Business aircraft and large charter operators may start seeing reduced insurance premium rates within the next few months, if they haven’t already. According to various brokers, insurance premiums for certain segments of the business aircraft and charter market have fallen by 25 percent or more in the past six to 12 months.
Types of insurance
A little over one year has passed since the European Union introduced higher minimum liability insurance requirements for aircraft registered within the EU, and those of foreign registry flying into or over its 25 member states.
New European Union minimum liability insurance standards that took effect April 30 are causing some U.S.-based operators to rethink their trips to Europe.
The time has come, your boss tells you, to buy another aircraft. So you jump to the task, do your research and find just the aircraft the boss needs. But before she signs her name on the purchase contract, she calls you and asks, “Do you think we need title insurance?”
1. Don’t overinsure or underinsure your aircraft. Hull insurance policies are stated-value policies. In case of a total loss the insurance company pays the stated value of the policy. Be sure to know your aircraft’s true replacement cost and insure the aircraft for that amount. Overinsuring your aircraft results in higher premiums; underinsuring means you’ll need to pony up extra money to replace that aircraft if it’s lost.
Various aviation insurance professionals seem to agree that the overall market has stabilized with premiums still significantly higher than pre-9/11 levels but with decreases in various segments. Some brokers have reported decreases in premiums as high as 25 percent, but those have turned out to be unusual cases. For those bizav operators who have seen decreases, the average reduction has been 5 to 10 percent.
The object of the regulation is to set minimum insurance requirements for air carriers and aircraft operators regarding coverage for passengers, baggage, cargo and third parties. The rule applies to all operators flying into, out of, within or over the territory of a member state. The new insurance levels are tied directly to the mtow of the aircraft and a special drawing right (SDR).
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