How Pilots Can Save Money On GA Insurance

The market forces driving the increased cost of GA insurance are beyond the control of most pilots, but there's still a lot you can do to make sure you're not overpaying.

March, 24, 2021  |  Posted in: Flying Today

Reduce costs general aviation insurance pilots

Worrying about skyrocketing insurance premiums is nothing new. If you own a home in a storm-prone area or have a teenager in your household reaching driving age, you know the feeling.

Aircraft owners have been lucky and have been spared this feeling for many years. But unfortunately, their luck has run out. For several reasons, 2020 saw the beginning of the end of the cheap and available general aviation insurance era.

Why Are General Aviation Insurance Rates Going Up?

It has been widely reported that aircraft insurance premiums increased anywhere from 20 to over 100 percent in 2020. The change caught many pilots and operators off guard since rates had been low and stagnant for many years prior.

Why the sudden increase? Some major natural disasters and losses in the aviation industry forced a reckoning with underwriters. As the COVID-19 pandemic took hold and planes were grounded, insurers were refunding premiums as aircraft were sitting in storage and not flying. Significant events like the groundings of the 737MAX planes also rippled through the industry. While these events may seem far from your home field and your little J-3 Cub, the insurance pool is shared between private owners, airlines, and other major players.

The tightening of the market has also resulted in many underwriters leaving the aviation sector. As losses mount and profits wane, there is little incentive to keep an insurer underwriting in the aviation sector. By the end of 2020, only about fifteen underwriters are still serving aircraft owners. That means competition for your policy is down, and so your rates are going up.

The good news is that insurance is just like every other part of the aviation industry — it's cyclical. What goes up will eventually come back down, but the next few years will require a little more diligence and time with your insurance broker.

Ways to Reduce Your General Aviation Insurance Costs

Trust Your Aviation Insurance Broker

The number one thing you can do to save money on general aviation insurance is to hire a broker that you can trust. A broker's job is to know how to get all of the discounts you deserve and to shop for the best rates for your policy. In short, a professional broker should be doing the worrying for you. You might not like the news they have for you, but you should be confident they're getting the best rates that you can get.

With so few underwriters in the industry now, switching brokers is unlikely to help. Playing different brokers against one another may hurt you in the long run since they'll be working with the same insurance companies to get you the same policy. Too much shopping around isn't the answer because there's only so much that can be done.

It's also not always advisable to switch carriers. With so much uncertainty in the insurance market right now, companies make it more challenging to get new policies. If you are in one of the high-cost segments, like pilots over 65 years old or owner-flown turbine aircraft, your best bet is likely to renew your current policy for a few more years before trying to find a cheaper one.

A good broker should also make sure you're getting all the obvious discounts that a company offers. The most common are for hangered aircraft, AOPA members, instrument-rated pilots, or multiple aircraft policies.

Keep Your General Aviation Insurance Policy Updated

The next step is to keep in contact with your insurance broker over the year. If you're changing home airports or putting the plane into storage for a few months, these simple things can save you money. Most policies will let you enroll as "ground only not in motion" coverage, which is excellent if your plane is in storage. It could save you about 60 percent.

If you can't get savings for storage periods, make sure you do not cancel your policy. If you cancel, you'll have to apply for a new policy and shop around all over again. And in today's market, new customers will get the short end of the stick compared to renewals.

Another area you want to sit down and discuss with your broker is your aircraft's insured hull value. Take current market dynamics into account and make sure you aren't overvaluing the plane's hull value. Shaving off some hull coverage can save you big money on the premium.

Get More Pilot Training or Credentials

Piots shouldn't need any encouragement to keep current. And insurance companies believe so, too, since currency can play a part in rates. High-performance or twin aircraft pilots should get their instrument rating if they don't already have one.

Another thing that might help is getting the highest-grade medical certificate that you can, regardless of whether the regulations require it or not. The insurance companies are not entirely on board with the FAA BasicMed system, so older pilots may still be required to get medicals annually by their insurance companies even if the FAA no longer requires it.

Some companies may offer discounts for pilots who participate in the FAA WINGS currency program or get annual instrument proficiency checks (IPCs). Again, the best person to ask is your insurance broker.

Getting New GA Insurance Coverage

If you're shopping around for a new policy, the going can be a little rough. If you don't have a few hundred hours (at least) of Pilot-in-Command (PIC) time in the make and model, you're going to pay a lot more until you get it. Some companies may require many hours of dual instruction in the make and model until they are comfortable underwriting the policy.

While you might be lusting after that sleek new twin, your best bet when it comes to insurance is to keep your requests simple. Fixed-gear, single-engine, four-place, and non-high-performance light aircraft will always be the cheapest and easiest to insure.

The market forces driving the increased cost of general aviation insurance are beyond the control of most pilots. The best we can do is work with our broker and our insurance company to keep the costs manageable. In the end, we'll do what pilots do best — keep the pointy end forward while we pick our way, carefully and safely, through this stormy industry landscape.

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