How much should I insure my hull for?

Aircraft policies are written on an “agreed value” basis. At the time the policy is bound, you and the insurer agree that the aircraft is worth a specific dollar value. Because of this, it is important to arrive at an insured value that accurately reflects what the aircraft is worth.

Underwriters will not overinsure an aircraft because it could present a moral hazard. You could profit substantially if “mysteriously”, the $50,000 aircraft you insured for $200,000 disappeared. Alternatively, if your aircraft is overinsured, the insurance carrier could elect to repair a large partial loss instead of totaling the aircraft, which could leave you with a heavily repaired aircraft you no longer want to fly and that would be difficult to sell with such an accident history. You also do not want to underinsure your aircraft because the insurance company will pay you a total loss and keep your salvage. You would be left with a check for $50,000 on your $200,000 damage claim and no plane.

An aviation insurance specialist can help you arrive at a reasonable value to insure your aircraft. This should also be reviewed annually or more often if you add equipment, overhaul the engine or have the aircraft painted.