Buying renter’s insurance doesn’t have to be complicated, but it helps to understand the insurance lingo and what it means to you. The first and most important part of the policy is "liability." This is your protection for passengers that you may injure and for who and what you hit. In insurance lingo this is your "bodily injury and property damage liability." Under the AIG policy this is termed "required coverage." The insurance company requires that you carry some limit of this protection before they will permit other coverage. This required coverage does not cover damage to the rented aircraft.
Your protection for the damage that you might do to a rented aircraft is called non-owned physical damage insurance or, under the AIG policy, "optional coverage." It is this important optional coverage that would pay your insurance deductible, loss of use (lost profits) by the fight school, parts and labor required for engine teardowns and inspection, repair of the engine and aircraft to return it to the same condition as before the incident including test flights and pilot charges, and the reduced value of the aircraft (as now, due to this accident, it has a value-reducing prior-loss history).
Most insurers recommend that you protect yourself with either the highest amount of required coverage you can afford and that is made available, or at a limit sufficient to give you the peace of mind you seek. The amount of optional coverage you need depends on the estimated value of the aircraft you typically fly as well as your rental agreement and what that rental agreement says you are responsible for.
As an example, let’s say you make an emergency landing in your rented airplane on a golf course and, while landing, you tear up the golf course and clip a golfer, and your passenger suffers a neck injury. Required coverage covers the damage to the course and the golfer up to amount of chosen coverage, with your passenger’s injuries covered up to the per passenger sub-limit amount. Your optional coverage covers damage to the rented airplane. So if you had a $1 million policy with a per passenger sub-limit of $100,000 and optional coverage of $80,000, treatment of your passenger would be limited to $100,000. The remaining $900,000 could be used to cover damage to the golf course and medical care of the golfer. The $80,000 optional coverage would be your protection should you be liable for damage to the rented airplane.
Note: Some policies have per person sub-limits instead of per passenger sub-limits. These policies are the most restrictive as they consider any person involved in the accident to be under the required coverage sub-limits—(in this case only $100,000) instead of making the total policy amount available for anyone outside the plane. There are no related premium savings with this policy, so it should be avoided if possible
AOPA Insurance Services is available to answer all your questions and help you make a decision that is right for your needs. AOPA Insurance Services is celebrating 20 years of serving the aviation insurance needs of its customers. Visit the company online or call 800/622-2672 for information on how AOPA Insurance Services can help you get the best coverage at the very best price.