airplane insurance requirements

Today, we review the Airplane Insurance Requirements, types of aviation insurance and the features of aviation insurance. . As a result of the events of September 11, 2001, and the ratification by the EU and its member states of a new Montreal Convention of International Commercial Air Transport, the EU has introduced a new regulation that makes insurance compulsory for both commercial and private aircraft.

airplane insurance requirements

Effective April 30, 2005, new European (EC) regulations require that all aircraft operators (both commercial and private) carry liability insurance coverage with respect to passengers, baggage, cargo, and third parties when operating within, into, out of, or over the territory of a European Union (EU) Member State. The required insurance includes coverage for war, terrorism, hijacking, sabotage, unlawful seizure of aircraft, and civil commotion.

The importance to our members

The new regulation will significantly impact general aviation owners of U.S.-registered light single- and twin-engine aircraft that travel to or within Europe because the level of insurance now required cannot be easily or affordably obtained through U.S. insurers.

Private aircraft operators will now be responsible for having the necessary insurance coverage regardless of whether they own or lease the aircraft. Failure of U.S.-registered aircraft operators to comply with the regulation may lead to refusal of the right to land by the relevant EU Member State. Additionally, if the relevant authorities of EU Member States are not satisfied that the conditions of the regulation are being met, aircraft will not be allowed to take off until the requisite insurance coverage has been evidenced.

Each EU member state has the right to inspect aircraft landing in that state and may require verification of compliance with the new insurance regulation. A current insurance certificate showing the required coverages should be carried on board the aircraft as evidence of compliance to avoid unexpected and expensive delays and possible refusal to land in EU territory.

Significant provisions

Passenger Liability:

  • $250,000 SDRs (Special Drawing Right as defined by the International Monetary Fund) or $378,425 U.S. dollars* per passenger on aircraft weighing 2,700 kg (5,954 lb) or more.
  • EU Member States may apply a reduced insurance minimum of 100,000 SDRs or $151,370 U.S. dollars per passenger for non-commercial operations by aircraft weighing less than 2,700 kg (5,954 lb).

Third Party Liability Per Aircraft:

UP TOMTOW (KG)MTOW (LB)SDRSU.S. DOLLARS*
5001,103750,000$1,135,275
1,0002,2051,500,000$2,270,550
2,7005,9533,000,000$4,541,100
6,00013,2287,000,000$10,595,900
12,00026,45618,000,000$27,246,600
25,00055,11680,000,000$121,096,000
50,000110,232150,000,000$227,055,000
200,000440,925300,000,000$454,110,000
500,0001,102,312500,000,000$756,850,000
Over 500KSee Above700,000,000$1,059,590,000
MTOW = Maximum takeoff weight
* Rate as of April 19, 2005

As an example, a Cessna 182 carrying a pilot and three passengers and operating non-commercially would require $4,995,210 of insurance coverage, assuming the EU Member State applies the reduced amount for passenger liability. This figure was calculated as follows:

$4,541,100 + $454,110 ($151,370 x 3 passengers) = $4,995,210

The insurance requirements related to risks of war and terrorism does not apply to aircraft with a MTOW of less than 500 kg (1,103 lb) used for non-commercial purposes or flight instruction.

AOPA’s position

AOPA believes that the new regulation creates a hardship and is unfair toward the owners and operators of small general aviation aircraft who have their airplanes based in Europe or only fly there occasionally. There are more than 500 individually owned U.S.-registered airplanes based in European countries, and close to 100 more of our members make at least one annual trip to Europe in their privately owned airplane. While most of these owners/operators carry liability insurance, the level of insurance required by the new regulation would not be easily obtainable or affordable through U.S. insurers. It is likely that for most, the decision would be to not fly their airplanes to Europe anymore.

AOPA recognizes the difficulty for operators of light single- and twin-engine aircraft to obtain liability coverage in excess of $1 million on their aircraft from U.S. underwriters. For this reason, AOPA is talking with insurance companies to determine the feasibility of providing temporary liability insurance coverage for those members desiring to fly to Europe for a one-time trip or long-term liability insurance coverage for those on an extended stay.

features of aviation insurance

Insurance requirements are the same across the United States. If you’re planning on flying internationally, however, you’ll need additional international liability coverage. The amount of insurance coverage you need depends on the size and type of plane that you have, as well as the equipment you have on board.

Below we break down a few of the insurance requirements you may encounter as an aircraft owner.

Proof of Insurance

Proof of your insurance must be carried on the plane. The proof of insurance should show your insurance coverage meets all the requirements for the plane’s size and category, the equipment it is carrying, and the flight you’ll be taking.

Hangar Insurance

Hangar insurance is the insurance that covers the hangar in which planes are stored. Hangar owners must have hangar insurance. If you choose to rent a space in a hangar, you may need your own hangar insurance in order to cover any damage that could happen while it is in storage.

International Liability

If you’re planning on flying internationally, you’ll need to make sure your aircraft’s insurance also includes international liability. While there is standard worldwide insurance that should cover your plane throughout most of the world, some countries may have specific requirements. You should check into additional requirements particularly when flying to Italy, Mexico, Hong Kong, Germany, or the EU.

Tip: Check that you have all of the required insurance before you leave no matter where you are flying. Landing permits may be denied if you do not have the proper insurance for your destination.

Non-Owned Insurance

If you don’t own your own plane, you may still need to have insurance coverage for planes that you or your company have used. Non-owned aircraft insurance covers individuals and companies that charter aircraft to protect them from any liability in the event of an accident. Non-owned aircraft insurance is also called aircraft rental insurance.

WHAT DOES AVIATION INSURANCE COVER?

Prop plane on runway

There are different types of aviation insurance that together cover the physical plane, any damage it could cause to property, aircraft crew, and any passengers.

In-Flight Insurance

In-flight insurance covers any damage to the plane that is the result of an accident or other events that occur while the plane is in motion, generally while it is in the air.

Public Liability Insurance

Public liability insurance is the type of insurance most often required by law for aircraft owners. This is the type of insurance that covers damages to external property or people. It doesn’t include coverage for passengers or damage to the plane itself.

Passenger Liability Insurance

As the name suggests, passenger liability insurance covers any harm that may come to passengers.

Combined Single Limit (CSI)

Combined single limit insurance is a combination of public liability and passenger liability insurance.

Aircraft Hull Insurance

Aircraft hull insurance covers any physical damage to the plane itself while it is on the ground. This can come in two different types – motion and non-motion.

Non-motion coverage insures against:

  • Damage as a result of vandalism
  • Accidents with uninsured vehicles
  • Damage from weather events

Motion hull insurance covers:

  • Damage sustained during takeoff
  • Damage sustained during landing

Crew Coverage

Aircraft crew members are typically insured by the company they work for. The pilot and cabin crew would have their own insurance through their company’s workers’ compensation and don’t need to be covered under your aircraft insurance.

Get your quote.

HOW MUCH DOES IT COST TO INSURE A PLANE?

Pilot jumping in front of airplane

The cost of your insurance policy does vary depending on the category and size of plane you own and the coverage your policy provides. Insurance for small aircraft usually costs between $1,200 and $2,000 annually.

Coverage Amount

The amount of coverage depends on your policy. Having the bare minimum policy may not be good enough in the event of an accident. What the insurance company pays may not be enough to fully cover the repairs, leaving you with the balance. It’s important to calculate how much insurance you really need in the event of having to repair or replace your plane.

Rate Increases After Claims

Whether your insurance premium rises after a claim depends entirely on the cause of the claim. If damage was caused by something like a lightning strike, then the insurance company may be more understanding than if there was an accident or if you or your crew were at fault in any way.

When purchasing a new aviation insurance policy, keep the following in mind:

  • Purchase liability insurance if it’s necessary in your area or where your aircraft is stored
  • Create a list of those who will be operating your aircraft and will need to be insured through the policy
  • Consider the outcome from over-insuring or under-insuring your aircraft
  • Look into the insurer’s history of resolving claims and don’t take out a policy with an insurer who has a bad reputation

You should review your existing policy once a year. Check to ensure that:

  • You have any necessary extensions to your policy
  • All your pilots are covered by your existing policy
  • There are no exclusions that would be limitations on the use of your aircraft
  • Your deductibles are reasonable

HOW CAN I MINIMIZE AIRCRAFT INSURANCE COSTS?

The best way to keep your aircraft insurance costs to a minimum is by remaining claim-free. However, that’s not always possible. There are other things you can do to try to keep costs down. These include using a hangar, completing pilot proficiency training, and increasing flight hours to name just a few.

Private jet parked in front of hangar

Use a Hangar

The likelihood of damage to your aircraft is lessened when you store it in a hangar. For the same reasons that it’s better to park a car in a garage than on the street, a hangar is preferable to a tie-down for aircraft upkeep. The plane is protected from variable temperatures, the sun, wind, hail, and other weather.

In addition to lowering your insurance rates on your plane, storing your plane in a hangar also reduces the maintenance costs of the aircraft.

Pilot Proficiency Training

You may be able to lower your insurance rates through pilot training. The more training you have, the lower the risk of an accident. Annual training may be required to maintain coverage. In addition, insurance companies may have specific training programs they require in order to lower their premiums. It’s important to check with your insurance company to determine their requirements before embarking on any training programs.

Increase Flight Hours

Insurance companies use the total number of hours as a factor in calculating the risk of insuring planes. Having more than 5,000 hours of flight time reduces the risk of a crash by up to 50%. The more flight hours you log the lower your rates may be.

Instrument Ratings

Obtaining an instrument rating can not only improve your piloting but can also reduce your insurance payments. The FAA has specific requirements for any pilot that wants to obtain an instrument rating. There are specialized schools available as well as many private instructors who are certified to train you for the instrument rating. Check with your insurance company first to see if they have any recommendations or requirements.

Join a Flying Club

Some clubs and associations may be able to obtain discounted rates for insurance. Most clubs charge a membership fee, which then gets you access to not just a discounted insurance rate, but also access to the club’s fleet of aircraft, as well as contact with other owners and pilots.

WHO NEEDS AIRCRAFT INSURANCE?

Prop plane on runway

Any person involved with the flying or operation of an aircraft should have some kind of insurance. That insurance should cover any person who is on board the plane, including passengers.

Owners

Aircraft owners must have insurance. Their insurance is the most comprehensive of the available insurance options, needing to cover the plane in the hangar, on the ground, and in the air, as well as any passengers on board the plane.

Renters

Those renting airplanes are required to carry legal liability coverage. This protects you from legal fees in the event of an accident. Besides liability protection, renter’s insurance policies can also cover physical damage coverage.

Part-Owners

Part-owners need to, between all of the owners, have the same insurance as a full owner. The insurance rates may be different for a group of owners rather than one owner.

Pilots

Any pilot flying a plane they do not own should carry their own insurance. The aircraft owner’s insurance covers passengers and the plane itself, but not the pilot. Pilots should have the following:

  • Medical payments coverage
  • Aircraft liability insurance
  • Aircraft physical damage coverage

Get insured.

WHAT HAPPENS IF MY PLANE IS UNINSURED?

If your plane is uninsured, you may be barred from using FBOs. Every airport with facilities for general aviation is operated by at least one FBO, which generally requires insurance. Whether you want to fly domestically or internationally, without insurance you may be denied landing permits.

Leave a Comment