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. Adjust the aircraft’s stated value at the beginning of each policy period or if the aircraft receives costly modifications, such as new avionics or RVSM packages.
2. Read and understand your policy. Review the policy with your broker and ask about any clauses you don’t understand. Make sure that the policy adequately represents the type and level of coverage that you are expecting. Ask what will happen under this policy if there is a loss.
3. Notify your broker of any significant changes in your operation. Different insurance policies handle different types of operation in different ways. For example, if you engage in a time-share or interchange agreement with another company, some insurance companies consider that a commercial operation and require coverage different from a simple Part 91 private operation. If that coverage is not in place and there is a loss, the insurance company might not pay on the claim.
4. Don’t allow pilots to sign waivers. Some FBOs ask pilots to sign a Waiver of Rights to Subrogation form. Essentially a hold-harmless agreement, the form waives the right of the aircraft owner’s insurance company to sue the FBO or its insurance company in case any damage is done to the aircraft while it is at the FBO. This could result in there being no insurance coverage for damage done by FBO personnel since the pilot may have negated the policy by giving up the insurance company’s right to go after the FBO’s insurer to cover the cost of the claim.