Your Flight Plan to Aircraft Insurance

Why Aviation Insurance Matters

How IAT's Insurance Answers Can Help

Flying should bring freedom—not unforeseen risk. Whether you're piloting an experimental aircraft, rotorcraft, or seaplane, aviation comes with unique exposures. At IAT Insurance Group, we work closely with agents and aircraft owners alike to provide the specialized coverage and dedicated support needed to protect every flight.

Even though there are no federal or state regulations requiring aircraft insurance, nearly all lenders, fixed base operators (FBOs), and airports do. Insurance is essential not just to protect aircraft but to ensure financial stability for pilots and lienholders.

Aviation Coverage Isn't One-Size-Fits-All

The right protection depends on more than just the plane—it’s about how it’s used, stored, and valued. When it comes to aircraft insurance, one of the most important decisions is determining the right coverage type and value. Here’s what you need to consider:

Aircraft Liability: Covers third-party property damage and bodily injury, including passenger liability, with options for smooth limits or per-passenger sublimits.
Hull Property Damage: Covers first-party claims, or physical damage to the aircraft itself, available as:
- Ground Risk Coverage: For aircraft not in motion.
- All-Risk / Full Flight Coverage: For complete protection during ground operations, taxiing, and flight.

Understanding the True Impact of Claims

Aviation claims aren’t just costly — they’re disruptive. When an aircraft is grounded for repairs, owners lose access to a vital resource. Whether used for business, recreation, or flight hours, this downtime can derail schedules and limit opportunities.

The majority of aviation claims stem from preventable human errors. Here are the most common — and costly — ones we see:

Gear-Up Landings - Gear-up landings often occur when pilots forget to deploy the landing gear, causing the underbelly of the plane to scrape the ground. These incidents can cause extensive damage, costing up to $130,000, and result in aircraft downtime of 16–18 weeks due to repair delays.
Fuel Exhaustion - Fuel exhaustion is considered a serious oversight by underwriters, as it reflects a lapse in basic safety checks. Failing to confirm fuel levels before takeoff shows a disregard for standard pre-flight procedures, which can damage a pilot’s credibility and insurability.
Hangar Rash - Hangar incidents occur during aircraft movement within hangars, commonly when a wing strikes the hangar door due to tight clearances. These claims are avoidable by using a wing walker to guide the aircraft safely in and out of the space.
Tow Bar and Propeller Damage - This type of claim arises when pilots attempt to start the aircraft without removing the tow bar, leading to significant damage to the propeller. A simple pre-start visual check can prevent this mistake, which typically results in $30,000 in repairs.

When a Claim Happens

Report promptly. Notify your insurer immediately — the earlier the better.
Stay engaged. Maintain active communication with the repair shop directly to monitor progress.
Be patient. Aviation repairs often take time due to backlogs and part availability.
Know your terms — and your team. Working with an insurance partner that offers an in-house claims team can make a meaningful difference.

Betterment: An important term to know

A crucial aspect often causing contention in aviation insurance claims is betterment. Betterment applies to parts subject to time-limited usage. For instance, a propeller may need overhauling after a set number of hours (typically 2200-2400). If an incident occurs when the part is halfway through its lifespan, the insurance coverage for repair might cover only half the cost.

Betterment doesn’t extend to every aircraft part. It’s notably relevant to propellers and engines, especially in the realm of general aviation. The objective is not to enhance your aircraft but to restore it to its original state. Originally designed to deter exploitation of the system, betterment ensures fairness in claim settlements. If the repair cost surpasses what the insurer deems reasonable due to prior wear, you might face out-of-pocket expenses to cover the upgraded portion.

How is aircraft insurance priced?

Underwriters assess a variety of risk factors to determine what you’ll pay for coverage. Understanding these factors can help you make informed decisions about your aviation insurance needs. At IAT, we work directly with experienced brokers and specialists in aviation insurance to ensure the policy reflects the needs and experience of the aircraft owner and operator.

Type of license

Different types of pilot licenses, such as private, commercial or airline transport, are associated with varying levels of training and experience. The more advanced the license, the lower the perceived risk, which can lead to lower premium rates.

Type of rating

Underwriters consider additional ratings, particularly instrument ratings, which signify a pilot’s ability to operate an aircraft in adverse weather conditions. Possessing such ratings can result in insurance discounts.

Pilot’s total experience

Underwriters consider the pilot’s total flight experience, which includes logged flight hours. More experienced pilots tend to receive more favorable premium rates.

Pilot’s experience in the aircraft type

Insurance rates may be affected by the pilot’s familiarity with the specific make and model of the aircraft. Pilots who have substantial experience with a particular aircraft type are often viewed as lower risks.

Make and model of the aircraft

Safer and more reliable makes and models typically lead to lower premiums.

Number of losses and types of claims

A pilot’s history of insurance claims, especially the nature of these claims, can significantly impact premium rates. A history of fewer claims or claims that are less severe can lead to lower premiums.

Areas of operation

The geographical area in which you intend to operate your aircraft is a crucial factor. Some regions are more prone to catastrophic weather events or theft, making them riskier for insurers. Pricing may vary based on your aircraft’s intended area of operation.

Specialized Aviation Coverage from IAT

At IAT Insurance Group, we provide aviation insurance that’s as specialized as the aircraft we protect. From unique policy features to fast, reliable claims handling, our approach is built around the real-world needs of aircraft owners, operators, and the agents who support them.

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