DID YOU KNOW insurance guidelines are tightening

In one of our previous posts, we explained how insurance premiums are like a roller coaster. We also touched on some of differences between a hard market and a soft market. Now that we are in a hard market, we?ve started to notice the underwriter guidelines getting more strict. For example, one of our companies have lowered their age requirements for a new pilot down to 69. (No worries, we still have some great companies that we work with for older pilots and we don?t see this as a trend with all of our companies.) New builds are also seeing tighter restrictions. We're having a harder time getting low time pilots approved and the insurance companies are getting more strict on training requirements.

The major change that we've seen lately is that our two companies who have offered $1,000,000 Combined Single Limits, aka $1,000,000 smooth, have decided to no longer offer this coverage for Vans aircraft. (If you are a Gallagher client and already have this coverage, you?re not at risk of losing it, but feel free to contact your broker to be sure.) This is very concerning to us because we want to make sure you are properly covered in the event of a claim. As of right now, the best liability coverage offered for a Vans aircraft is $1,000,000 per occurrence/$200,000 per passenger with the exception of one company that offers $250,000 per passenger. If you do not already have this coverage, it may be something to reconsider. We have not had any companies stop offering the higher liability, but we also can?t promise that they will continue to offer it in the future.

Below is a link to our previous post regarding a hard market verses a soft market.
http://www.vansairforce.com/community/showthread.php?p=1326358#post1326358

Thanks for the update. We are happy Gallagher customers. Any idea what has led to these changes? Has it been more claims?

flyinhood said:

Thanks for the update. We are happy Gallagher customers. Any idea what has led to these changes? Has it been more claims?

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It's not easy to pinpoint exactly what caused the changes as there are several different factors that lead up to the change in the market place. Part of it is due to the fact that rates have been decreasing for a very long time.

The main thing that most people don't realize is that you have to think of aviation insurance as a whole. It's split up into different niches (light aircraft, commercial) but it's all considered to be one. So when you see there has been a lot of commercial incidents, including the grounding of the Boeing 737, it's going to effect us too.

We have also had a lot of natural disasters over the past few years. The reinsurance companies that pay those large natural disaster claims for fires, hurricanes, floods etc. are also the reinsurance companies for aviation. Therefore they've taken a pretty big hit in the past couple years which causes them to need to replenish their reserves and tighten underwriting guidelines to lower their risk level.

Future policy

What should we do if we are not finished with a Builders Risk Hull Policy?

As a data point: I just got my renewal quote thru Gallaher, USAIG: it?s up a bit over 4% compared to last year. Given that inflation is running near 4%, I don?t consider this at all unreasonable. And, I am age 70, and they renewed my $1M CSL liability coverage without comment.
One thing I did notice: they have increased, by a lot, the requirements for someone else to fly under the open pilot clause. I would never let anyone do that anyway. As explained in a plain English cover page from Gallagher, open pilots have zero coverage. The owner (me) is protected, but I agree to testify against my pilot friend, if needed, in court, so the insurance company can recover their loss. I?m not up for that.

wirejock said:

What should we do if we are not finished with a Builders Risk Hull Policy?

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The best thing you could do is get time in the same make and model of the aircraft that you are building. Besides the hull value, the companies mainly rate off of the pilot's total time and hours in the specific make and model. If you can't get hours in that model, some companies accept time in a similar one, such as getting time in a RV-6 for your RV-7. Again, not all companies will accept this and there are certain models that the insurance companies want time only in the model they are insuring. Another thing most people don't realize, is that insurance companies don't see the tricycle gear model the same as the tailwheel version, meaning they will not take a pilot's time in a RV-6 to count towards a RV-6A and vice versa. It will still count toward the pilot's total time, but that's it.

When you are getting close to flying, you can contact your broker to get a full flight quote. This way you won't have any surprises when it comes to training requirements.

RV8JD said:

Leah,

Thanks for all your great posts on RV insurance. Appreciate it.

May I ask which company lowered their age requirements for a new pilot to 69?

Thanks,

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Each company has their own underwriting guidelines. Most of them have a maximum age for pilot. This is why we always try to make sure our older pilots are set up with a company that works best for them prior to meeting this age limits. If this is something you are worried about, be sure to ask your broker if there are any restrictions or if any coverages are going to be removed as you get older. We can't promise that the insurance companies won't change things in the future, but we can tell you how the companies are set up to handle older pilots right now.

Just listened to this webinar from Mike on insurance and really enjoyed it:
https://www.youtube.com/watch?v=4N34MyE7lg8