Jim Pinegar, Vice President & Director of Operations of AOPA Insurance Services, addresses your aviation insurance questions.Disclaimer: The following material is provided for informational purposes only and does not constitute legal advice. For questions concerning your specific circumstances, consult a local attorney.
CHRIS: Why are rotor wing aircraft harder and more expensive to insure than fixed wing aircraft?
JIM: Chris – great question…insurance company rates are generally comprised of two components --- liability and hull coverage. Many factors affect each component, so please allow me to give some thoughts on each.
We’ll first address the liability portion (the amount you are legally liable for in the event of a covered loss). An insurance company will look at their loss experience and other industry information to determine both their historical and probable losses in the event of a claim. Aircraft that typically have high liability related payouts are rated much higher than those that have historically had low payouts. Think in terms of the two, albeit extreme examples. A light weight, single seat aircraft with low speeds probably has less inherent insurable liability risk than a multi seat, high performance aircraft. And that makes sense, in the event of a loss; you may now have more passengers and larger, faster aircraft could also cause more ground damage, etc.
In addition, utility or use makes a difference. Helicopters are sometimes used for utility purposes in which aircraft may not qualify – i.e. landing on oil rigs or building tops….these activities could in theory be of higher risk than always having to land on a long stretch of asphalt. Rotor wing aircraft are sometimes flown close to other aircraft on the ground as they taxi in for parking. A fixed wing aircraft should already be on the round, slowly taxiing into position. I understand that these aren’t always the case, but in large numbers these types of activities could expose a company to more liability claims.
In the end they look at every make and model and if aircraft A typically results in a liability claim of $50,000 vs aircraft B which results in a liability claim of $500,000 – rates adjust accordingly.
Second let’s discuss hull coverage. Hull rates are determined by assessing the average cost of a loss and the frequency of loss. Aircraft that, from an underwriter perspective, incur more frequent or costly repairs or have more life limited parts are simply rated higher. In general, aircraft that are more expensive to maintain, require even further specialized skill or often result in a total loss are higher to insure.