Page 18 - March19

Underwriters are being more particular about who
and what they are insuring. Position your risk profile
in the most favorable light and have a knowledgeable
“brand ambassador” as your broker. One of the most
highly glossed over risks aircraft owners have is the
hangar lease agreement. One large FBO chain wants you
to sign an agreement stating they are not responsible
for damage incurred to your aircraft while they service
it. They are engaged in commerce but have essentially
eliminated their potential liability by pushing it back
on to you. This is how they have kept their insurance
rates artificially low and been able to retain a high
deductible with reasonable comfort. They are forcing
your insurance company to pay for their negligence.
Push back on these contracts. If you don’t, this is
more risk you are expecting your insurance company
to absorb. When the FBO damages your King Air and
your insurance company has to pay to repair it, per
the contract you signed, they can’t subrogate against
the FBO. In the end, you lose. You now have record of
a claim, while not your fault that monetary gesture will
follow you for at least five years.
Third party leases are also starting to attract the
attention of underwriters. At one time insurance
companies charged a higher rate for a chartered King
Air versus one operating strictly as “Industrial Aid,”
which refers to a corporate flight department flown
by professional pilots for strictly business/personal
transportation needs.
During the Great Recession many King Air owners
saw their utilization go down. As an attempt to dilute
their fixed costs, they entered into third party dry
lease agreements. In dry leases you typically extend
your liability coverage to the lessee, waive the carrier’s
rights to subrogate, and have increased utilization (more
takeoffs and landings equals more opportunities to
fly through a flock of birds). Underwriters are going
to start wanting additional premium dollars for this
increased risk.
Utilizing contract pilots also opens you, and your
insurance company, to a higher risk of claims. Employees
are covered by workers’ compensation, but a contracted
pilot is most likely not. Your policy may have “Guest
Voluntary Settlements,” or GVS – the first line of defense
the insurance carrier offers on your behalf. By going
through a company in the business of outsourcing
pilots or requiring your contract pilots to carry workers’
compensation and enter into a legitimate contract, you
are a better risk in the eyes of an underwriter.
The hardening market will also likely bring
additional charges from underwriters for items such
as unfavorable signed contracts you may have in
place. Keep that in mind before signing anything that
may impact your insurance policy and coverage. Be
sure to send any signed contract
to your insurance broker too; it is
a condition in your policy.
Strategies and professionalism
are going to be what sets you apart
from the pack. Having a high-
level risk management program
in place, while being proactive
to managing the perils you are
asking the insurance company
to take in return for premium
dollars, is going to be the best
discounts you can provide your
operation. Additionally, if you can
attend aviation industry events
throughout the year, ask your
broker if he/she will be there, and
if so, if there are any underwriters
you can meet with face to face.
Relationships will become more
important and beneficial as the
market continues to harden. KA
Kyle P. White, an aviation insurance
specialist for a global insurance
brokerage company. He has
professionally flown King Air 90s and
B200s and holds an ATP and multi-
engine instrument instructor license.
You can reach Kyle at kpwhite816@
gmail.com.
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­ KING AIR MAGAZINE MARCH 2019