Saving Money on Your Aircraft Insurance
One frequently-overlooked strategy for minimizing your aircraft insurance premiums is simply not to buy coverage you really don't need. That may sound obvious, but there's more to it than meets the eye. AVEMCO's Jim Lauerman offers some common sense recommendations about which policy features are worth paying for and which are simply money down the drain.
Insurance can be one of the most expensive elements in the fixed cost of owning an aircraft. It can be, but it doesn't always have to be.
Before we go further into the cost issues, I should caution that the least expensive isn't always the best choice. Aircraft insurance is not heavily regulated, except in a general way. Each company's policies can say pretty much as they please. Levels of service and underwriting practices vary. A company that would be great for a Bonanza might not like, or even insure a homebuilt.
Also, different companies have different features and benefits to the coverage they offer. You might like a lot of "bells and whistles" (extra coverage), or you might just want basic coverage. So what to do?
Who ya gonna call?
When you're shopping for insurance, you might ask your friends who they insure with and how they like them. You might look in one of the aviation trade magazines for the telephone number of an insurance company, or you might call your agent who insures your house or your car.
Your local agent may not be of too much help, unless he or she handles aviation in addition to the various lines of personal insurance. Aviation insurance is highly specialized and most general agents don't have enough requests for aviation insurance and few have appointments (authorization) from the companies which do specialize in this area.
Find a good aviation specialist and call. Make sure they deal with the majority of the aviation insurance companies (and there aren't many these days). The company I work for, AVEMCO Insurance Company, does not deal through agents, so you'll probably also want to call them direct at 1-888-241-7891 for a quote.
What you will generally get is a quotation from whomever you contact. It will likely be a quote for full coverage; liability including passengers, medical payments and full hull insurance, ground and flight.
Don't buy what you don't need
Here's where you can start to save money. Only buy the insurance you need, when you need it.
For example, if you are a student pilot and can't carry passengers yet, why pay for protection against injury to passengers in your airplane? Sure, you're going to carry passengers some day and you're just about to get your license, and insurance is such a hassle anyway- but it may take you longer than you think to get your ticket and, in the meantime, you can save money by only buying excluding passengers or occupants coverage. You will need to remember to change the coverage when you start carrying passengers, but the savings can be substantial.
Also look at the limits of liability you carry. Many people carry $1,000,000 of coverage limited to $100,000 for bodily injury. Do you really need a million in a 2-seat aircraft? Some people carry higher limits, such as $1,000,000 combined single limit (or as some agents call it, "a million smooth"). Do you really need that much? The principal reason for liability insurance is to defend you against and protect your assets. For whatever limit you buy (for most policies), the cost of defense is paid separately from the limit of coverage on bodily injury, such as $250,000 or $500,000. This can also save you substantially.
Do you really need medical payments? Maybe, but most medical payments coverage only covers what your accident and health insurance already covers. (No, aviation is not generally excluded from health coverage.) Eliminating medical payments won't save much, but it should save something. Some companies throw it in, which tells you how valuable it is!
Now, let's look at the hull insurance. Hull (property insurance) is simply the known cost you pay to avoid a cost you can't afford or don't choose to afford. Is there a cost/benefit match? I know I don't insure my cars when they decrease in value if I don't have any loans on them (otherwise the bank will make me buy it).
If you live in snow country and can't get the hangar door open, and couldn't fly even if you wanted to 'cause there's no heater in your bird, why pay for hull coverage until flying weather? Again, if you want hull coverage, you'll have to remember to add it on in the Spring, but here's another area where you can save money.
Hull comes in three flavors
You should also be aware that hull insurance comes in three varieties, or a combination of the three. The first insures the aircraft only, while not moving. This can be a real good choice for an aircraft in storage or in for a complete overhaul or reconstruction. It can also be a good choice for someone who is only concerned about things they can't control, such as fire, theft, vandalism, windstorm or flood. The second is taxi coverage, and the third is in-flight coverage. Some companies include taxi with ground coverage, some with in-flight and some sell it separately, but the point is that eliminating in-flight or taxi coverage can save money as well. You can save money by increasing deductible too, but usually not much.
One of the most effective ways to save on your insurance is to pay attention to your needs at any given time — if you store the aircraft for the winter, change to storage coverage during that period of time. Some airplane owners only buy flight insurance when they first get the plane and after they're really comfortable with their proficiency, drop in-flight coverage. Yeah, insurance is a pain, easier to buy and put away than not, but you may be able to save money by modifying your policy to meet your needs at various times during the year. Some companies do not encourage this, as it can be administratively burdensome to them.
Other money-saving ideas
How else can you save money? Get frequent recurrent training and make sure your insurance company knows you are doing things to improve your pilot skills. While most companies don't include specific discounts for training such as the FAA Wings program or attending FlightSafety, nearly all take it into consideration when determining the price.
What else? Well, if you participate in the EAA Aircraft Insurance Plan, you'll get an enhanced policy and may qualify for discounts. Join a local EAA Chapter and you'll get a 5-10% discount. And if you're building, use the EAA Technical Counselor Program for another discount! Another great aspect of the EAA Aircraft Insurance Plan is the first flight coverage you can get by using the EAA Flight Advisors Program.
Yes, insurance can be expensive, but by paying attention to your needs and asking your insurance representative a lot of questions, you can probably save money, sometimes a lot!