Aircraft annuals and the insurance company

Thinking of flying your freshly “out of annual” aircraft to the mechanic for the annual?  Check your insurance coverage first!  Many insurance companies will not provide coverage for the aircraft if it is not in a current airworthiness status.

But wait!  It is licensed; it does have a current airworthiness...well not quite!  If the aircraft is out of annual and the owner gets a ferry permit, some people feel that makes it legal to fly.   Sort of.  Yes it is legal, by the FAA, to fly under the restricted permit.  All you have to do is follow the rules. 

BUT...the insurance company doesn't always agree.  You could have the correct paperwork in the aircraft, the approved pilot and still not be covered.  The insurance policy often has a clause that will not provide coverage for the aircraft if it is not within current airworthiness.  In many peoples opinion this is a gray area of the airworthiness.  Airworthy means different things to the insurance company than to the pilot. 

What can you do?  Call the agent and get a little information.  Ask a few questions.  Check to see if the policy has any language about FAR’s.  Many companies have an exclusion in the policy that will not provide any coverage for any situation where the insured is found in non-compliance with the FAR’s.  We have found a few companies that don’t have any language pertaining to FAR’s (but they do have language that excludes out of annual aircraft).

With an aircraft that runs out of annual during a trip (poor planning for whatever reason) the coverage will probably be null and void.   Don’t put yourself into this type of situation.  The aircraft needs to have a ferry permit issued by the appropriate FAA Flight Standards District Office.  To do that requires that the aircraft have an entry in the logbooks from a mechanic stating that the aircraft is airworthy for a ferry flight.  Most of the time this means it does not have any outstanding AD’s that could jeopardize the flight, the flight has to be “Day VFR” and that only the required crew be on board.  In that situation having your friend fly along is not required.  Getting dual in the aircraft because you have never flown it before might be required for you, but not for the operation of the aircraft. 

If you want to fly and be insured with an aircraft that is out of annual the underwriter can put a note in the insurance company file and you’ll be okay.  Don’t be surprised if they charge you extra for this little bit of service.  If the aircraft has been out of annual for a long time, say over a month; make sure that you have a good relationship with the agent and the underwriter.  It might take a little work for the agent to get the underwriter to provide coverage.  Underwriters don’t like to cover aircraft that have been out of annual for a long time.  The risk is too high for failure and claims. 

If you bought an aircraft that was out of annual, you might not be able to get coverage at all.  Many insurance companies have decided that they will not take on a new risk that is not ready to fly.  That means the aircraft might be a good deal as is, out of annual, but you can’t bring it home insured.  If you want to buy an aircraft in this situation, call the agent first and let him know what the situation is.  We have been able to get coverage in a limited number of cases provided the aircraft has not been out of annual very long and the pilot was qualified to fly the aircraft. 

Whatever the situation, make sure you check you policy before you fly an aircraft that is out of annual… or hundred hour inspection, but that’s a different story.

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