Be Careful When Insuring Your Two Aircraft With Two Different Insurers

You own two aircraft and got a better insurance deal insuring each one with a different insurer. While this may seem logical and benign, there are negative insurance consequences in doing so that you should be aware of.

Because each insurer’s policy will contain some duplicate coverages (premises liability, coverage for use of non-owned aircraft, automatic attachment of newly acquired aircraft, etc.), the insurer of each policy wants to make sure they aren’t picking up coverage under their policy for another aircraft or exposure that should be covered under the other aircraft’s insurance policy. For example:

Newly Acquired Aircraft – This coverage is your get-out-of-jail card if you buy a new aircraft and forget to call your insurance broker to place insurance on it. It automatically covers the new aircraft provided the same insurer “covers all the aircraft you own at the time you acquire it”

Coverage for your use of Other “Non-Owned” Aircraft – This coverage can extend your liability coverage to provide protection when you are operating an aircraft you don’t own. It only applies if the same insurer covers all the aircraft you own.

Premises Liability and other ancillary coverages provided under your policy directly or via coverage expansion endorsements are qualified by what’s called the “Other Insurance Clause,” which states, “Coverage under this policy (or endorsement) provides you with excess coverage. If you have other insurance covering a loss that’s also covered by the policy (or endorsement), we will pay claims only when all other valid and collectible insurance covering the loss has been exhausted.” Since both aircraft insurance policies will contain this same wording, you have a potential claims problem on your hands.

For various reasons, it may make sense to insure your aircraft with two different insurers but do so with your eyes open regarding the insurance ramifications. Not all aviation hull and liability policies are the same so the above are just potential examples for illustration. Be sure to talk with your AssuredPartners Aerospace broker for more information.