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As The Market Turns

by Darryl Abbey 1. September 2009 00:00
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The aviation insurance market appears to have finally decided that prices are low enough. Sparked into action by the recent volume of airline losses (including Air France which is rumored to be reserved in excess of $600mm), helicopter losses and the effect of the overall economy on cost of capital, aviation insurance carriers have decided that it is time to at least stabilize premium levels and, depending on the market sector, started levying price increases on renewals starting this summer.

This transition toward higher rates is analogous to turning the Titanic or, more appropriately, a C5 aircraft: It takes a while and is not necessarily smooth. No doubt the market will target certain types of operations which the carriers consider high risk such as HEMS, off-shore service and other rotorcraft operations. Airlines will certainly pay increased premiums (to the extent they can afford them) and other areas of the aviation market which have experienced some losses in the past twelve months such as charter aircraft operators can expect higher insurance costs as well. Even the big aircraft, engine and component manufacturers are unlikely to see any premium reductions as the insurance carriers spread the anticipated cost of losses incurred so far in 2009 across the entire aviation insurance market.

The surplus of capacity which has built up over the past several years remains strong. There are currently no less than twelve carriers willing to underwrite aviation insurance in the US alone with additional capacity in London and other EU countries for large placements and non-US based risks. As mentioned in previous market updates, traditional supply and demand economics do not seem to have applied to the aviation insurance market for several years. Until very recently, prices have continued to drop due to excessive supply (read competition for market share) despite lower demand and higher loss ratios. But now, it seems that insurers are strengthening their resolve to increase their prices even though supply remains high.

Don’t get me wrong. I don’t think corporate operators (those that are still up and running) will need to worry much. The twenty year premium lows that they are experiencing will not increase much if at all because of their good loss record. Likewise, many Pleasure & Business aircraft operators will continue to enjoy low cost and, in some cases, higher limits than have been available for some time. This may continue until aircraft the aircraft sales market turns around. Once aircraft buyers jump back into the market and need insurance for their newly acquired aircraft (increasing demand), the market will likely respond with higher P&B rates. For most commercial aviation businesses, however, higher insurance costs are here now, or will be in the near future, at a time when most companies can ill afford it.

Is there a way to avoid premium increases? The best way to fight against higher cost is to educate your underwriter as to why you deserve his/her best treatment. This should include sharing information on your safety and training programs and everything you do to prevent losses from happening. Get to know your underwriter and help convince them that they want to give you the lowest cost. Your broker will also play a big role in helping educate the market so choose your representative wisely and make sure they have the ability to get the job done.

Remember, the aviation insurance market may harden significantly in the next year so be prepared, start your renewal process early and teach the insurance carriers why you deserve their best treatment.

Do you have additional experience with this topic? Tips, Tricks, or Advice? Please discuss it with us!

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GlobalAir.com

Aircraft Insurance Coverage: Will You Have It When You Need It?

by Greg Reigel 1. August 2006 00:00
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Most aircraft owners purchase aircraft insurance. In some instances, state law requires the purchase of insurance. In most other cases, aircraft owners purchase the insurance to protect themselves in the event of an accident or other loss arising from aircraft operations. When you purchase an aviation insurance policy you expect that the policy will provide coverage when you need it. However, that isn't always the case.

This article will address situations in which an insured may find that coverage is denied for an accident or loss. Since each insurance policy is unique and contains a multitude of exclusions, declarations and conditions, this article will only discuss exclusions and breaches of policy provisions in a very general sense.

Exclusions And Breaches Of Policy Provisions

All aircraft insurance policies contain exclusions. Exclusions define circumstances in which the insurance company will not provide coverage for operation of an aircraft. An aircraft insurance policy usually includes both "specific" and "general" exclusions.

Specific exclusions arise when you assume additional liability (e.g. you sign a contract that indemnifies or holds someone else harmless for damage they cause), damage occurs to your own property or injury occurs to members of your family. The policy may also specifically exclude coverage for your own medical expenses or for your operation of an aircraft that you do not own.

General exclusions can result in denial of coverage regardless of whether the exclusion directly caused a particular claim. These types of exclusions may preclude coverage for operation of your aircraft in commercial operations (as defined by the policy, not necessarily the FAA or IRS) or if you use your aircraft to commit unlawful acts. Coverage may also be excluded under general exclusions that preclude recovery for damage caused by war or terrorism or when a pilot that is not named as an insured on the policy and who does not meet the open pilot qualifications operates your aircraft and a loss results.

Aircraft insurance policies also have requirements, conditions and provisions with which the insured must comply in order for the policy to provide coverage. These requirements often mandate the condition of the aircraft, qualifications and currency of the pilot and accuracy of the information provided by the insured to the insurance company.

If an accident or loss occurs, and a policy's exclusion applies or a policy provision has been breached by the insured, the insurer may have the right to deny coverage. In that situation, the insured could find that he or she is uninsured. But, you may ask, "What if the exclusion or breach of a policy provision is unrelated to or had nothing to do with the accident or loss, will coverage still be denied?"

The answer to that question will depend upon the state law applicable to the case. In some states (Florida, Hawaii, Illinois, Iowa, Mississippi, Montana, South Carolina, Texas and Washington) an insurer cannot deny coverage unless the exclusion or breach was causally related to the accident or loss. In other states (Alaska, Arizona, California, Colorado, Georgia, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Tennessee and Virginia) a causal connection between the policy's exclusion or policy breach and the accident or loss is not required for the insurer to deny coverage. The remaining states have not decided the issue one-way or the other.

Examples Where Coverage Has Been Denied

Pilot Provisions. Most, if not all, aircraft insurance policies have provisions relating to the pilot(s) who will be operating the aircraft. These provisions typically require that the pilot have a current and valid medical certificate and that the pilot be in compliance with all recency of flight regulations. Insurers have denied coverage based upon breaches of these provisions when the pilot did not have a current or valid medical certificate or when the pilot did not have a bi-ennial flight review endorsement. Coverage has also been denied when the pilot did not meet recency of experience requirements for VFR, IFR, day, night or passenger carrying flights.

Airworthiness Certificate. Aircraft liability insurance policies require that the insured aircraft be in an airworthy condition when it is being operated. Coverage has been denied when the insured aircraft was not in an airworthy condition because it had not received an annual inspection within the preceding 12 months or it had not received other required inspections such as VOR, pitot-static and altimeter checks. An aircraft owner's failure to replace an ELT battery or perform required maintenance have also rendered aircraft un-airworthy and those failures have jeopardized insurance coverage.

Conclusion

If you live in a state that does not require a causal connection between an exclusion or policy breach, you need to make sure you comply with all of the provisions and requirements contained in your policy. Failure to comply could very well result in a denial of coverage if you are ever involved in an accident or loss.

If you live in a state in which a causal connection is required between a policy's exclusion or policy breach and an accident or loss, the insurer will have the burden of proving the existence of a causal connection. That may or may not be easy, depending upon the circumstances.

In either case, you would be fighting for coverage. In the aftermath of an accident or loss, a fight over coverage is the last thing an insured should have to do. To avoid these situations and to ensure that you will have coverage when you need it, you need to be aware of and comply with the requirements and conditions of your aviation insurance policy. Then you can enjoy the security of the aviation insurance policy for which you are paying your premiums.

 

Since this is a discussions forum what questions do you have regarding your coverage?  Do you have any experiences with denial of coverage, we would like to hear of any instances where you or your aircraft was not covered.  Please use the reply link provided below.

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Greg Reigel

Cost Saving Methods

by David Wyndham 1. June 2006 00:00
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Fuel costs are rising once again. Insurance costs never seem to fall. Even if business is good, those bills seem to be increasing faster than revenues. (If business is poor, that's fodder for a different article). How do you fly the same and not spend more?

One thing is to look at your current flying schedule. Can several trips be combined into one? Can the Monday trip to Des Moines be combined with the Tuesday trip to Cedar Rapids? If Kansas City is on the way to Omaha, maybe you can drop off someone? While technically this is flying less, you are still accomplishing the same mission. This will require the folks who use the aircraft to agree to some schedule adjustment. If the "big boss" dictates this, others will follow along.

Save in fuel costs. All operators have a choice in where they purchase fuel. While choosing an FBO based solely on fuel price (or any other single requirement) isn't necessarily the best, work with the FBO's you frequent most often to negotiate the best prices. When traveling to new destinations, make use of fuel surveys and handling agents to see where the savings are. Ask for a discount - if you don't ask you'll never get one. Go to http://www.globalair.com/airport/ and get up to date fuel prices for your destination airport. Call the FBO to confirm the price and other fees before leaving home.

In addition to negotiating with the FBO's directly, investigate fuel discount programs. It may be by using a fuel card or a professional association discount. These programs and discounts change, so it is best to review these on some sort of scheduled basis, at least annually.

Maintenance is one of your biggest cost areas and one where you do have the most control. Evaluate how you do your repairs and overhauls. Using loaner parts while yours are repaired may be less costly than exchanging for new. As you get your own part returned, you'll know the history of that part.

Maintenance tracking software is a valuable aid in determining where your maintenance expenses are and in managing your maintenance. You can't manage what you can't see. What about warranty? On a new aircraft, we all keep very careful track of what repairs are in warranty. But even older aircraft have many new parts installed. Those parts typically carry some sort of warranty. Tracking their ages/hours/cycles can result in savings should they need replacement and is something ready made for automation.

Guaranteed Maintenance Programs can be both a savings and an increased expense. They can be an effective way to manage your costs and avoid high expense years such as when the engine(s) are due for an overhaul. The also offer an insurance against unexpected expenses and may add value to the aircraft at resale. Still, the programs do have you pay now for future expected expenses. They warrant careful consideration, especially if acquiring a new aircraft.

Replace your aircraft with a newer one. OK, I know we are talking of saving money so how can getting a new aircraft save money? If the newer aircraft requires a lot less time in maintenance than your current one, then you (a) save in maintenance costs and (b) get increased utilization due to increased availability.

We've done numerous aircraft replacement studies and over time, newer aircraft tend to cost less to own and operate than older ones. There are always exceptions, but when you take into account how much time is lost by having your older aircraft in for maintenance, the numbers favor newer aircraft. This can be a tough sell, so you'd better have your reliability and availability data together, plus do your homework on costs before even bringing it up.

One last item is to make sure to communicate to management what you are doing and how to interpret your costs correctly. Paying out for a major phase inspection or an engine overhaul may make it look like your costs are too high. Educate the CFO as to the nature of aircraft costs. That $250,000 overhaul might have taken eight year's worth of flight hours to accrue. Don't assume they realize that. Let them know you are concerned about managing costs and keep them informed as to what you are doing to minimize costs while maintaining the highest levels of safety and service.

This is an interactive article and we would appreciate you adding any of your cost savings tips no matter how large or small, corporate operator or piston owner. Your suggestions on cost saving could possibly save enough for another owner/operator to keep their aircraft!

Work SMARTER, not harder. You already work hard!

Aircraft Co-Ownership

by Greg Reigel 1. May 2005 00:00
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Making The Relationship Work

Co-ownership of an aircraft can be a beneficial relationship for individuals who would like to share the aircraft ownership experience. However, it is a lot like a marriage. Compromise and some give and take are necessary to make it work. Open and honest communication regarding expectations is critical. Co-owners must also be compatible. At the end of the day, just like marriage, the arrangement is right for some people and wrong for others. Before you jump into an aircraft co-ownership situation, you need to do some research and planning to determine whether it is the right arrangement for you and to ensure that if you do enter into a co-ownership arrangement, it will be a happy marriage rather than simply a honeymoon before an ugly divorce.

Owner Compatibility. To determine the compatibility of prospective co-owners, you will need to ask and honestly answer a number of questions. Will each owner be flying for business, pleasure or both? What kind of aircraft does each co-owner want? Is it the same aircraft? Will it perform the missions desired by each co-owner? Can each prospective co-owner really afford to be a co-owner? Do the co-owners get along? These may seem like obvious questions, but more than a few people have ventured into aircraft co-ownership arrangements without asking these questions and have ended up in a less than pleasant situation. The answers to these questions will help you determine whether you and your prospective co-owners will have similar goals and expectations.

Formation of a Legal Entity. Once you have determined that you and your prospective co-owners are compatible, you will need to address the legal relationship between the co-owners. Will it be a partnership or perhaps some type of limited liability entity, such as a corporation or a limited liability company? I usually recommend that co-owners form a limited liability type entity for liability protection. It is not mandatory to form such an entity. However, unless you can insure for the full potential liability you might be exposed to if an accident or injury occurs, the protection of such an entity is likely worth effort and expense.

Besides, in today's aircraft insurance market, most aircraft insurance policies only provide limits of liability of $100,000 per passenger and $1,000,000.00 per accident. If a serious injury or death occurs, the potential damages will be well in excess of these limits. Although it may be possible to obtain higher liability limits, the premiums for such limits are exponentially more costly, downright unaffordable or, in some situations, just not available.

Once you have determined that the potential co-owners are compatible and decided upon the legal structure of your co-ownership arrangement, you will need to discuss the details of that relationship. Some, but certainly not all, of the issues that should be addressed and questions that need to be answered include the following:

Owner Information. Who will be the owners? Will each owner be an individual or maybe an entity owned by the individual? How much is each contributing? What percentage of ownership will each owner hold? Are all of the owners, whether individuals or entities, U.S. citizens? You will need this information to form your entity and to ensure that you are able to properly register your aircraft.

Management/Administration. Who will handle the administrative and management functions relating to the aircraft? Will it be the same person or will it rotate between owners? Who will keep the books and records, pay the bills, and report on financial matters to the other co-owners? How detailed and in what form will these records be maintained? Will this person maintain custody of all of the documents relating to the aircraft? Will decisions regarding ownership of the aircraft be made by majority vote or unanimous vote of the co-owners? Agreeing upon how these tasks will be handled is critical to ensuring that the business aspects of owing an aircraft will run smoothly. Documenting these tasks is equally important to provide written guidance for all of the co-owners' use and reference.

Insurance. What limits of liability do the owners want or, more importantly, can they afford? Will any of the co-owners need additional training or ratings to qualify for coverage under the aircraft's insurance policy? Is an umbrella policy or excess coverage desired or an option? Although the answers to these questions may be dictated by the current aircraft insurance market and qualifications of each co-owner, I recommend that you purchase as much insurance as you can afford.

Aircraft Use and Limitations on Use. How will the aircraft be scheduled? Will each co-owner's use be limited by a minimum or maximum number of flight hours per year? Will you have restrictions upon where or under what weather conditions the aircraft can and cannot be flown? Will you have currency requirements that are more restrictive than the aircraft insurer or FAA impose? May an owner use the aircraft for flight instruction or some other commercial use? Will you allow someone other than a co-owner to operate the aircraft? Who will perform the maintenance for the aircraft? At what intervals and to what standards will the maintenance be performed? Here again, a written document delineating the co-owners' agreements regarding use and limitations on use is essential to avoid future misunderstandings.

Expenses. What will you charge for use of the aircraft? How will the co-owners pay fixed expenses such as hangar, insurance etc. be paid? How will the co-owners pay operating expenses such as fuel, oil, reserve for maintenance etc.? When will the expenses be paid? Who will pay the insurance deductible if a claim is made to the aircraft insurer? What happens if a co-owner does not pay the amounts he or she owes when due? Aircraft ownership is not cheap. By addressing these issues in advance both verbally and in a written agreement, you will hopefully limit the money disputes that could arise down the road.

Dispute Resolution. If disagreements arise between the co-owners, how will they be resolved? Do you want to provide for formal procedures short of civil litigation such as mediation or arbitration? If the dispute involves the payment of money, will the co-owner who has not paid sums allegedly due be able to fly the aircraft before the dispute is resolved? Because co-ownership is similar to a marriage, the last thing you want to do when a dispute arises is run to the courthouse. Having written, non-litigation, dispute resolution procedures established in advance will hopefully provide a mechanism for the co-owners to resolve disputes without necessarily ending the co-ownership relationship.

Exit Strategies. What happens if a co-owner wants or is forced to sell his or her interest in the aircraft? Must the remaining co-owners consent? Will the remaining co-owners have a right of first refusal? What happens if a co-owner dies, becomes unable to fly, files for bankruptcy or is divorced? Will the departing co-owner's interest be purchased with cash or financed? The answers to these questions will give remaining co-owners security in knowing that a new co-owner will not be forced upon them and that they will be able to continue their co-ownership arrangement in spite of the departure of one of the co-owners.

Although the issues that arise between co-owners are similar to other co-ownership situations, how they are resolved is as unique as each co-ownership arrangement. The best approach is for you and our fellow aircraft co-owners to discuss and agree on these issues and as many others as you can think of and then to meet with an aviation attorney who can then draft a document formalizing your agreements.

Although most business attorneys can probably document your agreement for you, hiring an aviation attorney who understands these types of arrangements is usually more efficient because you won't have to educate the attorney. Additionally, an experienced aviation attorney will be able to point out issues you may not have discussed with your co-owners and help make sure that your written agreement addresses all of the key issues.

Finally, if you are considering a co-ownership arrangement, a variety of resources are readily available on the subject. AOPA and EAA both have information available for their members. Additionally, several books have been published on the subject that provide further insight into aircraft co-ownership arrangements and the potential advantages and disadvantages of this type of aircraft ownership. With the proper research and planning, you can make sure your co-ownership of an aircraft is a marriage made in heaven.

My Policy Says What?!

by Greg Reigel 1. February 2004 00:00
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Many states require that owners and/or operators of aircraft have insurance covering their aircraft and operations. At a minimum, states usually require third-party liability coverage. This applies to injuries to third-persons that result from operation of your aircraft. Additionally, if your aircraft is pledged as collateral for financing, the lender will require that you have hull coverage and/or replacement value insurance to insure the value of the aircraft collateral.

Obtaining the Policy

So, how do you obtain aircraft insurance? Typically, you apply for aircraft insurance through an insurance agent or broker who represents an insurance company or companies that provide aircraft insurance policies. The insurance company then reviews the application and does any additional investigation necessary for it to assess its risk in providing you with insurance for your aircraft or operations. Its risk is the likelihood that it may have to pay out on a claim against your policy.

In exchange for its acceptance of risk, the insurance company charges you a premium. The amount of that premium is a direct product of the amount of risk that the insurance company is assuming by extending coverage to your aircraft or operation. The greater the risk, the more expensive the insurance coverage will be. In some cases, the insurance company may not be willing to accept a particular risk for any price.

Factors that affect the underwriting decision include type of aircraft, pilot qualifications (e.g. total time, time in type, pilot certificates/ratings), nature of the operation (e.g. pleasure, business, Part 91 or Part 135) and base of operations. General aviation policies can include non-commercial pleasure and business use under FAR Part 91 or commercial use under FAR Part 135.

Reading the Policy

When an aviation insurance policy is issued, it represents a contract between you and your insurance company. As long as you comply with all of the terms and requirements of the policy, your insurance company will provide you with coverage. If you fail to comply and a claim arises, you may find yourself without coverage.

But, what does the aircraft insurance policy actually say? Well, as a practical matter, it is quite common that pilots and operators do not read their policies. Sure, they may review the declaration page to confirm that the correct parties are named and that the appropriate coverage limits are in place, but often times that is as far as it goes. Sometimes an owner or operator may even ask his or her agent to explain some of the policy's terms.

Unfortunately, the policy contains quite a bit more information of which the pilot or operator needs to be aware of to ensure that he or she complies with the terms of the policy. A thorough review of the policy is both prudent and recommended.

This review should begin with the Data Page or Declaration Page. First, confirm that the aircraft is correctly identified and that the appropriate owner and any additional insured parties are included. Also read the coverage limits to make sure that you have the limits for which you are paying.

Aircraft Damage Coverage

The typical aircraft insurance policy will include both aircraft damage coverage, as well as aircraft liability coverage. The aircraft damage coverage applies when your aircraft sustains damage (e.g. bent metal, broken windows etc.). This coverage comes in two flavors: In-flight/In-motion and Not-in-flight/Not-in-motion.

As you may have guessed, in the first instance your aircraft will be insured for damages it sustains while it is in use: moving under the power of its own engine, whether taxiing or flying. In the latter instance, you aircraft will only be insured while it is parked on the ramp or in the hangar. This coverage is less expensive because it presents far less exposure to the insurance company. It will only have to pay a claim if something happens to your aircraft while it is standing still and not in use. An aircraft owner may want this limited coverage when the aircraft is going to be stored and unused for a period of time.

It is also possible to purchase "all risk ground and flight" coverage. This coverage protects you whether the aircraft is moving or not. However, a policy with this coverage will likely be more expensive than a policy that is either In-flight/In-motion or Not-in-flight/Not-in-motion.

The aircraft damage coverage provides for transportation of the aircraft to and from the location at which the repairs are made, any related storage charges and the actual repair of the aircraft. However, most policies will also exclude coverage for damage sustained by your aircraft as a result of governmental seizure, resulting from repossession or enforcement of a lien against your aircraft or damage that is due to ordinary wear and tear, deterioration or age.

Assuming the damage to your aircraft is covered, you should read your policy language to determine whether it contains any specific restrictions or requirements relating to processing of your claim, who performs the repairs, where they are performed and even how they are to be performed. Simply because you have insurance coverage, this does not mean that you have carte blanche for having your aircraft repaired. Aircraft Liability Coverage

Aircraft liability coverage protects you from liability or responsibility to third-persons for damages they may suffer resulting from the operation of your aircraft. The coverage requires that the insurance company both indemnify and defend you against such claims. Indemnification means that if you are responsible for the damage to a third-person, the insurance company will pay the third-person directly, up to the policy limits, the amount for which you are responsible.

The duty to defend means that the insurance company will pay for your defense costs if you are sued by a third-person alleging that your operation of your aircraft caused damage. The insurance company will hire an attorney, usually experience in aviation law, to represent you and defend against the claims. Given the complexity and cost of aviation litigation, this benefit alone can be worth a substantial amount of money and may even exceed the amount of money actually paid by the insurance company to indemnify you.

Your policy will always have a maximum limit for liability coverage that can be either "sub-limit" or "smooth" coverage. An example of sub-limit coverage is a policy that provides for $1,000,000 per occurrence and $200,000 per passenger. This does not mean that you have $1,000,000 to pay all claims.

Rather, the insurance company will pay a maximum of $1,000,000 per occurrence, but will only pay each passenger up to a maximum of $200,000. Thus, for an accident in which only one passenger is injured, the insurance company's maximum exposure is $200,000, exclusive of any amounts it spends on your defense.

On the other hand, smooth limit coverage of $1,000,000 per occurrence will provide up to $1,000,000 of coverage regardless of the number of passengers. This coverage presents a greater risk to the insurance company since it could have to pay the full policy limits even if only one person is injured. As a result, greater risk means that the premium for this coverage is going to be more expensive than the premium for a policy containing sub-limits.

Policy Definitions

When you read an aircraft insurance policy, you need to pay special attention to the definitions section. Many of the terms used in the policy have specific definitions that are different from a dictionary definition or common usage for that word.

Examples include the definition of "accident" which is often defined as a "sudden and unexpected event resulting in bodily injury, death or property damage". This is different than the definition of accident contained in NTSB Rule 830 and is also more specific than a dictionary or common usage definition of the word.

Another example is the definition of "commercial operations" or "commercial purpose." An insurance policy's definition of this term is usually different from, and in some cases may be broader than, the FAA's or IRS's definition or a dictionary definition.

These are just two examples. However, remember that the aircraft insurance policy is a contract between you and the insurance company. Both you and the insurance company agreed to the policy definitions when you paid the premium and the insurance company issued the policy. As a result, both you and the insurance company will be bound by those definitions.

Coverage Exclusions

Your aircraft policy will also contain exclusions. Exclusions define circumstances in which the insurance company will not provide you with coverage for operation of your aircraft. An aircraft insurance policy usually includes both specific and general exclusions.

Specific exclusions arise when you assume additional liability (e.g. you sign a contract that indemnifies or holds someone else harmless for damage they cause), damage occurs to your own property or injury occurs to members of your family. The policy may also specifically exclude coverage for your own medical expenses or for your operation of an aircraft that you do not own.

Depending upon the state in which the aircraft is based, general exclusions can result in denial of coverage regardless of whether they directly caused a particular claim. These exclusions will preclude coverage for operation of your aircraft in commercial operations (as defined by the policy, not necessarily the FAA or IRS), using your aircraft to commit unlawful acts, damage caused by war or terrorism or if your aircraft is operated by a pilot that is not named as an insured on the policy and does not meet the open pilot qualifications.

Who Is Covered

Assuming no exclusions are applicable, the policy will provide coverage to each person named as an insured under the policy and to pilots who meet the "open pilot" requirements. As a threshold matter, each pilot operating the aircraft, whether named insured or qualifying under the open pilot provision, will need to possess the appropriate pilot and medical certificates and meet all currency requirements for operation of your aircraft.

The open pilot provision extends the coverage of your aircraft insurance policy to a pilot operating your aircraft who is not a named insured on your policy. The provision sets out total time, time in type and training requirements that the unnamed pilot must meet in order for the pilot to be covered under the policy. Generally, if those requirements are met and the pilot is operating your aircraft with your consent, your insurance coverage should extend to that pilot.

What You Can Do

The complexities of aircraft insurance can seem daunting. But, what can you do to protect yourself? The first, and one of the most important things you can do, is to read your insurance policy. If you have questions regarding terms or coverage talk to your insurance agent or contact an aviation attorney who is familiar with aviation insurance matters.

Once you understand the policy, make sure you abide by the policy and comply with its terms and requirements. It makes little sense to spend substantial amounts of money on insurance premiums and then place your coverage in jeopardy by doing or allowing something your policy prohibits.

Next, document your operations. What do I mean by that? Simple: Keep good records. Make sure your pilot logbook is up-to-date and current. If you take your pilot logbook with you when you fly, make copies of the pages containing your satisfaction of the FAR currency requirements and keep the copies in a safe place.

This way, if something happens to your pilot logbook and your insurance company or the FAA later question your currency, you will have back-up proof that you were current for your flight. Although not as critical, you may also want to keep a photocopy of your pilot certificate(s) along with your logbook records.

Finally, you should use this same procedure for your aircraft and engine logbooks. If you must take them with you in the airplane, make copies and keep them in a safe place. In this instance, you may want to make a full set of copies of the logbook entries, rather than just the pages showing the aircraft's current airworthiness. An aircraft that contains logbook entries for all of the work ever performed on the aircraft is worth more to a potential purchaser than if those records are incomplete or missing.

These simple steps can prevent potentially costly disputes down the road. It's been said that the best insurance is the insurance you never have to use. That may be, but if you take these steps, you should have greater peace of mind that your insurance will be there if you need it.

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Greg Reigel





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