance:
Is Insurance Required?
As we said in the introduction, there are no state or federal requirements that make aircraft insurance mandatory. However, there are a few notable exceptions that all aircraft owners should be mindful of when it comes to insuring their plane or not insuring their plane:
- Are you flying internationally? If so, then you’ll need international liability coverage. The amount you’ll need largely depends on your plane and what equipment you have on board. It can also be dependent on the set requirements of the nation you’re traveling to.
- Are you using an FBO? FBO stands for “fixed-base operator.” FBOs are enterprises or companies that are allowed to use an airport and the services offered by the airport. In this context, think of aircraft insurance like a homeowner’s policy. There are no laws requiring property owners to have homeowner’s policies. Yet, a bank won’t grant a mortgage loan without one because they could be on the hook if something were to happen. It’s the same thing in this type of situation.
Why is Insurance Needed?
Like an auto insurance policy, aircraft insurance will cover damage to the aircraft that is the end result of an accident or other events that may occur when the airplane is in flight. Insurance also covers damage to property or people, whether they’re outside of the aircraft (i.e., in the airport, at the hangar, etc.) or passengers riding in the plane. Insurance can also cover damage to the aircraft when it is in the hangar, such as that from vandalism or weather.
We’ll get into more of the specific coverages later on in this post.
How Much Does Aircraft Insurance Cost?
The cost to insure your aircraft largely depends on the type of plane, the size of the plane and any specialty equipment on the plane. For smaller aircraft, annual policies usually don’t cost any more than about $2,000. For larger aircraft, the cost may be several thousand dollars more. When weighing policy limits, it’s important to think about the total cost of your aircraft and whether or not the coverage would be enough to purchase a new one should it sustain significant damage. As is the case for anything you’re taking out a policy on, you don’t want to over-insure or under-insure it.
Like most insurance policies, if you were ever to file a claim, then it’s likely that your premiums will increase.
To minimize your insurance costs, there are a few things that you can do. Here’s a look at some of these strategies:
- Store aircraft in a hangar: Storing aircraft in a hangar means it’s less likely to experience damage and vandalism. It’s also protected from the weather.
- Go through pilot training: The better you are as a pilot, the less likely you are to experience any issues in the air. Just as experienced drivers are likely privy to lower auto insurance premiums compared to teenagers, the more certifications and training you have as a pilot, the better it’s likely to bode for your aircraft insurance premiums.
- Shop around: It’s advised that you review your aircraft insurance policy at least once a year. Weigh any policy changes and make any adjustments with your agent accordingly.
Aircraft Insurance Coverage
To give you a better idea of what aircraft insurance covers, we’ve broken down the different parts of a typical policy:
- Hangar insurance: If you store your aircraft in a hangar, hangar insurance covers the space where you’re parking it.
- International liability: If you’re flying internationally, you need international liability insurance. Check with the countries that you plan to travel to, as some have specific insurance requirements.
- In-flight insurance: As the name implies, in-flight insurance covers any damage to the aircraft that occurs while the aircraft is in the air or while it is in motion (i.e. taxiing on the runway).
- Public liability: Liability insurance covers damage to property or people outside of the aircraft.
- Passenger liability: While public liability covers damage to property or people outside of the aircraft, passenger liability covers any harm or damage that may come to any passenger within the aircraft.
- Combined single limit: Also just known as “CSI,” this is a combination of both public and passenger liability.
- Hull insurance: There are two types of hull coverage: motion and non-motion. Non-motion hull coverage provides insurance against vandalism, uninsured aircraft or vehicles, and damage from any weather. Motion hull insurance covers damage that is sustained either during takeoff or landing.
- Crew coverage: Crew coverage is typically offered by commercial airlines and covers the pilot and any crew members on board.
Contact Us Today
Though aircraft insurance isn’t typically required by state or federal law, owning and operating a plane is an investment – and you want to be sure that you’re safeguarding any significant investment. That’s why any owner, part-owner, or renter should have some sort of aircraft insurance policy. For more information on aircraft insurance and to weigh different policy types, contact us today.