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Aircraft Hull & Liability
Insurance

Unlike other forms of insurance, aviation insurance contracts are highly individualized. There is no standard, formal aviation policy used nationwide. Each company issues, with its unique wording, policies that may have little similarity to aviation insurance policies issued by another company.

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Coverage Highlights

Pleasure and Business
Limited Commercial
Industrial Aid
Commercial
Special Use

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What is covered under aircraft hull insurance?

Basic aircraft hull and liability insurance covers physical loss or damage to the aircraft itself (hull) or to persons or other property (liability). These coverages can be purchased separately or together in the same policy.

The hull value of an aircraft is based on an “Agreed Value,” which is often a close representation of the “bluebook” or market value.

Aircraft liability insurance provides the policyholders with protection against third-party claims involving bodily injury or property damage because of ownership, maintenance, or use of the aircraft. Liability policy limits are based on a number of factors including:

Minimums as required by law in the state/country of operation
Type of aircraft operation (Part 91/121/135, etc)
Number of passengers or type of cargo carried
Airplane/helicopter size (as measured by maximum take-off weight)
Number of flying hours per year

Aircraft hull insurance is derived from the marine term “hull” and means physical damage to the aircraft itself. It is designed to protect the interest of aircraft owners, operators, and other parties with a direct financial interest of owners, such as lien-holders.

Aircraft hull and liability insurance has matured into a unique branch of the industry since the first aircraft policy was issued by Lloyd’s of London in 1911. It has become a blend of fire, auto, personal-accident, and marine insurance, having characteristics very different from its antecedents.

Premium Breakdown

If you have elected to combine hull and liability coverage into one policy, the hull portion often accounts for approximately 70% of the overall premium.

Liability often accounts for the the remaining 30% of the total policy premium.

Example: If you have a $1,000,000 aircraft, the insurance company may rate the hull premium at 1%. This would result in a premium of $10,000. And with a $1,000,000 liability limit, it would be common to see the liability premium at $3,500. Total Premium would be $13,500.

The premium charged depends largely upon the experience and ability of the crew members. Aircraft owner/operators may improve their rates based on experience by verifying total hours flown as pilot in command and time in make and model. Pilot experience and training have become a HUGE part of rating the risk of a flight operation. Here is a list of approved flight schools for each make and model aircraft.

Aircraft liability insurance coverage options

The options for aircraft liability insurance limits are constantly changing:

Here are the current coverage options (Updated April 2022):

Pleasure and Business – up to $5,000,000 per occurrence for owner pilots with considerable experience and the lowest limit is $1,000,000 sub $100,000 per passenger for high risk operations such as pilot with low time
Industrial Aid – aircraft with professional pilots and dual crew, such as a Gulfstream, can see liability limits commonly at $300,000,000.
Rotor Wing or Helicopters – often confined to lower limits such at $10,000,000.

The amount of liability coverage needed largely depends on how much the insured has to lose. But in a hard market, insurance companies will put a cap on the limits they offer to limit their exposure. An insurance company’s primary concern is protecting its assets.

What are common options for hull coverage?

The most common option for hull coverage is to insured the aircraft for what it is worth. Over insuring or under insuring will cause a Moral risk. In the event of a total loss – if the aircraft is under insured, the insurance company has the right to take the aircraft and pay the agreed value. If it is overinsured, you may find your aircraft will be in a maintenance shop undergoing extensive repairs when it should have been written off as a total loss.

Already have hull & liability insurance?

One of the most common questions we get as insurance brokers is, “If I already have insurance on my aircraft, can any other broker get me quotes or am I locked in with my current broker?”

The aircraft insurance industry is a very small industry. There’s often somewhere between 15-20 underwriters, total. If your current broker makes a submission to certain companies within a 90 day renewal period, it blocks other brokers from receiving the right to quote. The reason it works this way is because it’s a small industry and underwriters receive 30-50 different submissions a day. If they had to quote every submission 2-3 times it would make their workload overwhelming and your rates increase.

Questions to provide your insurance carrier

We are now in a period where underwriters no longer just quote a hull and liability limit. They are taking a much more controlled and hands on look at an aircraft hull liability insurance policy.

Who owns the company? LLCs are often holding companies. What is the names and percentages of ownership?
What is the effective date or renewal date? Aviation Insurance companies don’t like to quote or compete for new business when there’s an existing policy unless it’s coming up for renewal. Your renewal is the time to negotiate these terms, not mid term.
What is the details of the operation? Are there dry leases? Is there any non-owned exposure where the insured is fly other aircraft? How many hours does the aircraft fly per year? What is the average passenger load? Is there any international exposure? Where does the aircraft typically fly to?