Aircraft Insurance Claims Process: What to Expect After an Incident

What do you do in the first 24 hours after an incident?

Call your broker before you call anyone except emergency services and, if required, the NTSB. The broker — not the carrier directly — is the right first call because they manage the claim narrative, assign the adjuster, and keep you from saying something on a recorded line that limits coverage later. Most policies require notification "as soon as practicable," and underwriters at USAIG, Global Aerospace, Berkshire Hathaway Specialty, AIG, Starr, and AXA XL all interpret that as same-day for any event involving injury, substantial damage, or third-party property.

Document everything before the aircraft moves. Photograph the airframe from all quadrants, the cockpit panel showing engine and fuel state, the surrounding environment, weather conditions, and any ground equipment involved. Pull the maintenance logs, the pilot's logbook, the trip sheet, and the fuel slip from the last uplift. If the aircraft is on a ramp, request a fuel sample be pulled and sealed before anyone touches the tanks. These artifacts determine coverage outcomes more than anything that gets said later.

When is NTSB and FAA notification mandatory?

NTSB notification is required immediately for any "accident" — defined as death, serious injury, or substantial damage to the aircraft — and for specific incidents like flight control malfunctions, in-flight fires, engine separations, or runway excursions causing substantial damage. The trigger is 49 CFR Part 830, and the operator has the obligation, not the broker or insurer. File via the NTSB online portal or by phone to the regional office.

The FAA gets involved separately through the local FSDO, particularly if there's any suspicion of a regulatory violation — busted minimums, expired medical, lapsed annual, or unapproved maintenance. Anything you tell the FAA can find its way into the insurer's coverage analysis, so coordinate statements through aviation counsel when the event is serious. A pilot deviation report can become the basis for a named-pilot warranty denial if the pilot wasn't current on the specific make and model.

How does the adjuster assignment work?

The carrier assigns an independent adjuster — usually a specialist firm like Aerospace Claims Management, McLarens Aviation, or Crawford's aviation practice — within 48 to 72 hours of notification. On a major loss, the carrier may also send a staff adjuster and retain a Designated Engineering Representative (DER) to evaluate airframe damage. For Part 135 events or anything with fatalities, expect three to five parties on-site within a week: the adjuster, the carrier's aviation engineer, defense counsel, an NTSB investigator, and potentially the manufacturer's go-team.

The adjuster's first job is a reservation of rights letter. This document does not deny coverage — it preserves the insurer's right to investigate before committing. Read it carefully. If it cites named-pilot warranties, geographic exclusions, or use exclusions (freight, aerobatic, instructional), those are the issues that will determine whether you get paid. A good broker pushes back on overly broad ROR language before it hardens into a denial.

What does the damage estimation and repair authorization process look like?

The adjuster commissions a damage survey from an approved MRO — typically a factory service center or a Part 145 repair station with type experience. The survey produces a written estimate that becomes the basis for the repair-versus-total-loss decision. Hull insurance pays the lesser of repair cost or the agreed value stated on the policy declarations. When repair estimates exceed roughly 70-75% of agreed value, most carriers declare a constructive total loss and pay the full hull amount, taking the salvage.

Repair authorization comes in writing from the adjuster, not verbally. Do not authorize work beyond preservation and disassembly until you have that letter. Progress payments to the MRO typically run on a 30-60-90 day schedule tied to milestones — teardown complete, parts on order, reassembly, post-maintenance test flight. The owner usually has to front the deductible, which on jets typically runs $10,000-$25,000 on hull but can be higher on landing gear or in-motion claims.

How does a total-loss settlement actually pay out?

Total-loss settlements on agreed-value hull policies pay the stated number on the declarations page, minus the deductible, minus any salvage credit if the owner retains the wreck. Most owners assign salvage to the carrier and take the full agreed value. Payment lands 30-60 days after the loss is formally declared total, assuming clean coverage and no warranty disputes. Lienholders get paid first under the breach-of-warranty endorsement, then the owner receives the balance.

Where it gets slow: when agreed value hasn't been updated to current market, when the loss occurs during a coverage gray area (ferry permit, pre-purchase, post-annual test flight), or when there's a named-pilot issue. A 2019 Citation hull insured at $4.2M two years ago might now be worth $5.5M in the current market — and the carrier owes $4.2M, not market. Review agreed value at every renewal.

How are liability claims handled differently?

Liability claims run on a parallel track and take far longer — frequently 12 to 36 months for anything involving injury or death. The carrier assumes defense, retains aviation counsel (Schnader, Condon & Forsyth, Kaplan Massamillo are typical), and controls settlement decisions within policy limits. Owners with $25M-$100M limits on a jet, or $100M-$500M on a Part 135 operation, generally have enough capacity to settle most events without personal exposure. The exposure problem hits owners who carry minimum limits — $1M smooth on a light jet is dangerously thin if there are passengers.

Wrongful-death settlements on a jet accident routinely run $3M-$10M per passenger, and a four-fatality event can easily exceed $40M in indemnity before defense costs. This is why brokers push hard for $50M minimum on owner-flown jets and why charter operators carry layered programs stacking primary, excess, and umbrella into the $300M+ range.

What gets claims denied or reduced?

The recurring denial drivers are named-pilot warranty breaches, open-pilot-warranty minimum violations (insufficient total time, no recurrent training within 12 months, no type rating), geographic exclusions (Mexico, Caribbean, war-risk zones), and use exclusions. A pilot who hasn't completed FlightSafety or CAE recurrent within the policy period is the single most common reason a clean-looking claim turns into a coverage fight. Mentor pilot hour requirements — typically 25-50 hours for first-time jet owners — also create denial exposure when the owner flies solo earlier than the policy permits. Read your warranty schedule annually, not just at binding.