Wednesday, July 16, 2014

What happens when you make an engine change?

So you’re thinking of making a change.  Many modifications are available for your aircraft, but one of the most expensive (and some claim “most valuable”) is a new larger engine!

Before you run out and borrow the money for that fantastic conversion, check with your aviation insurance agent and see what will happen to your insurance rates.  Typically, they will probably say “I don’t know!”   Engine conversions have not always been a regular thing.  Conversions were always popular with homebuilders, but not with certified aircraft.  Today, more and more people are adding a different sized engine to their aircraft, hoping to increase the performance.

The first and most important question to consider is “is there an STC or will my aircraft be listed as an experimental.  If you are putting an engine in your aircraft that has not been certified or has not went through the FAA supplemental type certification (STC) process you’re asking for an increase in premiums, sometimes substantial.  In my experience, the premiums have increased anywhere from 10 to 25 percent. 

Examples?  There have been a number of companies that have put automotive engines into certified aircraft.  V-8 Chevy engines in a Skymaster, Subaru engines in 150’s and even the Camair engine in a Piper Arrow.  None of these conversions used certified aircraft engines and had their airworthiness certificates modified.  They were reclassified in the experimental category. 

In other cases where the aircraft was using certified aircraft engine and the aircraft was listed in the experimental category, the rate again increased between 10 - 25%.

But what happens if you decide to put a new, bigger engine in your aircraft by way of the STC program?  Numerous companies have engine conversions available that provide increased horsepower without making the aircraft an experimental.  I contacted a few underwriters, in those cases, most said that the premiums would probably not change significantly if at all.  The key here is “as long as it was an FAA approved STC conversion”.

If there were changes, what would they change?  The open pilot warranty might be more restrictive. The deductibles might be higher.  And definitely the value would be different!  But other than that...not much would change.  Of course all of this hinges on the insurance company and underwriter. 

What will you need to do, insurance wise, if you make the conversion?  Whether you convert to a bigger engine or just install a new engine, you need to re-evaluate the aircraft value on your policy.  Most companies will increase the value of your aircraft IF they can prove the higher value based on the aircraft value guides.

So what does this all mean?   Simply, if you decide to change the engine in your aircraft, whether it is the same or different horsepower, the insurance rates should not change if the conversion is done using an FAA approved STC.  The value of the aircraft will change, which in turn will increase the premium you pay.  Besides that, go for it!  The performance should be worth it. 

No comments: