Sunset Aviation Insurance Blog

Don’t Make These Three Mistakes in Your Workers’ Comp Insurance Coverage

Most employers don’t shop around for their workers’ compensation insurance. In general, they find an insurer and continuously renew their policy without revisiting the details or shopping to confirm that they have the coverage they need at the best premium rate. If your insurer isn’t familiar with the details of your aviation business, you may be paying more for coverage than necessary. Here are the three most common mistakes aviation companies make in their workers’ comp coverage:

 

Mistake 1:  Not using the correct class code for your operation

Workers’ comp insurance premiums are based on estimated risk and exposure. Underwriters use a set of standard class codes to calculate the risk of an operation. Applying the wrong code may result in an increase in the perceived risk. For example, corporate flight department pilots should fall under the 7421 Transportation of Personnel in Conduct of Business code rather than the 7431 Aviation–Air Charter or Air Taxi–Flying Crew code. 

Also, while insurers in most states use the National Council on Compensation Insurance (NCCI) codes, in some states – including California and New Jersey – a unique set of workers’ comp codes are applied. So a corporate flight department in California would use code 7424 CA&NJ Aircraft Operation–Member of Flying Crew. 

 

Mistake 2: Submitting an Incorrect Payroll Figure

Workers’ comp payouts are based largely on a percentage of the employee’s pay. Submitting incorrect payroll figures to the underwriters estimating premiums can result in future problems. This error may even be grounds for your workers’ comp insurance to be terminated. Don’t guess when filling out the payroll figures paperwork. Be sure to keep payroll figures updated, as needed, if employees receive pay raises.

 

Mistake 3: Not Listing All Employee Resident States 

This mistake can be easily overlooked, especially by companies that have pilots or crewmembers living in states other than the state where the company or flight department is based. Because worker’s comp laws differ from state to state, an employee may choose to file the claim in their home state. When underwriters determine the premium, they must be informed about all the states where the insured company has exposure through the residences of its employees. 

 

We hope the information in this post is useful to you, and we welcome the opportunity to discuss the details of your current policy. To receive a free comprehensive review of your workers’ comp insurance coverage – Contact us at team@sunsetais.com or call 1-310-453-3355

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Insurance in new single-pilot mentorship program

Insurance in new single-pilot mentorship program

Articles - October, 31 2021

CAE and Starr Insurance Partner on Single-Pilot Jet Program

At NBAA’s 2021 annual convention, aviation training giant CAE announced a unique partnership with Starr Insurance Companies devised to help single-pilot jet owners who are not professional pilots attain and maintain insurability in tough markets.

CAE has developed an 18-month single-pilot mentorship program incorporating simulator training, flight training data monitoring, in-aircraft mentoring, and upset prevention and recovery training (UPRT). According to a press release issued by CAE, the program will “increase insurability and ensure the highest safety standards for single-pilot turbojet owners and operators who are not professional pilots.”

Sunset Aviation Insurance has been seeing the effects of the hardening market on some of our clients looking to move up from piston or turboprop aircraft to very light jets, and applaud the development of the CAE program. Recently one owner/operator client with a total time of 1200 hours—most of which was in a Cessna 441 twin turboprop—had to cancel the purchase of a Citation M2 because of uninsurability. Enrolling in a program such as CAE’s should provide the insurability needed to allow single-pilot owner/operators to move up in their choice of aircraft. 

If you’re planning to purchase an aircraft and have any questions about your insurability, please reach out to us at team@sunsetais.com or give us a call at +1-310-453-3355.

Meet Ben at NBAA’s Owner/Single-Pilot Operator Pavilion

Meet Ben at NBAA’s Owner/Single-Pilot Operator Pavilion

Articles - October, 1 2021

Ben Peterson, founder of Sunset Aviation Insurance, will be on site at NBAA’s new Owner/Single-Pilot Operator Pavilion on October 12-13, 2021 in Las Vegas. Available by appointment at 310-453-3355, Ben will answer questions about aviation insurance and discuss topics such as:

  • Estimating premiums in a hardening market
  • The use of quota sharing for insuring high hull value, single-pilot aircraft
  • Training options to help become safer and more insurable.

The new pavilion will be located at the outdoor aircraft static display at Henderson Executive Airport, about 10 miles south of the Las Vegas Convention Center. Shuttles will be available between the convention hall and Henderson Airport.

The pavilion will be aimed toward owners and pilots of single-pilot rated business aircraft such as:

  • Cessna Citation CJ/M2 series
  • Cirrus SF-50 VisionJet
  • Embraer Phenom 100/300
  • Pilatus PC-24/PC-12
  • Daher TBM series
  • Piper M350/500/600

The pavilion will also showcase owner pilot associations, host presentations from OEMs and suppliers, and provide networking opportunities. Textron Aviation, Smartsky Networks and Daher are scheduled to present on Tuesday, October 12. SierraTrax, Charlie Precourt, Embraer, and Pratt & Whitney Canada are all scheduled to present on Wednesday, October 13. Note that the pavilion will not be open on the last day of the show (Oct. 14).

Since Sunset Aviation will not have a booth at the Owner/Single-Pilot Operator Pavilion, Ben can be reached during the show at 760-331-8166. 

 

What Quota Share Means to the Business Aircraft Owner/Operator

What Quota Share Means to the Business Aircraft Owner/Operator

Articles - September, 18 2021

Obtaining and keeping your high hull-value business aircraft insured is getting increasingly difficult in the hardened post-Covid market. With aviation claims costs skyrocketing amid the ever-increasing cost of labor and materials in repair shops, not to mention the U.S. court system’s penchant for granting exceedingly high judgements against aviation entities after an accident, many underwriters have lost their appetite for insuring aircraft with hull values above $5 million, no matter what the premium. Some aircraft owners, especially older owner/operators of single-pilot light jets or those with relatively little jet experience, have found their insurance company dropping their policy at renewal time, even with no claims on the aircraft or owner record.

For owner/operators of aircraft such as HondaJets, Cessna Citations, Embraer Phenoms, Pilatus PC-24s, and high-end turboprops like the Super King Air or well-equipped PC-12s, the answer may be quota sharing. This is where multiple insurance companies share one risk, so that if a claim is made, no one company has to shoulder the entire burden of paying the claim. For example, Sunset Aviation Insurance recently brokered a set of policies for a large helicopter fleet operator in which the risk was shared by nine insurance companies.

As you can imagine, the paperwork involved in a quota share agreement can be tricky and tremendous, and this is where your broker shines. The broker will find one insurance company to take lead; this company agrees to take the largest percentage of the risk and will be the initial handler of any claims. Perhaps for a $5 million hull-value policy, the lead company may agree to a 50% quota share, and thereby would be on the hook for $2.5 million if a claim were made. The broker then finds one or more additional insurance companies to handle the rest of the risk. These companies would work with the lead on any claims. After 100% of the risk is accounted for, the policies are drawn up according to the percentage of the risk agreed to by each insurance company.

While quota sharing used to be relegated to larger multi-ship operations, the high cost of claims is making quota sharing a more attractive option for operators of high hull-value aircraft who are having a hard time keeping their aircraft insured in this hard market.

 

Note that light jet/turborprop owner/operators may find information on quota sharing and other insurance-related topics at the Owner/Single-Pilot Pavilion launched at NBAA-BACE 2021. Located at the outdoor display, this new pavilion will be the “place for single-pilot operators to connect with their peers and engage with useful, relevant content designed specifically for this key part of the industry,” according to the NBAA website.

 

If you have any questions about quota sharing or need assistance in finding insurers, please reach out to us at team@sunsetais.com or give us a call at +1-310-453-3355.

Sunset Aviation Office has moved to a new Location

Sunset Aviation Office has moved to a new Location

Articles - August 04, 2021

We’ve Moved!

Sunset Aviation Insurance has Moved!

Effective September 20, 2021 our new address will be:

Sunset Aviation Insurance

19301 Campus Drive, Suite 264
Santa Ana, CA 92707

3 Tips for Buying Aircraft in a Seller’s Market

3 Tips for Buying Aircraft in a Seller’s Market

Articles - August 04, 2021

Buying aircraft, especially pre-owed aircraft, is rough right now. Opportunities and inventory are very low despite a pandemic. I did a little research on what may have contributed to this tight this market and thought I’d share what I learned, along with a few tips I hope can help you secure that perfect plane or helicopter. There’s good news. It’s not impossible to get a good aircraft if you do your homework and plan ahead while keeping your options open.

The Current Environment

The pandemic has certainly played a significant part in today’s low aircraft inventory, and it continues to do so. When airline service dropped, those companies and individuals on the cusp of aircraft ownership chose to buy their own aircraft right away rather than wait for a new aircraft delivery date. This caused a significant dip in the pre-owned market. Similarly, many more moved to fractional ownership or began renting private aircraft, pressuring FBOs into buying aircraft to support a growing customer base. What’s more, there also seems to be a trend of first-time buyers choosing larger, more expensive aircraft than this demographic has historically pursued in the past, further limiting options for owners seeking to upgrade.

Even today, with airline service struggling to return to pre-pandemic levels, there continues to be a higher sense of safety flying private aircraft. Demand continues to be high for private aircraft ownership and use.

That said, today’s aircraft buyer must plan ahead to be in the best position to secure a new aircraft. Here are three tips I’ve uncovered that can help you be in that winning position.

  1. Secure Financing Early and Plan your Financial Options

Secure a financing partner and have preapprovals in hand well before starting your aircraft search in earnest. A strong financial partner will help you ensure you have your paperwork and backing ready when buying aircraft. That partner will also help advise you on options when you are faced with competing and cash offers as well as the potential of paying above aircraft value.

If you do choose to pay more than value, be ready to pay the difference out of pocket. Lenders only finance based on the aircraft’s value. Alternatively, if you plan to pay all cash out of pocket as a tactic to win a bid with the intention of financing later, flow the cash through proper escrow channels to ensure the highest chance of favorable financing. Due to their high value and attractiveness to some nefarious business dealings, financing companies are required by law to vet the buyer and seller in cash sales. A failure to properly leave a paper trail of your cash purchase can lead to denied financing. Again, a good financial partner can help advise you on all these details.

  1. Beware of Settling or Overpaying

While stiff competition for your ideal aircraft may be high, beware paying way too much or settling for a less optimal aircraft.

If you overpay, be ready to pay for the valuation to justify that cost. In that scenario, you also run the risk of losing money down the road as the value could deflate. Alternatively, competition for the next level down of aircraft could well be is just as high, which will artificially inflate the price. When the market swings in the opposite direction, it’s the lower aircraft that will begin to lose value first and often will lose more value than higher value aircraft. Think ahead about how much risk you’re willing to take in either of these scenarios and have a plan in place before making an offer.

  1. Remain Objective and Nimble

It is hard not to get attached to a particular aircraft, but it’s essential in closing a fair business deal to stay objective when buying aircraft. It’s all about timing and you may have to make multiple offers before one is accepted.

Enter your aircraft search journey with an open mindset that the aircraft you envision may not be the one you will ultimately own. Instead, outline general requirements such as performance, speed, operating costs, passengers, range, etc. Many aircraft types could meet those parameters, far expanding your target and increasing your chances of closing the sale.

These tips should get you started and down the road to successful aircraft ownership. Of course, if you want to tie in the cost of insurance to your plan, I’m happy to help your search by providing free estimates based on a variety of aircraft. Feel free to reach out to me at +1-310-453-3355 or team@sunsetais.com.