Insurance

The depressing drone of bad economic news yielded one little nugget that especially caught the attention of many owners last month: AIG, the insurance giant, was overleveraged and on the ropes. Deemed too big to allow to fail, the federal government engineered a hasty bailout package that has since ballooned in cost. What does this have to do with the AIG policy on your Skyhawk? Or your USAIG policy on your Bonanza? Is the insurance business about to tank along with the stock market? Not exactly, but thats not the same as saying AIGs well-regarded aviation insurance division hasnt been nicked by the credit crisis. It has, but only as a result of a general loss of confidence in certain businesses in general. For a detailed report on this, click on the podcast link at right, which appears on our sister publication, www.avweb.com. In that audio segment-no MP3 player required, by the way-you can hear an explanation from our aviation insurance guru, Jon Doolittle.

The long-awaited age of the VLJ has begun. The Eclipse 500 and the Cessna 510 Mustang are the vanguard of the new movement. Eclipse is now building almost one new jet airplane each work day. Cessna delivered 45 airplanes in 2007 and is ramping up to build two Mustangs a week. There are already close to 200 VLJs out there. By this time next year that number will have more than doubled, and soon other manufacturers will be swelling the ranks of Jet-A consumers. One of the looming worries for VLJ builders and potential owner-pilots is what the cost of insuring these jets will be, or if it will be available at all for budding jet pilots.

For aviation insurers, its the best of times and the worst of times. In many traditional parts of the aircraft insurance market, an overabundance of capital and new insurers is forcing premiums-especially those for corporate airplanes-down to new lows. At the same time, buyers are snapping up new airplanes of all sizes faster than manufacturers can build them. And the two new market areas of the decade, Very Light Jets and Light Sport Aircraft, are beginning to take off.In some ways, Light Sport Airplanes are an insurers dream. If the glass-half-full guys are even remotely right, there will be shoals of them. And from an underwriters viewpoint, theyre attractive because they have what insurers call “low severity.” Severity is essentially the average cost of an accident.

If you fly for fun or for a living and you have shopped for life insurance, you probably heard the agent draw a breath when he learned you were a pilot. If you fly, you pay more for life insurance. A lot more. My own experience in buying life insurance is typical. After asking my age, weight, whether I smoked and a number of other health-related questions, the agent quoted me the companys most attractive rates, with all the appropriate disclaimers.

Even for a modest single, the bidding starts at $40,000 or 20 years worth of premiums. Insurers always pay but so will you in higher rates, betterment and for hidden damage.

Post-accident, most insurers will do the right thing but some will steer you to a marginal shop. Heres how to stand your ground to get competent repairs.

Think of Fast Fix as AAA for airplanes, sans the free towing and TripTiks. But is on-call phone advice and help worth $600 to $1200 a year?

One owner s expensive lesson in the limits of insurance coverage. (And some advice on how to avoid the same trap.)

Want to fly your airplane on company business? Excess liability coverage may be the best (not cheapest) solution.

Its terrorism risk insurance and you’ll soon have to decide whether you want it or not. Our advice: Pass.

Insurance for older pilots is a touchy issue. Recurrent training or adding a rating will make you a more attractive risk.

While most aviation insurers will survive the largest claims in history, expect rising premiums to cover the losses.