I have seen the best and worst in both people and companies as we have all been forced to evolve rapidly in ways we may never have imagined.
While we don’t know the final financial impact businesses and individuals can expect, it is fairly obvious that we will all be paying a hefty price tag for some time to come.
The state of the insurance industry during a pandemic
Insurance is meant to provide financial support to businesses and individuals and as such has been declared ‘essential’. Most insurance company and brokerage offices are open (albeit with staff working from their homes) and we are doing what we can to answer your questions and advocate for your needs.
As the situation changes from week to week we have seen the industry responding in vastly different ways.
Some insurers are leaping to do everything they can to help their clients by issuing credits, re-rating policies midterm to help lower remaining payments, waiving late fees, and even allowing for late payments.
Other insurers have been forced to refuse coverage for business interruption for their existing clients and new applicants, leading to class action lawsuits being filed against some of the largest insurers in the world.
But those are general insurers, and as usual, the aviation insurance segment is in a unique spot. Since there is such a diversity in aviation operations, some being considered ‘essential services’ and others being unable to operate, every client has to be looked at on an individual basis. Considering your Aviation Insurance during a Pandemic The long term financial impact covid-19 will have on the economy can’t yet be seen.
So now, more than ever, it’s important to get protection though proper coverage. With all this uncertainty, your customers may not be able to be as gracious as they might have been in the past if something happens.
If you are not carrying insurance now, it’s not too late. Most aviation policies are on an occurrence basis, meaning you are covered for work done in the past if you have a policy in force at the time that a loss occurs.
If you already have insurance and are looking to reduce your costs, you can look to lower your coverages and limits on renewal to reflect what you are able to afford right now. In most cases you can increase your coverage and limits when it’s needed (i.e. if you get a new contract or lease that requires higher limits).
If you have aircraft, you may want to look at increasing your deductibles for the year to obtain a somewhat lower rate.
While I hope not to see the necessity of the reemergence of liability only policies, and aircraft operators insuring their own hulls, it’s always good to consider how the changing economy can affect the agreed value of your aircraft and amend your policy to reflect this.
Remember: insurance is meant to provide financial support in the event of a loss, so often times not carrying proper coverage can lead to much more devastating financial consequences down the road.
Managing your insurance costs
In some sectors of aviation, if you do not have insurance, you cannot operate legally. But how are you supposed to afford it when, right now, it may be impossible to operate in a way that doesn’t risk the safety of you, your employees, and your customers?
I am always asked how best to save on insurance premiums, but rarely has the question come with such weight.
First off, I recommend reviewing your policy limits and the operations you are covered for. For businesses (aviation and non-aviation alike) check the receipts reported or listed on your policy, your policy could be rated for more work than you actually do, especially if your policy is renewed automatically.
Again, with respect to deductibles, a higher property deductible can make a difference and you always have the option to reconsider in a year when your financial position may have changed. I don’t have too many customers that would report a small loss, so a higher deductible may make economic sense.
I haven’t come across many companies that can afford to self-insure their property, but if you don’t have a mortgage, loan, line of credit or lease this may be something that you can consider temporarily.
You can also reach out to associations, friends, or colleagues, and look in publications and on-line to find insurance programmes that are written on a group basis with lower premiums than you may have now.
At my brokerage we offer a variety of aviation programmes. Notably some for members of various AME associations across Canada, that ranges from affordable AME contractor premiums, a highly competitive policy for amos, and a group home and auto insurance option.
Monthly, quarterly or seasonal premium installments are available to virtually everyone, business or personal, aviation or otherwise. There is generally a cost for this but it can be easier to manage having your payments spread out.
Most premium financing companies are also looking for ways to be more flexible with their payments to help businesses and individuals whose finances have been impacted by the pandemic.
Get proper advice
There have been numerous cases where false information has been posted online, repeated by news sources, or said by politicians, that just isn’t true. They are no doubt doing their best to keep everyone safe and financially stable during this period of uncertainty, but they are not insurance specialists.
While the news is broadcasting about insurance discounts on your auto policy, it’s important to remember that everyone has a different insurance policy with different coverages and through different insurers.
The only way to know exactly what credits, discounts, or rebates you qualify for is to contact your broker or direct writer.
You might be lucky and may not be too financially impacted by the current epidemic, but we can’t all be certain we’ll be fine the next time. We need to look forward, learn from this experience, and make sure we have the right tools and resources in place for the next struggle we are faced with.
There is no better time to consider the deficiencies in your coverage or pricing.
Take a good look at the extensions and exclusions in your insurance policies. While we can’t predict the future, we can consider what we’re going through now and how we can be better prepared in the future.
The only way you’ll know for sure what your options are for your personal, business, or aviation insurance is to contact your broker directly. With their assistance you can determine the worst case scenario, the price tag associated with this, and the likelihood of suffering such a loss.
Pandemics may be being excluded from policies now, if they weren’t already, but what about natural disasters? Coverage for earthquakes, floods, and water damage is optional on most types of property policies but can be added for relatively little cost.
It’s impossible to know how the world will look going forward, and although insurance may not be the financial answer to the relief a lot of Canadians are looking for, there are still things we can do now and to prepare for the future.