Hull Insurance for Private Aircraft: Coverage, Valuation, and Deductibles

What does aircraft hull insurance actually cover?

Hull insurance covers physical damage to the aircraft itself — airframe, engines, avionics, and installed equipment — regardless of whether the loss happens in flight, while taxiing, or sitting on the ramp. It is the property side of an aviation policy, entirely separate from the liability section that responds to bodily injury and third-party damage.

A standard hull form pays for repair costs up to the insured value, or pays a total loss settlement when repair economics exceed roughly 75% of insured value. Coverage extends to damage from collision, hard landings, gear-up incidents, hangar rash, hail, windstorm, fire, and ingestion events. It does not cover wear and tear, mechanical breakdown absent an accident, corrosion, or progressive engine deterioration. Foreign object damage that causes a sudden loss is covered; a slow-developing hot section problem is not.

The policy attaches to the aircraft, not the pilot or owner, but it is conditioned on the named-pilot warranty and open-pilot clause. Fly with an unapproved pilot and the hull coverage can void, even if that pilot did nothing wrong.

How does agreed value differ from stated value?

Agreed value means the insurer and the insured agree at policy inception on the aircraft's value, and that number is what gets paid on a total loss — no depreciation argument, no appraisal fight. Stated value, sometimes called actual cash value, lets the underwriter pay the lesser of the stated amount or fair market value at the time of loss.

For owned business jets and turboprops, agreed value is the market standard and what every serious broker should be writing. The premium difference is minimal and the claim-time certainty is enormous. Stated value policies still appear on older piston aircraft and some experimental categories, and they create real exposure: a 2008 King Air insured at $2.4M on a stated-value form may settle at $1.8M if the underwriter pulls Vref or Aircraft Bluebook numbers showing softening values.

Valuation should be revisited at every renewal. Jets that delivered at $65M and are now worth $42M need the hull figure adjusted down — overinsuring does not increase the payout on a partial loss, it just inflates premium. Conversely, the 2021-2023 market spike caught many owners underinsured by 20% or more.

What do premiums actually cost by aircraft category?

Hull premium runs 0.5% to 1.5% of insured value annually, with the rate driven by aircraft type, pilot experience, use category, and loss history. A turboprop owner-flown by a 2,000-hour pilot might see hull rates around 0.7% to 1.0%. A light jet flown single-pilot with a fresh type rating prices closer to 1.2% to 1.5% in the first year, dropping to 0.8% to 1.0% after a clean renewal cycle.

In dollar terms: turboprops generally land between $8,000 and $25,000 per year combined hull and liability, light jets $25,000 to $60,000, midsize $40,000 to $90,000, super-midsize $50,000 to $110,000, and heavy or ultra-long-range jets $75,000 to $200,000-plus. Owner-flown aircraft pay more than professionally crewed. Part 91 pays less than Part 135. Hangared aircraft pay less than tied-down.

The market hardened sharply from 2019 through 2022 — rate increases of 15% to 40% were common — and has since flattened, with well-managed accounts seeing flat to modest decreases in 2024 renewals. Underwriters who quote this business include USAIG, Global Aerospace, Berkshire Hathaway Specialty, AIG, Starr, and AXA XL, plus Lloyd's syndicates on the larger and more complex risks.

How are hull deductibles structured?

Aircraft hull deductibles are almost always split between "ground not in motion" and "in motion," with the in-motion deductible substantially higher. A typical light jet might carry $0 ground / $10,000 in motion. A midsize jet runs $0 / $25,000. Heavy jets see in-motion deductibles of $50,000 to $100,000.

"In motion" means under its own power or being towed — gear-up landings, runway excursions, ground loops, and taxi collisions all trigger the in-motion figure. "Not in motion" applies when the aircraft is parked, chocked, and unattended: hangar rash from a tug, hail damage on the ramp, vandalism. The zero ground deductible is one of the more valuable features of an aviation policy compared to most commercial property forms.

Engine ingestion is sometimes carved out with a separate deductible, particularly on aircraft operating into unimproved fields or known FOD environments. Owners should read the schedule carefully — a $25,000 ingestion deductible per engine on a twin can mean $50,000 out of pocket on a bird strike claim.

What hull exclusions catch owners by surprise?

The exclusions that produce the most claim denials are named-pilot warranty breaches, war and terrorism, wear and tear masquerading as sudden loss, and use outside the declared category. Fly a charter trip on a Part 91 policy and the hull coverage evaporates.

War risk is excluded from the base hull form and must be bought back, typically as a small additional premium. Most owners carry it without thinking; operators flying to higher-risk regions need to confirm geographic scope and check the excluded-countries list, which has expanded materially since 2022. Coverage into Ukraine, Russia, Belarus, and parts of the Middle East is either excluded outright or requires specific underwriter approval and surcharge.

Mechanic-in-control sublimits restrict coverage when the aircraft is being moved or test-flown by maintenance personnel rather than rated pilots — typically capped at $1M to $5M of hull regardless of the policy limit. Freight, aerobatic, and demonstration use are excluded unless specifically scheduled. Environmental cleanup from a fuel spill is usually capped at $50,000 to $250,000 within the liability section, not hull.

How does a hull total loss actually settle?

On an agreed-value policy, total loss settlement is mechanical: the insurer pays the agreed value, takes title to the wreck, and the claim closes — typically within 30 to 90 days of NTSB preliminary findings on an accident, faster on a non-accident loss like a hangar fire. The insured signs a proof of loss and a bill of sale transferring the salvage.

Constructive total loss kicks in when repair estimates plus diminished value approach or exceed the insured amount, generally at the 70% to 75% threshold. The insured does not get to keep the aircraft and the payout; the carrier takes the salvage and resells it through specialty brokers. Partial losses follow a different path: the insurer pays repair costs at an approved facility, less the applicable deductible, and the aircraft returns to service. Diminished value claims are not paid under standard hull forms in the U.S. — that is a recurring point of dispute and one of the strongest arguments for keeping the agreed value current.