Common Misconception: My Aircraft Is Fully Covered at the Shop.
Similar to questions about winterizing aircraft, we often hear owners tell us, “My aircraft is at the shop, so their insurance applies. You can take my coverage off.” Simply put, this isn’t 100% accurate. The ONLY time your aircraft would be covered by their policy would be if they were liable for damaging it. Outside of that, it’s your policy that will respond. Therefore, dropping coverage simply because your aircraft is at the shop creates enormous exposure for you because it’s essentially uninsured. Insurance policies have built-in mechanisms for crediting periods of inactivity. Before we address them, it is imperative to note that one option should never be considered: removing coverage for your aircraft altogether. Just because you’re not flying does not mean you’re immune from any losses. The option you should choose depends on two things: 1) the type of coverage endorsements included in your policy, and 2) your true expectation of usage. In other words, are you “grounding” the aircraft for the next several months, or are you just assuming you won’t fly for a while?
- Option 1) Ground/Not in Motion: (commonly referred to as ground only). If the plan is to tuck the aircraft in a hangar and not bring it out again for several months, this is the option for you. Your agent will transition your coverage from full flight to ground only, which will generate a premium credit while maintaining coverage on the hull. This way, you’re still covered for things like hangar fires and hangar collapses (due to ice/snow), but you’re not paying a premium as if you’re still operating the aircraft.
- Option 2) The Lay-up Credit: This coverage endorsement is the best of both worlds. It returns premium for periods of inactivity (usually 45–60-day windows), but you don’t have to worry about telling your agent when you fly or to reinstate coverage to full flight from ground only. If 45–60+ days go by and you haven’t flown, simply let your agent know, and a lay-up credit for that inactivity will generate a credit. It in no way alters the coverage, just credits you for that period of inactivity. If there’s a break in the weather on a Saturday afternoon or if you need to run it up for a test flight, no need to worry whether you’re covered to fly. Your lay-up window resets as soon as you fire it up, but the coverage isn’t altered. Not all policies have this unique coverage endorsement, so don’t make any assumptions; contact your agent for clarification.