The Case for Non-Owners Insurance
You are well on your way to your first solo and you are excited about the chance to pilot your craft by yourself. Along with this new freedom will also come new responsibilities. One of these is the fact that you alone are responsible for this aircraft. Back at your introductory flight you might have even inquired about insurance. Perhaps the instructor had confidently replied “don’t worry, we have insurance.”
But did that mean YOU are insured against loss? Or did it mean the instructor carried insurance or the FBO had insurance if they sustained a loss? Too often, too late, a renter finds out they are not covered in the event of an accident.
What do you mean I need insurance?
Chances are that if you rent a car, your own auto insurance will protect you. Go to a resort and rent skis, chances are your homeowners insurance will protect against a loss. But neither policy will likely cover your escapades in an airplane. The FBO may have coverage against THEIR loss, but often their insurance will attempt to recover their money through a process called subrogation. In other words, the insurance company pays the FBO and then bills you for their costs. Yes, it is legal.
Thankfully, airplane crashes are rare. So rare that one occurring in California will get coverage in newspapers and on TV on the east coast. So your chances of needing insurance are slim, right? Maybe not.
While airplanes seldom wind up as total losses, each day the FAA lists about a dozen accidents and incidents reported to them. Swerving off the runway and hitting one or two runway lights will never make it on the NBC Nightly News, but can make a substantial impact on your wallet.
How much insurance do I need?
There is no one size fits all answer to this question. Let’s take a moment to understand the types of damages for which you may be responsible. From there you can determine your individual tolerance for each risk.
Actual Loss – This is the actual amount of damage that results from an accident or incident. Total losses are rare, but because aircraft are unique by requiring certified parts installed or repaired by a licensed mechanic, even partial losses can run up a substantial bill. Let’s take the aforementioned runway excursion. Damage to the wing, tail and landing gear can total hundreds if not thousands of dollars. If the propeller strikes the light, an engine “tear down” and inspection may cost $20,000 or more! If you hit a drainage ditch and damage the firewall and damage the propeller in the process, the total can easily exceed $50,000.
Loss of Use. The FBO has a rental airplane because, let’s face it, they have renters. At a busy airport the average monthly rental per plane may exceed 50 hours. That is money, on which the FBO could reasonably expect, they will not receive. It is not unusual for the repairs to take a month or longer so expect an additional 5 grand to cover the FBO’s losses.
Diminution of Value – You may know that all maintenance records are kept with the airplane for its entire life. Airframe repairs must be recorded and becomes part of that permanent record. It will vary depending on the age of the airframe, but often appraisers will diminish the value of the airframe 10% for accident repairs.
General Liability – Just as with an automobile, you can be responsible for whatever (or whomever) you hit. Should an accident cause injury to a person, you might be responsible for medical bills, lost wages, etc. Here is a case where existing homeowners may provide some coverage, but you should check with your provider. Even the runway lights mentioned earlier are more than $200 plus installation which may increase that cost another $50 to $75.
The good news: insurance is available and surprisingly affordable.
Not comfortable writing a check for $50,000 or more? Then you should consider purchasing non-owners or “renters” insurance. Reasonable coverage can be purchased from several sources so consider this before you take the airplane out on your own… it can happen to you.