When applying for aviation insurance, several matters will
be taken into account including:
" Sum insured: Aviation policies are
divided into
i. Hull: The loss of or damage to the aircraft.
ii. Liability: Loss of or damage to property
belonging to others and/or bodily injury to
others as a result of the insured's negligence
Aviation insurance is based on "agreed
value". This means that, in the event
of a total loss in respect of the hull, the
amount agreed to in the policy is what will
be paid upon acceptance of the claim.
It is vital that the aircraft be insured
for its true value as major difficulties can
arise for the owner if the amount is under
or overinsured. For example, if an aircraft
is grossly underinsured, the agreed value
will not be enough to enable the owner to
replace it.
In the case of overinsurance, the insurer
may decide to approve a lengthy repair process,
costing more than the market value but less
than the agreed value. This will result in
major delays to plans of getting "back
in the air".
Liability is a different issue with settlements
determined in most large cases by the courts.
" Type of aircraft: Generally, helicopters
cost more to insure than fixed wing aircraft.
Here in Australia, this is partly due to the
manners in which they are employed, for example,
mustering livestock and heavy industrial use.
Helicopter accidents are also more likely
to result in a total loss of the aircraft
than fixed wing accidents. What would seem
a relatively minor "heavy landing"
in a fixed wing aircraft would most likely
write-off a helicopter.
The best way to ensure the lowest price possible
is quoted for the aircraft, fixed wing or
rotary, is to be clear with the insurer exactly
what it will be used for. For business owners,
it may be worthwhile considering whether diversifying
from the central business function is worthwhile
if diversification results in more hazardous
usage of the aircraft.
" Pilot Experience: Pilot experience
and qualifications are the most important
aspects of determining the amount of the premium
and level of coverage. In some cases, cover
may not be extended if the pilot has not enough
hours in the air logged.
If any persons other than the owner are to
be flying the aircraft it is the owner's responsibility
to ensure all details regarding additional
pilots be accurate and up to date. Inaccurate
information can lead to a claim being rejected.
There are basically three types of pilots
able to fly the insured aircraft:
i. Owner: Self explanatory
ii. Open Pilot Warranty: The Open Pilot Warranty
(OPW) is the minimum standard of requirements
that must be met in order for a pilot to fly
the insured aircraft. Although names of OPW
pilots do not have to be notified to the insurer,
it is crucial to ensure that all OPW pilots
meet the requirements for the insured aircraft.
Remember that the OPW for one type of aircraft
may not be satisfactory for another.
iii. Named Pilots: These are persons you will
be permitting to fly the aircraft but who
do not meet the OPW standards. Using Named
Pilots will generally mean a higher premium.
It is useful to consider the insurer's position
here. An aircraft is a high level of risk
to the insurer. In order to underwrite that
risk it must be worthwhile. Since most aircraft
accidents are statistically due to pilot error,
more premium must be charged for less experienced
pilots to justify the risk.
Once cover is granted, renewal after one
year is not always automatic.
As the renewal date approaches, cover is re-evaluated
along with the premium. This can have a positive
outcome as pilot experience and any additional
training undertaken will be considered when
calculating the new premium.
Overall, the main issue to be understood
is that all information given regarding the
aircraft to be insured and its pilot(s) is
to be as accurate and up to date as possible.
Whether or not this leads to a premium one
may deem "cheap" is irrelevant.
What is relevant is that the premium will
be a true reflection of the risk.
And that is as insurance should be.
