Insurance for owners of high-performance aircraft
Let's say the Beech Baron or Cessna 300-series aircraft that you own does not have the range and speed for your needs, and you have the means to step up to a Beech King Air or Cessna CitationJet. Will you be able to get insurance? What do the insurance companies require as far as flight experience, and what kind of premiums could you expect to pay? These are important questions that need to be answered before any purchase should be seriously considered. The answers to some of these questions might reveal a steep increase in insurance rates, the inability to buy adequate liability coverage at any price, or the requirement that a check pilot fly copilot until flight experience has reached a required level.
Aircraft insurance companies separate aircraft and pilots into discrete groups for the assessment of risk. The first category is the single-engine, fixed-gear airplane with fewer than 236 horsepower. This includes Piper Warriors and Archers, Cessna 152s and 172s, and Beech Sundowners, just to name a few. The insurance requirements to own an airplane in this group are very simple: There are no minimum requirements. Anyone from a student pilot on up can get insurance for this type of airplane. However, a student pilot can expect to pay a 25-percent surcharge above the basic premium.
The next category is a single-engine airplane with more than 235 hp and fixed gear. Some examples are the Cessna 206 and the Piper Cherokee Six. Insurance companies prefer a private pilot certificate with at least 300 hours. Some companies may require training with a CFI or the option of paying a higher premium. Many companies prefer that the pilot-owner has an instrument rating, even in this category. In some cases a point system is used to grade the pilot. If the pilot's experience falls below a certain threshold, the companies add a surcharge.
Moving up in complexity we come to the single-engine airplane with retractable gear and 201 or fewer hp. (The catch words here are retractable gear, because insurance companies view these airplanes as a greater risk for hull damage as well as personal injury.) Examples are the Beech Sierra and Piper Arrow. Most companies require, as a minimum, a private pilot certificate and instrument rating with a total time of 500 hours, of which 100 hours are in retractable-gear aircraft. There may also be a requirement for 25 hours in type. If the airplane has more than 201 hp (e.g., Beech Bonanza, Cessna 210, or Piper Lance), the private certificate with an instrument rating is required, but the hours may increase to 750 hours' total time with 250 in retractable-gear airplanes and 25 in type.
Move up to a multiengine airplane with 520 or fewer total horsepower, and you better have logged some hours. To get the best insurance rates for your Piper Seminole, Beech Baron, or Cessna 310 you will need your private/instrument with multiengine rating and 1,500 hours, with 500 in multiengine airplanes. You also will need 25 hours in type, and there will likely be a requirement for recurrent training. Fewer hours in any of these categories will result in the requirement of a qualified check pilot to ride along or a surcharge on the policy until these minimum hours are attained.
If you have deep pockets, you might want to purchase an aircraft such as the Piper Chieftain or Cessna 414. Then you better get your commercial certificate to go along with your instrument and multiengine ratings. Most insurance companies will require 2,000 hours, including 1,000 in multiengine airplanes, and annual recurrent training. In addition, there will likely be a requirement for schooling at Pan Am/Simcom, SimuFlite, or FlightSafety International.
Now we come to the realm where few are able to tread — turbine-powered aircraft. Should you win the lottery and want to get to your destination above the weather and fast, then be prepared for strict insurance requirements. In general terms, you will need 3,000 hours, including 2,000 in multiengine airplanes and 250 hours in turbine-powered aircraft. You also need to attend the manufacturer's school, FlightSafety, SimuFlite, or Simcom. If you do not have the required flight hours, a surcharge would be applied. This will gradually decrease as your flight hours approach the required flight experience. As an example, let us say you sell your Cessna 340 and purchase a Beech C90 King Air. With its higher passenger capacity and higher value comes a higher premium. Assuming the pilot has zero turbine time, the insurance company will require a check pilot who meets the minimum standards for the first 250 hours. The pilot/owner would have to attend a recognized school such as FlightSafety for initial training and semiannual recurrent training until he reaches 250 hours in type. Then annual recurrent training would be necessary.
The training and check pilot requirements would apply as well to larger turbojet-powered aircraft. However, when moving from one turbine-powered aircraft to another, credit is given for aircraft that have similar engines. Also, coverage is more likely to be available if you transition with your present insurance company rather than going with someone new. Keep in mind that some insurance carriers may not be able to insure certain high-performance airplanes, and the prospective buyer may have to seek coverage with a new company.
As some cars are more expensive to insure than others, the same is true for aircraft. In most cases, the premium charged by an insurance company is directly related to the aircraft's safety record. A pilot considering the purchase of a King Air or a Mitsubishi MU–2 might find that some insurance companies will not want to insure the MU–2 or, at the very least, charge a high premium, set very strict training requirements, and restrict liability coverage. This is because of the loss record of this type of aircraft. However, if a pilot were buying an MU–2 to use as a cargo airplane, he would find it easier and less expensive to insure as opposed to carrying passengers. Another way to lessen the cost of insuring a high-risk airplane is to incorporate it into a large fleet.
Some pilots may opt for a high-performance single such as the Piper Malibu, or the turboprop-powered Socata TBM 700 and Piper Meridian. Insurance companies like to see a lot of experience in other high-performance complex airplanes; otherwise they may require a check pilot to ride along for the first 25 hours in the airplane. There will also be the requirement for annual recurrent training. The Piper Malibu's accident history has contributed to higher-than-standard insurance premiums and more stringent training requirements for owners.
So now you have a basic understanding of what insurance underwriters look for in the pilot/owner of the proposed aircraft. Next let us look at a few specifics to see what this roughly translates to in dollars. Let me preface this by stating that the premiums that follow are very generic and are only meant to provide a ballpark figure for the coverage in the examples given. I gave insurance companies, as examples, the type airplane the owner/pilot was moving from/to and the pilot's experience in terms of certificates, ratings, and hours. The premiums for your specific situation will certainly be different from the examples given.
Let's start by looking at a private pilot with a multiengine rating and 300 hours' total time and 25 multiengine. This pilot currently owns a Cessna 182 and would like to purchase a Beechcraft Baron. Let's assume the insurance company values the Baron at $150,000. It considers this pilot to have low time and would require him to attend formal training in the Baron through the American Bonanza Society or some other sanctioned training program. In addition, this pilot would require the presence of a check pilot for the first 25 hours in the Baron. The premium would be about $4,000 per year for $1 million in liability coverage sublimited to $100,000 per passenger. In other words, if an accident injured four passengers ($400,000), there would be $600,000 remaining to cover the rest of the liability, such as persons and property on the ground. Not a lot of coverage.
In our next example we have an instrument- and multiengine-rated private pilot with 1,000 hours' total time and 300 multiengine. This pilot would like to move from his Baron to a C90 King Air. The premium would be $19,000 per year based on an airplane value of $1 million, with $2 million in liability coverage. This pilot would be required to attend initial and six-month recurrent flight training at an approved school and fly with a high-time pro for the first 50 hours.
In another example we have an instrument-rated commercial pilot with 500 hours' total time who presently owns a Cessna 182 but would like to purchase a Piper Meridian or a Socata TBM 700. The premium in this example will be $37,000 per year based on an airplane value of $1.6 million. This includes a $10,000 deductible with $1 million in liability coverage. This pilot would also need to attend formal initial and six-month recurrent training at an approved school and fly the first 50 hours with a safety pilot.
Now we have an instrument- and multiengine-rated commercial pilot with 700 hours' total time and 75 multiengine who would like to trade his Cessna 172 for the big step to a Cessna 414. With the 414 valued at $175,000 this pilot will pay $6,750 per year for $1 million liability coverage sublimited to $100,000 per passenger. The only training requirement is 50 hours of dual with an experienced safety pilot.
For the last example, we have a pilot with a commercial certificate, and instrument and multiengine ratings, with 3,000 hours' total time and 700 multiengine who owns a Piper Seneca but needs the speed and range of a Cessna Citation CJ1. With an aircraft value of $4 million, this pilot will pay $55,000 to $60,000 per year for a $2 million liability policy. As in previous examples, this pilot will have to attend formal initial and recurrent flight training, as well as flying dual with a qualified check pilot until several hundred hours are accumulated in type. Only then will single-pilot privileges be granted.
It is very important that pilots understand that premiums are based on the information on the application. According to Scott Arledge, an aircraft insurance broker with Aon Aviation, you may think of yourself as the greatest, safest, and most proficient pilot in the world. However, the insurance company determines your premium based solely on the flight time and experience on the application. You are lumped in with pilots of similar time and experience, and your premium is determined based on where you fall in its risk categories.
So if you are considering the purchase of a larger, higher-performance airplane it is very important to take into account your insurability and whether the requirements placed on you by the insurance company are something you can fly with. And you should also remember that some companies, such as Avemco, that may insure your Cessna 414 will not write a policy for a Cessna Citation. Doing research on the insurance aspect of the purchase is as important as researching the aircraft itself.
Howard J. Marcus holds ATP and CFI certificates and has flown the Boeing 737, 757-767, and 777 for a major U.S. airline. He is currently a 737-300 captain.
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