Is Liability Coverage Only a Smart Move?
Part 2 of the Liability Coverage discussion. This time we discuss optional hull coverage.
As always – it depends. Last month we discussed “How much liability coverage is enough?” and this month we are focusing on the “optional” hull coverage. During the recent insurance hard market, with premiums rising, many clients have considered removing hull coverage from their policies in an attempt to ‘save money’. The only real reason not to insure the hull is if you perceive the premium to carry the physical damage coverage on the aircraft is unreasonably high relative to the insured value. If the aircraft has a very low hull value and you are OK with paying for any repair work after an accident or losing the aircraft in the event of a total loss, then it might make sense for you. You should consider the rising cost of aircraft replacement parts and repairs into your decision equation. Often our clients decide that a few hundred dollars to cover a hull value of many thousands of dollars is well worth the cost.
Other things to consider. If you have a lienholder on the aircraft, it’s not an option. They will require hull insurance as a condition of their loan agreement. Some owners feel their most likely loss exposure is damage to their aircraft while in an FBO’s hangar or tie down area and if that occurs, the FBO’s hangarkeeper’s liability coverage will cover it. Don’t count on it. Hangarkeeper’s liability only applies to damage the FBO causes to your aircraft that results from their negligence. A tornado collapsing the hangar on your aircraft, which seems to be a more common occurrence these last few years, would not be covered under an FBO’s HKL coverage as there is no negligence on their part.
If this is a coverage path you are interested in pursuing, ask for a quote on a liability only basis. Be aware insurers surcharge the liability premium for coverage written without the supporting hull premium, so the cost savings might not be what you anticipate. In the end, its not a path most aircraft owner’s chose, and only you can determine if it’s a smart move for your situation.
Still have questions? Ask the experts at AssuredPartners Aerospace. Visit ap-aerospace.com/own or call 800.622.2672. We’ll help you navigate the aviation insurance market.
