What Drives Insurance Cost?

Rene

Rene

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Rene
Obviously total time, time in type, ratings, claim history. Hull cost if that is covered. But what else?

Claim history of the model?

I ask because I have been given significantly different quotes on different models (with the older tail-dragger quoted at a lower cost than a newer nose-and-tail- dragger (nosewheel and skid). Same low-time pilot, same airport, same company, different airplanes.
 
One of the driving forces is now the pilots age.
 
The return on capital invested in loss reserves.
 
Curious what kind of quotes you've been given and what planes you're looking at.

Iirc you hadn't even taken lessons yet but now have your ppl in 2 months? Most can't get a dpe scheduled in that time frame.
 
Are you comparing the same hull value ?
 
Racerx said:
Curious what kind of quotes you've been given and what planes you're looking at.

Iirc you hadn't even taken lessons yet but now have your ppl in 2 months? Most can't get a dpe scheduled in that time frame.
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I'm working on my SPL and exploring future options. I do know someone who scheduled a DPE at 22 hours and had 40 by the day of the practical.
 

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My vote is lack of competition combined with ineffective regulation, supported by lobbying second only to the drug companies last time I checked.
 
Albany Tom said:
My vote is lack of competition
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The barriers to entry are pretty low for aircraft insurance, which means if it was lucrative there would be lots more participants. The lack of competition is most likely because of a lack of worthwhile payoff.
 
Llewtrah381 said:
The barriers to entry are pretty low for aircraft insurance, which means if it was lucrative there would be lots more participants. The lack of competition is most likely because of a lack of worthwhile payoff.
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Agree. My answer was more the general case than the specific. It's lack of competition here, because it's a small market, also agree.
 
Llewtrah381 said:
The barriers to entry are pretty low for aircraft insurance, which means if it was lucrative there would be lots more participants. The lack of competition is most likely because of a lack of worthwhile payoff.
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That's a function of excess reinsurance capacity, ( partially function of ultra-low interest rates) of which until 2024 there was very little. Forecasts are for an increase and softening of the market in 2025, so hopefully there may be a little relief on the horizon.

When there's excess capacity, it's easy to place risk in and jump out of the aviation market. No one I know of, except AVEMCO, actually earns an underwriting profit.
 
Rene said:
I plan to be . . . in another 52 years or so.

But, I'm sure my age is a significant factor in insurance cost.
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That's actually an interesting point we don't see asked here, ever, that I can recall. We talk a lot about insurance rates going up or being unattainable at 70. But are rates higher for young pilots too, like they are for car insurance? Probably not much of a sample size, not too many 16-25 year olds buying airplanes, but is that a factor in the insurance rates?
 
Rene said:
I plan to be . . . in another 52 years or so.
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Believe me, time really does fly. It feels like it was just last month when I was a teenager street racing from red light to red light, now I am on medicare.

But on the fun side, walking out of Sam's Club today with a full cart. The parking lot slopes downhill enough that I was able to jump on and ride the cart down the slope with my wife running after me yelling for me to slow down...she thought I would hurt myself. Dang kids... :lol:
 
So I'm curious what tailwheel rates are for an 18 yr old low hour student pilot. And what aircraft and hull value we're talking about.
 
Zeldman said:
Believe me, time really does fly. It feels like it was just last month when I was a teenager street racing from red light to red light, now I am on medicare.
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Aside from the teenager part...did you do that last month?
 
Racerx said:
Aside from the teenager part...did you do that last month?
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Well, at my current age I have been known to demonstrate excessive acceleration, and slide the tires across the pavement around certain corners that seem to beckon me to test my cornering skills...with my wife screeching at me the whole time.

She keeps telling me I am too old to drive like I do, then she will cry and beg me to not get old...
 
Zeldman said:
Well, at my current age I have been known to demonstrate excessive acceleration, and slide the tires across the pavement around certain corners that seem to beckon me to test my cornering skills...with my wife screeching at me the whole time.

She keeps telling me I am too old to drive like I do, then she will cry and beg me to not get old...
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On the upside, I go way too fast in cars and on motorcycles to waste any effort worrying about my cholesterol....
 
Racerx said:
So I'm curious what tailwheel rates are for an 18 yr old low hour student pilot. And what aircraft and hull value we're talking about.
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Almost all of my time is in a Champ. It's not a 7FC, so other than an hour I have in an Ercoupe it's all tailwheel time. (I have a few more hours in a J-3.)

Right now, renter's insurance is about $100 a month as a Student Pilot ($50,000 hull value, $300,000 liability, $30,000 medical). With an anticipated SPL and 40 total hours I was quoted $80 for the Bellanca, a little MORE for the Ercoupe. (I'm not sure why. It has a slightly lesser hull value and is a "safety-plane". Why it doesn't even have a pesky tailwheel.) And slightly LESS for a 65TC (L-3A). Each quote was from the same insurance company, for the same low-time pilot, and an aircraft hangared at the same airport. Causing me to wonder how these sort of decisions are made.

I mean, the more the hull is valued for, the more risk. And the lower the pilot's total time the more risk. Then what? The claim histories on the different types?
 
Rene said:
(I'm not sure why. It has a slightly lesser hull value and is a "safety-plane". Why it doesn't even have a pesky tailwheel.)
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One possibility (not sure it's the case here) is repair cost. The insurance company doesn't assume that any claim is for the entire hull value; they might be paying to repair damage. It's possible for a plane to have a lower hull value than another, yet also be more expensive to repair. Hull value is what you choose to think you're plane is worth; IOW, it's what you want to be paid if it's totaled. That has a lot to do with market forces. It doesn't reflect what replacement parts might cost, or what the difficulty of repairs and necessary labor hours might be.

Ercoupes, BTW, have a risk of fire from the header tank and might be more likely to cause personal injury. That's another possible explanation for this particular case.
 
This ^^^^^^^

One reason insurance prices are up are because repair costs are higher than before.

And if you have not adjusted your hull value, you can end up getting a perfectly repairable airplane totaled. The insurance company looks at the cost to repair versus the salvage value and the stated hull value and decides what is best FOR THEM.

So you have an airplane insured for $100,000. You have a mishap. Cost to repair is $80,000. But the salvage value is $60,000. So they can pay $80,000 to repair or pay you $100,000 and sell the plane as salvage for $60,000 and be out of pocket only $40,000.

Even worse, you do an avionics upgrade and not revise your hull value and now your plane is worth $120,000 as salvage. Insurance can pay $80,000 to repair or they can total the plane, give you $100,000, sell as salvage, and MAKE $20,000.

Both scenarios, you end up without an airplane.

You really should base your hull value on the cost to REPLACE your plane with one just like it (or as close as possible).
 
Pinecone said:
You really should base your hull value on the cost to REPLACE your plane with one just like it (or as close as possible).
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Agreed, and I’ve tried to do that, but costs for our old planes are all over the map. It’s tough to find even one that’s similar enough to give a valid cost point. I took my best SWAG and just hope I never have to make a claim.
 
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