The uncomfortable silence on the other end of the line was enough to tell me that I had just squashed all the joy and excitement from this soon-to-be turbine pilot by sharing the $60,000 quote we obtained for his new turboprop purchase. “But the sales rep told me the premium would only be $30,000-$35,000,” he finally retorted. Famous last words…
That premium may have been accurate for a well-qualified professional pilot flying this aircraft in a corporate environment but not in these circumstances. This client, while a respectable private pilot with nearly 1,000 hours and instrument rated, lacked retractable gear time and was transitioning from a single-engine piston. Compounding the issue, he was only two weeks away from closing when he sought an insurance quote, leading to a premium double his expectations.
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While we ultimately secured coverage, the client’s enthusiasm had been dampened. His experience worsened when an early hull claim exceeded the first year’s premium, causing rates to rise at renewal. Once the claim and turbine inexperience were behind him, he moved on to another broker, who made out like a hero now that the initial underwriting challenges were gone. This episode left neither of us satisfied, and I’ve always regretted being the bearer of bad news during what should have been a celebratory time for him.
Plan Early to Avoid Surprises
Insurance doesn’t have to be a buzzkill if you plan ahead and invest time to obtain accurate quotes as part of your aircraft buying due diligence. While there are many skilled aircraft salespeople who paint an accurate picture of ownership costs and collaborate with insurance brokers for reliable estimates, it’s wise not to base your decision solely on quotes from someone unlicensed in the field.
If you don’t have an existing insurance broker relationship, or you are dissatisfied with your current relationship, start by identifying a professional to work with. As I’ve emphasized in previous FLYING articles and will reiterate here, you should vet and hire an insurance broker, and then let that professional do their job to identify the best insurance markets for you and negotiate competitive proposals. An insurance broker will be handcuffed and unable to obtain optimal results if they bump into other insurance brokers in the process, and underwriters may lose interest in quoting your account when that happens. Referrals from fellow pilot friends and acquaintances can be a great source of insurance broker recommendations if you don’t know who to call.
Once you’ve chosen a broker, involve them early in the buying process. Discuss more than just hull values and liability limits—share details about your flying experience, intended missions, and aircraft candidates. Your broker can offer insights that might influence your decision without having a big dog in the fight over which plane you buy. Our business model is not predicated on high stakes, one-off sales but rather on recurring revenue, and we make money on long-term relationships over many years and the referrals those generate, not over whether we earn $500 or $1,500 commission on your policy this year.
To that end, I was recently able to guide a relatively low-time client of ours transitioning out of a Diamond DA40 toward purchasing a Cirrus SR22 versus a Piper Malibu that had over 2.5 times the insurance costs, required a lot more dual time with a CFI, and frankly was more airplane than he needed for regular business flights that were predominantly just him with an occasional one or two passengers.
Obtain Firm Quotes for Informed Decisions
Once you’ve narrowed down your search to one or two aircraft candidates, ask your broker to obtain firm quotes based on your current ratings and experience. Ask for options at different liability limits, bearing in mind that personal umbrella policies typically exclude aviation activities. I recommend the highest liability limit available at a feasible price, and without a sublimit that caps per passenger or per person liability if possible.
Your hull should be quoted at market value, which in most cases will be the purchase price unless you obtain a special below-market deal. And don’t try to save a few dollars by underinsuring the hull. It won’t be a good outcome if you receive a total loss check for a fraction of what your aircraft is worth after a physical damage loss—and to make matters worse the insurer will get to keep and auction off any salvage for its benefit. For legacy aircraft that have been heavily upgraded, be prepared for a request of additional information to justify hull value. A detailed aircraft spec sheet with a schedule of upgrades and pictures will usually be sufficient for underwriters to approve insuring a hull at higher than standard book value.
The good news is that we are on the cusp of a softening insurance market after years of higher rates and tougher underwriting standards. That makes now a better time to obtain competitive rates and flexible policy provisions than we’ve seen in the past five to six years.
Understand Pilot Warranty and Training Requirements
Once you obtain quotes, pay particular attention to the pilot warranty and training requirements. The pilot warranty is not merely a guideline, it’s a warranty in the strictest sense of the word that could void your coverage if violated. It’s critical to look at any specific training requirements you have as well, which can be substantial and very specific if you are transitioning into a new category or class of aircraft.
For example, the pilot warranty may require you to complete a certain amount of dual time with a CFI, including a specified number of takeoffs and landings to a full stop as well as several hours in actual or simulated instrument conditions before you can fly solo. In addition to your specific requirements, also review the open pilot warranty that specifies minimum ratings and experience for any pilot not specifically named.
The open pilot warranty usually applies to any CFIs you fly with to meet policy training requirements as well. It’s often possible to get approval for a pilot who falls a little short of open pilot warranty minimums, but that requires underwriter review of a pilot history form and an endorsement adding them to your policy as a named pilot.
If you are making a major transition with your aircraft purchase, such as piston to turboprop, turboprop to jet, and/or single engine to multiengine, you will be viewed favorably if you proactively propose a transition training plan. Your broker can provide input and collaborate with you to tweak it before the plan is presented to a prospective underwriter. Even if the underwriter proposes something different or modifies your proposed plan, they will perceive you as a risk management focused owner deserving of more favorable treatment than the average prospective insured who puts little to no forethought into their transition training.
Attention to Detail Matters
Once you are happy with a quote and ready to move forward, ensure everything is correct. Your insurance policy is a legal contract—and details matter. The most common item I see bound incorrectly is the named insured policyholder. Often, pilots will request a quote in their personal name as they are starting the aircraft buying process and then forget to note that the aircraft is being purchased by and registered in the name of another legal entity, such as an LLC or corporation, until after coverage is bound.
Other details commonly overlooked are valid policy addresses, lienholders, and other additional interests. I’ve even encountered situations where aircraft owners neglected to mention they took on one or more partners until coverage had already been bound with a sole owner. Oversights can usually be corrected, but they create unnecessary headaches and set the wrong tone for your relationship with underwriters.
Insurance is an integral part of aircraft ownership, and when managed thoughtfully, it doesn’t have to diminish the joy of acquiring your dream plane. By engaging a knowledgeable broker early, communicating openly about your needs, and understanding your policy’s terms, you can make informed decisions that enhance your ownership experience. Your new bird represents freedom, opportunity, and adventure—adopt an insurance strategy that ensures smooth skies ahead.
This feature first appeared in the March Issue 956 of the FLYING print edition.
