Loss of Use Insurance for Aircraft Owners

What does loss of use insurance actually cover?

Loss of use coverage pays a daily cash benefit while your aircraft is out of service for a covered hull claim. The carrier reimburses the cost of chartering a comparable aircraft — or simply cuts a check at the agreed daily rate — for the period the aircraft is grounded between the date of loss and the date it returns to airworthy status.

The trigger is a covered physical damage event under the hull policy. A bird strike that pulls the aircraft offline for engine borescopes and a replacement fan blade qualifies. A hangar rash incident that requires paint and skin repair qualifies. Routine maintenance, AOG parts delays unrelated to a covered loss, and ADs do not. This is the single most misunderstood part of the product: loss of use is not maintenance interruption insurance. If the airplane is down because Pratt & Whitney can't ship a hot section, your hull policy does nothing.

How is the daily indemnity structured?

The daily rate is negotiated up front and tied loosely to the charter replacement cost of the aircraft class. For a King Air 350 or Pilatus PC-12, expect $5,000–$8,000 per day. A Phenom 300 or Citation CJ4 falls in the $8,000–$12,000 range. Midsize jets like a Citation XLS+ or Learjet 75 sit at $10,000–$15,000. Super-mids run $15,000–$20,000, and heavy iron — Gulfstream G550, Falcon 7X, Global 6000 — gets written at $20,000–$25,000 per day, sometimes higher for owners who can document actual charter spend.

Most policies impose a waiting period of three to seven days before benefits start accruing. That deductible exists because underwriters don't want to pay on every fender-bender that sidelines the aircraft for a long weekend. The aggregate cap is usually 60 to 90 days, though 30-day and 120-day variants exist. A G650 owner with a $25,000 daily rate and a 90-day cap is buying up to $2.25 million in charter reimbursement per loss.

What does the coverage cost?

Annual premium runs $2,000–$8,000 as an endorsement on the hull policy, scaling with daily limit and aggregate cap. A $10,000/day, 60-day policy on a midsize jet typically costs $3,000–$4,500. The same structure on a $50 million Global runs closer to $6,000–$10,000 because the underwriter knows charter replacement at that tier is expensive and hard to source on short notice.

Underwriters who quote this regularly include USAIG, Global Aerospace, Starr, and AIG. Berkshire Hathaway Specialty has been more selective. The endorsement is rarely written standalone — it sits on top of the hull and liability program with the same carrier, which simplifies the claim handling because one adjuster controls both the repair timeline and the loss of use clock.

Who actually needs it?

Owners who fly more than 200 hours per year on a single-aircraft flight department are the core market. If the aircraft is the sole lift for a principal who flies weekly, a 45-day downtime event without coverage means $400,000–$900,000 in unbudgeted charter spend on a midsize, and well over $1.5 million on a heavy jet. The endorsement premium is rounding error against that exposure.

Owners on fractional or jet card backup programs need it less. NetJets, Flexjet, and Wheels Up cardholders already have contractual access to replacement lift, though the daily rates billed against their account during an extended outage can still justify a modest loss of use limit. Part 91 owners with no charter relationship and no backup aircraft are the ones who get hurt without it.

Part 135 operators are a different conversation. For them, the analog is business interruption coverage tied to lost charter revenue, which is a separate product and underwritten very differently — typically as a percentage of documented prior-year revenue rather than a fixed daily rate.

What are the common claim disputes?

The biggest fight is over what counts as "downtime." Carriers will pay for the time directly attributable to repair of the covered damage, not for parallel maintenance the owner elects to complete while the aircraft is in the shop. If a gear-up landing puts the aircraft down for 75 days and the owner uses the opportunity to knock out a phase inspection that adds 10 days, the adjuster will only pay for the 65 days of repair time. Document the repair work order separately from any discretionary maintenance.

The second dispute is comparable aircraft. The policy says comparable, not identical. A Falcon 2000 owner cannot charter a Global 7500 and expect full reimbursement. Carriers benchmark against published charter market rates for the same aircraft category and will push back on invoices that exceed market.

Third, named-pilot warranties and operational exclusions on the underlying hull policy carry through to loss of use. If the loss occurred while a non-approved pilot was at the controls, hull denies and loss of use denies with it. Same answer for excluded geography — a hull loss in a war-risk-excluded country is not a loss of use claim.

What gaps should owners negotiate out?

Push for elimination or reduction of the waiting period if your operational profile makes a three-day outage material. Some carriers will drop it to 24 hours for an additional 15–20% on the endorsement premium. Confirm that the daily rate is indexed or reviewable at renewal — charter market rates have moved 30–40% since 2020, and a daily limit set in 2019 may no longer cover actual replacement cost.

Ask for explicit language that loss of use applies during repair of damage from a covered loss even if the repair facility is constrained by parts availability. Without that, a carrier can argue the delay past a "reasonable repair window" is no longer their problem. And confirm the endorsement responds to constructive total losses during the period the adjuster is still evaluating whether to repair or write the aircraft off — that determination can take 30–60 days, and you need coverage running the whole time.