The Art of the Deal…. Insurance Renewal Negotiations
For those that have owned a maintenance shop, FBO, or aircraft for many years, the renewal process may seem “routine.” You have answered the same questions every year and received the same rhetoric about getting your information updated in a timely fashion. You receive a quote and hear the same reasons from your broker why the insurance underwriters can’t seem to improve your renewal pricing or policy. Many people go through this annual process assuming that their insurance broker has the knowledge and experience to negotiate with the underwriters and present their operation in the best possible way. The only thing left to do is accept their offer, right? Or can you do more?
Maybe it is time for you to take a more proactive role in the renewal process. If your broker is not providing fast and accurate service or regular pre-renewal visits with underwriters, then it might be time to interview new brokers. It doesn’t matter if you are negotiating your aviation insurance for the first time or have had policies for years – the broker you select is the key to lower pricing, expanded/broader coverage, and peace of mind.
Meet with your Broker
There is no substitute for a face-to-face meeting with your broker. These in person meetings become even more crucial if you are an FBO or maintenance facility. This is critical to conveying the full and complete scope of your insurance risk, and discussing all aspects of your operations. Demand this basic service from your broker.
Once your broker has a full understanding of your operation, they can verify that you have the necessary coverages in place. The following are some examples of coverages on a General Liability policy that are not necessarily included and may not be discovered without a site review.
Incidental Premises Liability: An extension of General Premises Liability to provide coverage at locations incidental to the insureds operations. If you perform any work away from your primary location/airport premises liability typically stops at the airport boundary. Most underwriters can offer this coverage, which extends the premises liability to locations you or your mechanics may travel to in order to perform repairs.
Fellow Employee Exclusion: An exclusion in most General Liability policies that eliminates “Insured” status for an employee if they cause injury to another employee. Some insurance companies offer broad form endorsements that do not contain the fellow employee exclusion. Some underwriters are willing to remove this exclusion from their standard policy form by endorsement. Many will not modify the “fellow employee” exclusion at all.
Contracts Require Review
Aviation is filled with contracts in every form. When visiting, I commonly request contracts from my clients as they are easily accessible.
Contracts are drafted for hangar facilities, maintenance, dry leases, pilot services, aircraft management, fuel supply, aircraft rental, etc. Each contract will likely include an insurance section and an indemnification section. These may affect your insurance coverage and may require a certificate of insurance. Each underwriting company should be provided an opportunity to review the contracts to help them fully understand the risk exposures. Most insurance policies require underwriter approval for such things as additional insureds and waivers of liability or subrogation, so a contract review is necessary and prudent.
Other Fine Points
As you can imagine, there are many more details to consider. It is important for you to advise your broker of any changes you had or anticipate in your operations. These points must be negotiated before you accept the underwriter's quote and prior to renewal.
Your broker can only help you if you help your broker. Be proactive. Volunteer information. The renewal application is simply a guide for deeper discussion and cannot be expected to cover every possible situation. Schedule a meeting with your broker and underwriter. That is your opportunity to ask them questions. This may result in more or broader coverage and reduced pricing.
