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Not flying? Don't cut insurance policy

Stopping insurance can be costly in the long run

Pilots who are not flying because of COVID-19 restrictions and who cannot get ground-only coverage should not cancel their policies, according to legal and insurance experts. Some companies may not be willing to write a new policy when you’re ready to fly again.

Pilots should think carefully before making changes to their insurance policy. Photo by Mike Fizer.

Many AOPA members who aren’t flying because of COVID-19-related restrictions have reported difficulty convincing their underwriters to convert aviation insurance policies to not-in-motion only status. Automobile insurers have made such concessions to those who are not driving, or driving a lot less, following the advice from state governments to limit the spread of the coronavirus during the pandemic.

Aircraft policyholders looking to save money, particularly if their insurers will not grant not-in-motion only status, should think very carefully about canceling active policies. Generally speaking, canceling an aviation insurance policy, even for a short period of time, can put the policyholder back at square one when the time comes to request coverage again, and the same policy (including the specific terms and conditions) may not be available, particularly in what was already a very tight insurance market even before the pandemic.

At least two states, Washington and Louisiana, have taken steps that may provide some relief to pilots when it comes to insurance. Washington’s emergency order issued March 25 requires insurers licensed by the state to provide a “grace period” for premium payments, and imposed a moratorium on property and casualty policy cancellations through May 9. (It is not clear, however, what legal recourse a consumer might have should an insurer violate the state directive.) Louisiana issued a similar order on March 26, though the order differs in some of the details and the same caveats apply, in that the relief does not apply to cancellations at the request of the insured, so individual policy holders in those states may still be better off keeping their coverage and paying the premiums.

AOPA is aware of at least one aviation insurance provider, Starr Aviation, the aviation insurance division of Starr Insurance Companies, that implemented temporary relief for customers who are unable to satisfy the training or medical certification requirements of their aviation policy during the pandemic. There are a few caveats, however. Starr’s announcement states that the accommodations “… are at Starr’s sole discretion,” only until “June 30, 2020,” and “Starr may cease to provide any component or the entirety of either or both accommodations at any time at its sole discretion….”

Like many aspects of the pandemic response, the insurance industry and state governments are responding in different ways, and measures to provide relief can raise more questions than answers. The FAA has provided pilots some relief from deadline pressure with most of the country under stay-at-home directives to limit the spread of the coronavirus, suspending enforcement of medical certificate expirations in March. However, as AOPA reported March 31, the FAA action has no effect on insurance policy requirements.

The global pandemic arrived just as the aviation insurance market took a turn for the worse, from the consumer perspective, with sharp increases in premiums for policy renewals reported by many AOPA members. Bill Behan, CEO of AssuredPartners Aerospace, AOPA’s partner in hull and liability coverage for members, explained the reasons behind the rate increases in January, offering tips for mitigating the cost of the “hardening” market that predates the global pandemic.

One piece of advice still applies: The policy you have may be better, in terms of cost and coverage, than what you could get if you cancel or allow that policy to lapse. AOPA continues to advise members to maintain their insurance coverage, even in cases where the insurer refuses to provide premium relief. At the very least, seek your insurance agent’s advice before canceling your current coverage.

AOPA ePublishing staff
AOPA ePublishing Staff editors are experienced pilots, flight instructors, and aircraft owners who have a passion for bringing you the latest news and AOPA announcements.
Topics: COVID19, Insurance

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