by Herb Cunningham
COPA Insurance
Committee Chairman
The value that you insure your aircraft for
is usually an "agreed value". This means the insurance company
agrees your aircraft is worth the amount you have chosen and will pay that
amount less your deductible in case of a total loss. Because the value of
used aircraft has doubled over the past five years, many owners are not
insuring their aircraft for a high enough value to replace it. The best
advice is to insure for replacement value or the price you would accept if
you decided to sell your aircraft.
Underinsuring your aircraft creates problems if you have an accident. If the
cost of repairs, including taxes, approaches the insured value, then some
insurance companies will declare the aircraft a total loss and then sell the
salvage. You will be paid the amount specified in your policy less your
deductible but this will not be enough to replace the aircraft. Insurance
policy wordings differ but if your aircraft is insured for $50,000 and it
will cost $40,000 to repair it and the salvage value is $20,000, then you
could lose your aircraft depending on which company insures you.
The amount of hull coverage should always be increased if the aircraft has
been upgraded by adding an expensive avionics package, new paint or
interior, or an overhauled engine.