FREQUENTLY ASKED AVIATION INSURANCE QUESTIONS – 2013 Blais Aviation Insurance Services has grouped a number of aviation insurance related questions and answers that are typically asked into the following categories. Owned Aircraft - (Pages 2-8) Renters/Borrowers - (Pages 9-15) CFI Owned - (Page 16) CFI Non-Owned - (Pages 17-19) Flying Clubs - (Pages 20-21) Homebuilt - (Pages 22-24) Hangars - (Pages 25-26) General - (Pages 27-36) Do not hesitate to call a Blais Aviation Insurance representative for further details and/or questions. One of our aviation brokers will be glad to assist you. www.blaisaviation.com 972 818-4090 These FAQs and answers are general in nature and are not intended to address the specific requirements of an individual's policy. These should be discussed directly with one of Blais Aviation Insurance Services staff members. In all cases, the terms, conditions of the policy and policy endorsements will determine the outcome of a specific situation. 1 | Blais Aviation Insurance Services Owned Aircraft Insurance Frequently Asked Questions Have a question about Owned Aircraft insurance? Browse through our list of frequently asked questions below. If you still can't find the answer you're looking for, contact us. One of our aviation broker/agents will be happy to assist you. 1. How can I recognize the differences in aviation insurance policies? 2. What is liability insurance? 3. What limits of liability should I carry? 4. What is a "Combined Single Limit of Liability" or "Smooth" Limit? 5. Are my legal costs included in the liability coverage? 6. How do I ensure my family is protected when they fly with me? 7. What is the difference between a direct writer and an independent agent? 8. What is the highest limit of liability that an aviation carrier will provide? 9. Is there liability coverage if I injure a co-owner of my aircraft? 10. What coverage options are generally available on an aviation insurance policy? 11. How can I reduce my insurance costs? 12. Is there any type of additional training that would lower my premium? 13. What factors do insurance companies use to determine my premium? 14. Is there a premium difference if I register my aircraft in the name of my business? 15. Does your policy allow me to make a profit from an approved pilot who uses my aircraft? 16. If I start a policy for a pending purchase will there be a penalty for canceling if the deal falls through? 17. In the event of a total loss to my aircraft during the policy period, am I entitled to a premium refund for the remainder of the policy period? 18. What is an A.M. Best rating? 19. How does your company define a "non-commercial" flying club? 20. What are some common exclusions that can void my coverage? 21. How do I report a claim? 22. Do I have liability protection after I sell my aircraft? Why would I need it? 23. Are personal belongings of an occupant covered? 24. Who is permitted to fly my aircraft? 25. Does your policy have any exclusion against landing on a private grass strip? 26. Can I get coverage for aircraft damage on my homebuilt if I equip it with an automobile engine? 27. Does your company offer coverage for rotorcraft, balloons, ultralights, gyroplanes, or gyrocopters? 28. Will aviation carriers insure fractional ownership arrangements? 29. Are you able to provide coverage for my flight instructor? 30. Do I need to add my CFI to my policy in order to receive dual flight instruction? 31. Are you able to provide liability coverage for a hangar that I own? 2 | Blais Aviation Insurance Services 1. Q: How can I recognize the differences in aviation insurance policies? A: Because state law does not regulate aviation insurance extensively, policy language varies considerably. Be sure to ask for a sample policy and review it to understand what is and is not covered. Since every aircraft owner has different coverage needs, be aware that the least expensive policy may not provide the best protection to meet your needs. It is important for the insured to read the policy fine print because while coverage may appear to be similar from one policy to the next, the policy's exclusions may cause you to pay more for uncovered losses. 2. Q: What is liability insurance? A: Liability insurance protects you against claims arising from Bodily Injury or Property Damage you may have caused to others. Your insurance company's commitment is to defend you if you are sued, and if you are at fault, to pay for the damages according to the terms of the policy. This coverage is not first party medical or life insurance (the policyholder/insured pilot would be a first party), but rather, liability coverage for claims made against you by third parties for which the law holds you legally liable. 3. Q: What limits of liability should I carry? A: Because different people have different needs, there is no standard recommended amount of liability coverage you should carry. You need to consider factors such as your personal assets, earnings, the liability limits you carry on your other insurance policies such as auto or homeowners, whom you carry as passengers, how the aircraft is used, and how much insurance you can afford or that is available, among others. You might also want to ask Blais Aviation Insurance Services about the most popular limits purchased by owners of comparable aircraft, although this will probably not be the principal factor on which you rely. Obviously, buying the most coverage you can reasonably afford and that is available is your safest bet. Also remember that as important as the limit of liability is, the ability of your insurance company to resolve claims within those policy limits is just as important. You want to be sure that the company defending you has a proven track record of success in the complex world of aviation litigation. 4. Q: What is a "Combined Single Limit of Liability" or "smooth" limit? A: Most aircraft insurance policies contain liability coverage sub-limits. An example would be, $100,000 Bodily Injury each person per accident $1,000,000, Property Damage per accident, with an overall accident limit of $1,000,000. With sub-limits, the most that can be collected under each coverage per accident is the stated maximum limit. A combined single limit (CSL), often called a "smooth" limit, has the total stated limit available with no specific sub-limits for Bodily Injury or Property Damage claims. 3 | Blais Aviation Insurance Services 5. Q: Are my legal costs included in the liability coverage? A: Under most policies, legal and defense costs are not limited. The carrier will continue to pay your legal defense costs even if your limits of liability have been exhausted by the payment of judgments or claims. In addition, some policies also provide up to $5,000 for legal defense costs if a pilot enforcement or civil penalty action is brought against you as a result of a covered accident. Since you may have an FAA action brought against you if you have an accident, this coverage is important. Note: While most policies provide for a legal defense for claims by passengers, not all policies provide protection for FAA enforcement actions. 6. Q: How do I ensure my family is protected when they fly with me? A: Aviation policies normally pay for Bodily Injury to your spouse, parent or child caused by an accident for which you are legally liable. Also, most aircraft insurance policies offer medical expense coverage that can provide you and your family with additional medical coverage. Please note, however, that aviation insurance is "third party" liability and only responds if you are legally liable to someone else for the accident. Life insurance is one important way to protect your family when you fly as well. It is important that you check your family's current life insurance policy to see if it covers general aviation activities. 7. Q: What is the difference between a direct writer and an independent broker/agent? A: There are only one or two aviation direct writers (at this time 2013). In the case of a direct writer, you deal directly with the insurance company. Employees of the direct writer do not represent you. An aviation independent broker/agent represents you and deals with many companies who offer different policies. The broker/agent acts as an intermediary between you and the insurance company. 8. Q: What is the highest limit of liability an aviation carrier will provide? A: The maximum per accident limit of liability being offered by aviation carriers varies. Most carriers provide a $1,000,000 limit for Bodily Injury and Property Damage in any one accident subject to underwriting criteria. Various combinations of Bodily Injury and Property Damage Liability limits, with a maximum per occurrence limit, are available. 4 | Blais Aviation Insurance Services 9. Q: Is there liability coverage if I injure a co-owner of my aircraft? A: This coverage varies significantly among insurance companies. A number of policies provide liability coverage between insured persons like partners or flying club members when they fly together. This is a very important feature to look for since it is likely a partner or another flying club member will be with you in the aircraft on numerous occasions. 10. Q: What coverage options are generally available on an aviation insurance policy? A: Coverage options vary widely from company to company. The most common coverages available are as follows: o Liability for Bodily Injury and Property Damage to third parties that can be purchased as including or excluding occupants of the aircraft.