As the aviation insurance market softens in most sectors, I’m often asked the same question: What drives the cost of an aviation insurance premium?
‍
A policy’s pricing is shaped by more than just aircraft value. Among many factors, a premium is impacted by current market conditions, pilot experience and your claims history. But some aspects may surprise aircraft owners.
Following are five key factors that play a role in what you pay.
‍
Aviation Insurance Premium Pricing: 5 Key Factors
1. The Market and Competition
In today’s softening marketplace, there are even more insurers are competing for your policy. Over the past 18 months, we’ve seen four new aviation underwriting carriers enter the aviation insurance market. This increase in capacity drives competition, often resulting in lower premium rates and broader coverage.
The shift is most pronounced in the under-three-million-dollar hull value sector, where both legacy and new carriers are working aggressively to win policies.
‍
2. Asset Type and Insured Hull Value
Rising aircraft prices mean higher insured values, which directly affect your aviation insurance premium. Hull insurance, which covers physical damage, is typically the largest portion of a policy.
For example, hull insurance often makes up 60 to 80 percent of the annual premium because most claims involve physical damage. Liability premiums, covering injury or property damage to third parties, are usually lower since such claims occur less often.
‍
3. Pilot Experience
The Pilot in Command’s experience significantly impacts the aviation insurance premium. In light piston aircraft, a low-time pilot may pay more than triple what a highly qualified pilot pays.
In single-pilot jets, especially high-value models like the Phenom 300E, PC-24 and CJ3+/4, limited experience can mean higher premiums or coverage restrictions. Sometimes, single-pilot coverage isn’t even available in the first policy year for new jet operators.
‍
4. Claims History
A lesser-known factor that impacts policy premiums is the aircraft owner’s claims history, especially if a claim was filed in the last three to five years.
Premiums often depend on the loss history, including:
- Recency of the loss
- Size of the claim
- Circumstances surrounding the loss
It’s a good idea to discuss these details with your broker before shopping for a policy. Full transparency helps underwriters assess the risk accurately and can prevent unwelcome surprises.
‍
5. Miscellaneous Factors
Several other considerations can influence an aviation insurance premium. These include whether the aircraft is hangared or tied outside and the demographics of the base airport, such as whether it has a paved or unimproved strip.
The state where the airport is located can also affect pricing. Some insurers will not write policies for grass runways or certain geographic areas, which can limit coverage options.
In closing, your aviation insurance premium pricing will reflect market forces, aircraft details, pilot qualifications and claims history. Knowing how each factor affects your policy can help you prepare and position yourself for the best possible rate.
‍