Jun 02 2015

How to Cut Your Helicopter Insurance Costs Posted 8 years 329 days ago ago by Admin

 

Insurance is a necessity for helicopter owners. You need it to protect your investment and cover any liability costs should an accident occur. This said, there is no reason to pay more for insurance than you have to. So how do you reduce your policy costs? Here’s what helicopter insurance experts told us.

Why Insurance is Expensive

One obvious reason insurance is expensive is because it cost a lot to repair and replace rotorcraft. However, that is not the only reason. Matt Drummelsmith, president of Corporate Aviation Insurance Group [http://www.corporateaviationinsurance.com] points out the relative difficulty of piloting rotorcraft. “Helicopters are naturally harder to fly than fixed-wing aircraft. There is a third axis of flight introduced with helicopters that requires more skill to operate (them) safely.” Harder to fly means more chances for pilot error—and accidents.

Another reason for soaring insurance is that helicopters perform far more varied missions than fixed-wing aircraft do, and they land almost anywhere. William Davidson, president of National Aviation Insurance Brokers [http://www.jsdavidson.ca], notes that potentially risky operations such as slinging, heli-skiing, and flying to remote areas increase operational risk. Furthermore, when a helicopter breaks down in a remote location, the cost of recovery and repair can be astronomical, assuming that the aircraft can even be retrieved and transported to a repair facility.

Combining all these factors means that that there are more losses in the rotor-wing space. Drummelsmith says, “Because insurance carriers incur more losses, they must have higher rates in order to compensate (their policy holders). Insurance premiums are based primarily on pilot qualifications, aircraft use, and coverage limits; both hull and liability.” Lowering premiums requires altering the above variables in ways that make insurers feel less exposed to claims.

How to Lower Insurance Costs

The risks associated with flying helicopters are always going to result in substantial insurance rates. The most effective way to reduce these costs is to reduce the level of risk that the insurer is being asked to cover. Less risk means potentially lower insurance rates.

Risk reduction starts with well-maintained, properly serviced helicopters supported by modern repair facilities. You can bet that when an insurance underwriter comes to your company to compile data for a quotation, he or she will be looking for just that—and writing down any potential risks detected during their inspection.

“Insurers like to see a clean operation, up-to-date records, currency on type, and recurrent training,” observes Davidson. “On the private owner’s side, insurance information should provide the insurance company with information about your type of flying. Are you just flying back and forth to your summer home, totally familiar with the route? Do you know your emergency drills and the area most hospitable for an emergency landing?”

The human factor matters. Helicopter insurers want to know how well trained, current, and prepared a company’s pilots are for the missions they fly. Total flying hours also count; insurers know that pilots with thousands of them have better safety records than recent graduates. Rates are set accordingly.

Drummelsmith explains how to lower premiums. “Two of the best ways to mitigate helicopter insurance rates are to incorporate more intense and/or more frequent training, and to increase the deductibles on the insurance policy,” he says. Flying with two pilots also helps lower insurance rates, because two trained heads are truly better than one when managing helicopter challenges. “Dual pilots may not be a financially feasible option but it’ll help the rate if you can do it,” he adds.

One last way to reduce helicopter insurance costs is to focus the business on low-risk operations. This would mean flying fair weather missions in urban areas, as opposed to servicing offshore oil platforms, or hauling heavy sling loads into remote regions in any weather conditions.

New vs. Old

Does a used older helicopter cost less to insure than a new helicopter? Yes and no: A helicopter’s hull value does play a role in determining its insurance rate. Hence, if an older hull costs less to repair or replace than a newer hull, the insurance associated with it should also cost less. On the other hand, an older hull may be more worn and thus more prone to problems than a new hull. Under this scenario, one could expect insurers to charge more to insure that older helicopter

Perhaps surprisingly, buying a new helicopter over a used one does not usually have a direct impact on the risk premium. Drummelsmith explains this somewhat counterintuitive statement. “Because aircraft are so meticulously maintained, they aren’t necessarily much more of a risk as they get older than they are when they’re brand new. If the aircraft is newer, the insurance costs will only be higher because the hull is worth more.” This means the same make and model of a 1990 helicopter and 2010 helicopter might be millions of dollars apart in value, resulting in higher insurance premiums for the 2010 model because its hull is more valuable, not because it’s necessarily safer to fly.    

However, insurance savings on the reduced value of older models can be mitigated by more maintenance costs. Davidson explains, “Older machines generally require more maintenance. One has to weigh the pros and cons of the costs of the operation and then make a choice that will hopefully result in lower operational costs.”

Finding the Right Broker

All the advice listed above can help a helicopter owner reduce insurance costs. However, things can still go wrong if the insurance broker is not knowledgeable about helicopters and does not know how to accurately assess the risks associated with insuring them. How can you find a good broker? “Put in the effort to find someone who knows aviation, can give you good advice, and can answer your questions,” said Dave Fitzpatrick, president of Air1 Insurance  [http://www.air1insurance.com].  He cautions, “There are brokers who list aviation insurance in their ads or their window signs; they may even have an aviation department (or desk) and advertise in aviation publications. But when you call, you get to talk to someone who has never been close to anything smaller than a DC-10.”

Drummelsmith also weighs in from the perspective of his company, Corporate Aviation Insurance Group. “In our case, specializing in the helicopter niche means knowing what to ask, being able to relate to pilots in all facets of helicopter uses, knowing what safety issues they face, and knowing what options are available for operators to incorporate and help mitigate not only their insurance cost, but also their overall risk.”

Davidson of National Aviation Insurance Brokers is a licensed helicopter pilot and flight instructor. Yet, he advises against selecting a broker strictly on the basis of their flight experience. “They may know all about helicopters, but are they conversant and knowledgeable on the right insurance coverage? Of course, an experienced helicopter broker will understand the complexity of the machine, and if there is a loss can champion the client’s cause with some knowledge of the components and airframe. But they have to know the insurance business as well as helicopter operations to deliver the best, most affordable insurance for their clients.”

Finally, here’s one last hint. When in doubt, consult other helicopter owners about their insurance. Which brokers do they use?  What premiums do they pay? How happy are they with their coverage to date? Comparative word-of-mouth can be a great way to locate a good helicopter insurance broker.