The Importance of Valuations
✈️ Underinsured Aircraft Hull Value: The Hidden Risk That Could Ground Your Finances
In aviation, precision is everything—from takeoff calculations to fuel monitoring to maintenance scheduling. But when it comes to insurance, many operators make a critical error: underinsuring the aircraft hull.
This oversight could leave you exposed to six- or seven-figure losses in the event of a serious claim.
What Is Aircraft Hull Insurance?
Aircraft hull insurance covers physical damage to the aircraft itself. It typically includes:
In-motion coverage (taxiing or flight)
Not-in-motion coverage (while parked or stored)
The policy is usually written on an agreed value basis, meaning the insurer pays that fixed amount in the event of a total loss—no depreciation, no negotiation. That’s where the risk comes in.
The Danger of Underinsurance
If the insured hull value is too low, here's what could go wrong:
You suffer a total loss and receive a payout well below the market value, leaving you with a serious deficit when replacing the aircraft.
The aircraft sustains partial damage, and repair costs approach the insured limit. The insurer might declare a total loss to save money, even if the aircraft is fixable.
Your business experiences downtime, and no business interruption insurance kicks in because the aircraft’s low value doesn’t trigger enough coverage.
Why It Happens
Outdated appraisals: Aircraft values have fluctuated significantly in recent years, especially post-pandemic.
Pressure to save on premiums: Some owners intentionally list a lower hull value to reduce costs, not realizing the potential consequences.
Neglected upgrades: Modifications, avionics updates, or engine replacements may not be reflected in the policy.
Real-World Example
A flight school insured a Piper Archer at $180,000. When the aircraft was destroyed in a hangar fire, they discovered the replacement cost had risen to $250,000. The $70,000 shortfall became an unplanned capital expense that delayed expansion and strained cash flow.
How to Avoid It
Get a professional appraisal or consult resale platforms every 6–12 months.
Update your policy at renewal if the aircraft’s value has increased.
Document upgrades or modifications with your insurer to adjust the agreed value.
Don’t chase cheap premiums at the expense of financial protection.
Final Thoughts
Underinsuring your aircraft hull might save a little upfront—but it can cost everything later. Like a worn-out altimeter, an outdated hull value gives you a false sense of security. And in aviation, that’s a risk no operator can afford.
