June 13, 2025 • 38 mins
In this video, I break down the critical insurance mistakes that destroy most jet brokerage careers before they even get started. From demo flight disasters to coverage gaps that leave you exposed, I'll show you exactly what to watch out for and how to protect yourself.
**What You'll Learn:**
✈️ The 4 biggest insurance mistakes that end brokerage careers
✈️ Why "facilitating transactions" has serious legal implications
✈️ Demo flight coverage - what's actually protected and what isn't
✈️ How to avoid dangerous coverage gaps during closing
✈️ E&O insurance essentials every broker needs to know
✈️ Real stories of claims that were denied (and why)
✈️ Cost breakdowns for different types of aviation insurance
Whether you're a new broker or experienced professional, these insurance gotchas can catch anyone off guard. Don't let a simple oversight destroy everything you've worked to build in your aviation career.
**FREE RESOURCES:**
🔹 Join our Private Jet Broker Community: www.theprivatejetbrokercommunity.com
🔹 Download The Ultimate Jet Guide: go.theultimatejetguide.com/book
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Hello and welcome.
My name is Tom Lelio.
I'm your ultimate jet guide andon this channel we pull back
the curtain on private aviation,help you buy or sell that
private jet with no experiencenecessary to get started.
Today we're talking theexciting world of aviation
insurance and you may not thinkthat it's super exciting, but it
could be very, super scary ifyou find yourself in a situation
(00:28):
where you need it but you don'thave it.
And so to talk about all ofthis, I've invited the man, the
myth, the legend.
Mr Matt White is with me todayand Matt is the guy, he's the
go-to.
He's the company owner of BWIfly, which is actually where I
get my ENO coverage from.
(00:50):
Uh, his, his, his girl, jack is, uh, is amazing.
She's a wonderful broker.
That that's helped me and shealso helps out.
She's the one I recommend toclients when it comes to hey, I
need insurance for my aircraft.
Um, matt is also a YouTuber, soif you're interested in what
he's talking about, you can getsome more Matt in your life by
(01:11):
subscribing to him on YouTube atBWIFly.
I am subscribed to my otherchannel, but I'll go ahead and
give you another sub right there.
Sorry if it's a littleembarrassing right there, but
Matt welcome to the channel man.
Speaker 2 (01:23):
Thanks for having me, tom, so excited to talk about
everybody's favorite subject inthe world aircraft insurance.
I know you guys can't wait totalk about those.
Speaker 1 (01:33):
Well, you know, it's interesting and fun to talk
about when it happens tosomebody else.
Speaker 2 (01:37):
And.
Speaker 1 (01:38):
I think that's what we're going to talk about.
It's like seeing an accident onthe road and you just have to
look and see like, wow, what didthose people do?
So that's kind of what we'regoing to talk about.
We're going to get right intosome mistakes and we're going to
gear this primarily towardsprofessionals, towards brokers,
people that are involved inaviation, not just owners,
because we've already done apodcast for owners, which you
(01:58):
can go check out on both mychannel and Matt's channel.
So today we're pulling back thecurtain for brokers when it
comes to aviation insurance.
Speaker 2 (02:07):
Awesome, absolutely Happy to get into it.
Speaker 1 (02:11):
I'll let you go.
Let you go.
We got four mistakes that we'regoing to talk about in the very
beginning.
Is that correct?
Speaker 2 (02:15):
Yep, yep, cool, let's do it.
So the first one is kind ofwhat are the main gotchas that
specifically kind of an aircraftsales broker should look out
for insurance wise?
And you know these are somepretty important points here.
But there are a few, you know,major gotchas that I want to
(02:37):
kind of go over that you want tobe aware of, especially when
you're transacting in aircraft.
Number one is pilot approval.
So if the buyer is planning tofly the aircraft themselves,
especially if it's a turbine ora jet, they may not meet the
underwriter's minimumrequirements and I've seen deals
(03:00):
fall apart at closing becausethe owner was assuming they
could be approved and we didn'tget a quote until the final hour
before the deal was closing andit's too late and the deal
falls apart.
So pilot approval is a big one.
We've got to get the pilotapproved and that happens
through insurance.
Speaker 1 (03:22):
So, okay, pilot approval.
So I own a jet in my world.
I own a jet, I'm alreadyapproved, I have insurance, I
went through you, I made sureeverything was good to go, but
now we need to relocate forclosing, or maybe we close in
Florida and the plane has to bedelivered to New York, or
something like that.
If we don't know, if we haven'thad these conversations, if we
(03:45):
haven't talked to someone likeyourself, the person picking up
the plane may not be covered.
Right, right, gotcha, okay, nowyou just said it right there.
It's a huge risk.
Is this illegal?
If you don't have insurance onan aircraft, maybe we should let
the brokers know whether or notis insurance required when it
comes to aircraft.
Speaker 2 (04:05):
Insurance is not legally required, except for two
or three states.
I think Minnesota is one ofthem, but the other 47 states do
not legally require insurance.
I think they should, but theydon't right now don't require
insurance.
So it's not illegal.
But on the insurance side, youknow, you have your approved
(04:26):
pilots and so this is.
You know, you've given yourlogbook, all the information to
your insurance broker, you gotto prove you're a named pilot on
the policy and then there's theopen pilot warranty, right?
So these are other pilots thatif they meet the underwriters
minimum qualifications, they canfly.
They don't need to be named.
(04:53):
The number one reason whyaircraft insurance claims get
denied is because somebody wasflying the airplane and they
were either not named on thepolicy or they didn't meet the
open pilot warranty.
That's the biggest reason why Isee aircraft insurance claims
get denied.
And it's so easy.
It's less of a risk with jetsand turbines, more of a risk
with your Cessna 172s, 180s.
You know, hey, let me let mybuddy go fly around, the pattern
(05:16):
, something like that.
And then something happens andthen there's no insurance
coverage.
Speaker 1 (05:21):
Would a bank or a lender require insurance for
closing sometimes?
Speaker 2 (05:26):
100%.
Yep.
If the aircraft's the aircraftfinance, they're always going to
require insurance.
They're going to require, uh,that the aircraft is insured up
to the whole value of thepurchase price, and they're
going to want to be named as anadditional, as a lien holder on
the policy and so in this casewe're going to closing.
Speaker 1 (05:43):
Maybe a buyer thought yeah, no problem, I can get
insurance.
But either they didn't get theinsurance or, like you said, the
guy that they hired to relocatethe aircraft doesn't meet the
open policy or isn't named onthere, and so now we're just
kind of stuck to the expertiseas an aircraft broker in guiding
(06:03):
your customers when they'rebuying an aircraft.
Speaker 2 (06:10):
right, if you know that the deal is going to be
financed, we're probably goingto want to get insurance
involved early.
We're going to want to get themlisted as a lien holder.
We're going to want to get thewhole value, you know, et cetera
.
If you know that the aircraft'sgoing to be ferried, we're
going to probably want to getthe pilots approved and go
through that process.
And all that comes down to yourexpertise and your expertise
working with an aircraftinsurance broker together, um to
(06:31):
make that deal successful.
Speaker 1 (06:33):
Perfect, perfect.
All right, let's go to numbertwo.
What's, what's gotcha?
Number two Gotcha.
Speaker 2 (06:37):
Number two is this is a big one.
This is, you know, aircraftsales uh, one-on-one it's there.
Probably should be a aninsurance part of it, but it's
misunderstanding how insurancequotes work.
Um, insurance, specificallyaircraft insurance carriers.
They don't want to see the sameaircraft, the same tail number,
(06:58):
submitted by five differentinsurance brokers.
Um, so this, this is a mentalchange from, like auto insurance
.
You know you shop aroundeverywhere and you know you're
you're comparing every year,you're trying to save money.
That's the complete opposite ofhow you want to, the approach
you want to take in aircraftinsurance, because there's like
(07:20):
a limited number of underwritersand hundreds of thousands of
submissions and when they getyour aircraft and pilots, but
specifically your tail number,but even your name and shirt,
when they get that from four orfive different brokers, they
will shut down and they'll stopquoting it and they'll start
declining it.
They'll start ignoring itbecause they want, they want to
(07:41):
see you with.
You know they only want to seeit one time and they want to
give it their best effort theone time they do see it.
So when an aircraft salesbroker refers a client, you know
if they refer a client to liketwo or three different brokers.
They are actually hurting theircustomer because those two or
three brokers are going to startshopping around.
Aircraft sales brokers reallyneed to find, like one, aviation
(08:06):
insurance professional andstick to it a hundred percent.
Speaker 1 (08:10):
I appreciate that Now for most.
Let me ask you this questionwhen a aircraft broker is
looking for insurance brokers,is it kind of like some
specialize in heavy, somespecialize in light, some
specialize in GA versus businessapp, or is the industry pretty
small that if you're an aviationinsurance broker you probably
(08:34):
have places to go for all typesof business?
Speaker 2 (08:38):
Yeah, that's a great question.
So it's very specialized.
So, for example, I have afriend who owns an aircraft
insurance agency and hespecializes in insuring
Comanches and Gyros.
Like two planes, comanches andGyros, that's it.
And he can quote your 172s,your 180s and he can do a decent
(09:00):
job on those, but he justreally likes to specialize in in
like two makes and models.
And so you're you're going tohave, like your smaller brokers
are way more specialized andyour larger brokers, they, they
will have people you, if they're, if they're a good larger
broker that they will haveagents that specialize in
(09:21):
different things within thatindustry.
Right, so I'll have somebodythat specializes in jets and
turbines, another one, I meancommercial.
You know part 135 and part 91.
And like we have people at BWIthat just specialize in Alaska,
we have an office in Alaska andthat's all they do is aircraft
in Alaska.
It's a completely differentthing and, yes, it's very unique
(09:44):
and specialized.
So me saying, you got to findone broker that you know that
you can trust, but then they allspecialize in different things.
It's hard, um, but youdefinitely don't want to go find
three or four and have them allshopping at the same time.
That's, that is a recipe fordisaster right there no, I I
(10:05):
understand.
Speaker 1 (10:06):
I appreciate that.
Cool, all right.
Wow, moving right along.
What uh gotcha?
Speaker 2 (10:09):
number three okay gotcha number three part 135
usage or future charter plans.
This is a big one, especiallywhen you're trying to offset the
cost of buying a jet.
Um, if, if one of your buyersthinks that they're going to put
the jet on a chartercertificate down the line, they
should bring that up to you.
Now, right, they need to letyou know during the sales
(10:31):
process, because part 135policies insurance policies
structured totally differentthan like part 91 or pleasure in
business or anything like that.
It's, it's a completelydifferent type of insurance
policy.
Business or anything like that,it's a completely different
type of insurance policy and youcan't change the usage.
Right, you can't bind apleasure in business policy or
(10:52):
part 91 policy and then, likesix months later, say, hey,
we're going to convert this toallow for 135 use.
No-transcript.
Speaker 1 (11:29):
Now if they're thinking about it, but it's more
just like.
You know, I had a buddy thatyou know said I should do this
one time and maybe in like five.
And they're not like superserious, like that's one thing,
but like if you ask them pointblank, like hey, what's the plan
?
And they're like, oh, you know,I'm probably going to buy it
and then I'm going to put it ona one 35.
That's a whole differentscenario, right, totally
(11:51):
different, yeah.
Speaker 2 (11:52):
Different insurance policy, different underwriting,
different questions.
Everything's different.
Speaker 1 (11:58):
Yeah, it's people.
It's not like Airbnb.
Jets are not like an Airbnbwhere you can just kind of throw
the same you know policy on to,or the same financing, or the
same whatever you know,understanding part 91, part 135.
Um, it's why working with aprofessional broker lenders is
(12:18):
super important.
Okay, cool.
Speaker 2 (12:20):
I like it.
Yeah, let me ask you a questionhow many of your customers do
you think plan to rent out, youknow, or charter out a jet that
they purchased, like?
What's the percentage of that?
Speaker 1 (12:33):
Of the phone calls that I get and people just
shopping, and how many of thoseactually will bring that up?
I'd say probably about 30%.
You know, we'll say the reasonI'm shopping is because I'm
thinking of you know doing thisthing, but of you know that's a
very small number when it comesdown to like who actually closes
like out of my closings,probably 10 of them like one out
(12:58):
of 10 you know end up puttingit on a 135.
So it's, it's, it's, but it'simportant, like you said, to
have those conversations upfront.
That way you can guideeverybody along the way and not
waste time and really educatethem.
It's like okay, are you sureyou want to do this Right?
Is there a big jump ininsurance premiums from a 135
(13:21):
versus a part 91?
Speaker 2 (13:23):
A% Way more exposure for the insurance companies.
You know insurance policies arealways written on like how much
risk is it right?
How much exposure do they haveout there on the policy?
And when you have you know theaircraft doing different things,
especially like a 135 versus a91, the exposure level increases
and therefore the premium isalso going to increase.
(13:45):
Is it like?
Speaker 1 (13:47):
or triple, or 10 times.
Speaker 2 (13:49):
I would say it's like 120 to 150 percent more.
And you know, it all depends,depends on the usage, depends on
the routes where we're flying,how many people, how many
passengers, liability.
You know all the value of theaircraft, all that stuff yeah,
but if you?
Speaker 1 (14:08):
but then I mean worst case scenario again we, you try
to do 134 and a half right, youdon't insure correctly and you
saved yourself, you know 120percent, you know for a couple
of years, but now all of asudden you have a catastrophic
loss.
Not only do you have the wholevalue if you're chartering your,
your plane's at least worth amillion dollars, um, but God
(14:30):
forbid any, any lives wereimpacted, you know.
As a result, I mean, thenyou're, you're, you're just
completely sunk, all to save acouple thousand dollars, right.
Speaker 2 (14:39):
You're putting your whole business and, if you're
the business owner, yourlivelihood in jeopardy at risk
if you don't have.
If you don't have a policy andif the policy is not written
correctly which is probably thesecond or third biggest reason
why claims are denied inaircraft insurance is that the
policy is not written correctly.
(14:59):
But that's a different, that'sfor another day.
Speaker 1 (15:03):
Great, I got a couple more gotchas.
What else you got, matt?
Okay.
Speaker 2 (15:06):
My last one is lien holder and breach of warranty
language.
And I see this so many timesyou know, probably two or 300
times in the last 12 months.
But if the aircraft we talkedabout this earlier but if the
aircraft is going to be financed, the insurance policy has to
reflect that perfectly right.
(15:27):
It's got to have the correctlender name, the endorsements.
Breach of warranty language anylittle mistakes here can delay
funding for the aircraft and itcan leave the lender exposed.
So you got to make sure youknow.
That's why in the process, asprofessionals, we have to ask
(15:50):
these extra questions.
You're buying an aircraft,that's why.
That's why you know you're theprofessional buying aircraft.
And then you work with aprofessional who does aircraft
insurance.
These are the questions we ask.
We try and get the informationout of like from the beginning
of the of the whole processeither buying or selling an
airplane or getting insurance.
You gotta, you gotta go throughthese questions and a lot of
(16:12):
times, aircraft owners.
You know they, they, they don'twant to give, they don't want
to answer these questions.
And again, you know it kind ofhinders us from being able to
write the policy correctly anddo our job.
But this is a big one.
You've got to get the leanwhole, or breach of warranty
language.
Speaker 1 (16:30):
And I think this is the benefit of working with
multiple professionals, so thatif I have a level of trust with
the owner and you have a levelof trust, we can say like, hey,
listen, you can come back to meand be like hey, tom, this is
the answers I got.
I really need you to make surethat these are accurate and it's
fleshed out enough, because Iwant to make sure he's covered.
(16:51):
Now I can go back to the ownerand be like, hey, listen, I know
you might be worried aboutsaying something that's going to
impact you negatively or giveyou higher premiums or something
like that, but we need thisinformation X, y, y and z to
make sure we fill it outappropriately and so you can
kind of tag team it to make sure, at the end of the day, you
know it's at the owner's uh, theclient's, best interest.
We're not just trying to shopfor higher premiums like we see
(17:14):
stuff happening 100.
Do you mind sharing, uh and Iknow we will come back to kind
of explain coverages and gaps incoverage and all that kind of
stuff but do you mind sharingmaybe some of some stories or
examples where you've seen thesegotchas happen in real life and
what was the?
What was the result of some ofthese mistakes that people have
(17:37):
made?
Speaker 2 (17:38):
Yeah, yeah, 100 percent.
So you know, a lot of thesemistakes or gotchas aren't, you
know, realized until there's anaccident or a claim.
And then it's like, oh, wedidn't do that, oh, we didn't
add this, oh the policy doesn'treflect that, and now it's a big
problem, right, and that's like.
(17:58):
That's the whole reason.
Like, I get excited aboutinsurance.
I know insurance.
Everybody, you know, seems tohate insurance.
But you know, and I totallyunderstand it, but when, like,
we can write something correctly, and then when there is an
accident and you have insuranceand we're like, nope, we're
there, you're covered a hundredpercent, that's the whole reason
people buy insurance, right,and any of those mistakes that
(18:22):
cause, you know, there to be alapse in coverage or, you know,
for the claim to get denied,that's, that's the kind of stuff
that that no aircraft ownerwants to go through, but you
don't know that until itactually happens.
Speaker 1 (18:36):
That.
That must be a good feelingwhen you know you write the
policy, you know obviously youget the premium, you get a
commission, like that's a greatfeeling.
But you know it's.
It's yucky when someone callsyou and says, hey man, I had a
claim and here's what's going on.
But it must be a really coolfeeling after that call when you
go back to the policy and youtake a look and be like, yeah,
you are covered, you know,because you did your job.
(18:58):
You can go back to the ownerand say, hey, listen, look, I
did my job and yes, you arecovered, and get them.
You know what they deserve inthat time of an accident.
That must be kind of a coolfeeling.
Speaker 2 (19:10):
It is.
And it's like you know,insurance is a scam until you
need it, until it pays.
You know, for your $1.2 millionbrand new Cirrus SR 22, right,
cause you, you know you had anaccident and a lot of accidents
SR 22, right Cause you.
You know you had an accidentand a lot of accidents.
They're not avoidable, you know, like some a good majority are,
(19:30):
but some accidents, like youcouldn't have avoided that flock
of geese.
You know, like there's there'sa lot that happens that's
outside of your control, and soyou know, if you don't have an
insurance policy just in casesomething like that happens, you
know it's, it's, it's never.
You know it's an ego hit.
Of course, whenever you ground,loop it or something, you know
(19:52):
you're feeling bad.
I should have landed thatbetter, I should have done
different, and it's like adouble whammy when you go and
you're like, and now I alsodon't have insurance coverage,
like you feel devastated.
That's not something we want,you know.
And so one of the things we doat BWI specifically, so we have
about 150 to 170 airplanecrashes or claims a year, so
(20:15):
about one every other day isreported to us by our customers
and most of these are, like youknow, prop strike, ground, loop,
hangar, rash, right, you knowthese are not all fatalities and
the thing we do is, because weknow how important insurance is,
we want to be there on theother side especially, like
that's the whole reason ofinsurance.
(20:36):
What we do is we have a reviewprocess that the agent has to go
through before they canactivate a policy.
It's called the bind review.
It's like a step-by-stepprocess, verifies everything,
the name, pilots, open pilot,work, like everything on our
side, and then, after we boundthe policy, there's a separate
third party we review our adminteam does.
(20:57):
It called the policy review andagain it's a third party set of
eyes reviewing the policymatches, the quote, matches, our
system, line by line by line,all the way down to make sure
it's perfect.
Because, like I said, we dohave people.
Every other day somebody turnsa loss into us and we've never
(21:18):
had somebody where we're likethere's no coverage.
That's not a position we'llever want to be in.
Speaker 1 (21:25):
That's not.
That's not a position that I'llever want to be in.
Huh, that's huge.
That's I don't.
Well, let's talk about thisthen.
What does the claim statusactually look like from a
broker's perspective?
So, you know, just walkingsomebody through, like what is
the claim status?
Is it pretty much, like youknow, know, a geico claim where
I just go on my app and I clickon it or how does that kind of
(21:45):
work?
And yeah, like what is theclaims?
Like reporting the claim, butthen, like what's the average on
, like how long it takes for itto get worked out?
Do they just send a check?
Do they bring anybody out toconfirm, like what's going on?
Yeah, I'm kind of curious.
I think it's a little bitdifferent than like a car or a
(22:05):
home or an auto claim.
Speaker 2 (22:07):
Right, yeah, I can be happy to walk through that.
So a couple of things.
So, first of all, you know youhave an accident and you know a
lot of times aircrafts, the endof the runway, and now what do
we do?
Right, and the steps is numberone, of course, passenger
security and safety first, takecare of the passengers, make
sure medically.
You course, passenger securityand safety first, take care of
the passengers, make suremedically.
You know that's always thefirst priority, first concern
(22:29):
Get everybody out of theairplane, get them safe, Get
them off the runway.
The second thing, the secondstep this is before you even
talk to me or your insurancebroker.
The second step isdocumentation.
So if you can take pictures ofthe accident, the wreckage, the
aircraft, any pictures, anythinglike that, that's step number
two.
And then the third step, afterthose two, is to get your broker
(22:55):
involved and let them know, andso there's a lot of different
ways you can call us.
You can go online and submit aclaim report and we have a
process where this is monitored24-7, 24-7, 365.
So you're going to get aresponse from us, no matter what
time you submit it you knowholidays, weekends, all that
(23:16):
stuff.
When we get the response, thefirst thing is we want to
collect as much data.
What happened?
Who was flying, time of day,what is the damage?
What is the estimate?
Do we think it's just a bentrudder?
Do we need to rebuild theengine?
Was it a prop strike?
We want to know as muchinformation as we can.
(23:36):
The minimum is just like anaccident happened phone number,
tail number.
You know somebody to contact,somebody for us to get back to.
We don't, after we collect thisdata, we don't turn it into the
insurance company right away.
We look, we look at the dataand we look at the accident and
we pull up your file and yourpolicy and your quote and we're
(23:58):
going to do a quick five minutereview.
So so we're going to look atthe whole situation.
This is where we, you know ourexpertise is as your aviation
insurance risk manager.
This is where the expertisereally comes in.
So we're going to look at yourfile and we're going to say,
okay, what do we think?
You know the severity of thedamages, what do we just
ballpark estimate, how much isit going to cost to repair the
(24:19):
aircraft?
And then we're going to look atyour file and we're going to
come back if we can and we'regoing to advise you whether to
proceed or not.
It's not an automatic thing thatevery claim gets turned in.
It's hey, you know, this issome hanger rash.
It might cost you $3,000 to$5,000 to repair this if our
(24:39):
customer paid for it on his own.
But then they're not going tohave a claim on their record and
they're turning let.
But then they're not going tohave a claim on their record and
they're turning.
Let's say they're 68, they'returning 70 in two years with a
claim on their record.
They won't, you know, be ableto get insurance and so it's
probably worth, like it's ajudgment call.
It's us advising If, if one ofour customers wants to turn a
(24:59):
claim in, a hundred percentwe'll turn it.
But this is our opportunity toadvise our customers.
Hey, this is the best course.
This is what we've seen happenin a similar situation when you
turn a claim in.
Here's how it plays out.
And we might get told hey, Ijust can't afford that.
We got to turn it in.
(25:20):
Great, we'll turn the claim inand that's we report it Once
they get.
They get the report, they turnit over to an adjuster and the
adjuster, like once we turn tothe company company, turns it to
get, handles it to, hands it toan adjuster and then the
adjuster gets in contact withthe aircraft owner and they
(25:41):
start working through the wholeclaims process.
Right, send me a copy of yourlogbook.
Send me a copy of the pictureof the aircraft, the accident,
the incident, whatever.
Usually they're going to ask dothey have a repair shop in mind
that is local, that can startgetting estimates?
I want to get estimates of therepair.
The adjuster's job is to analyzethe situation and sometimes
(26:05):
they will go out to accidentssites and look at aircraft.
They can fly around and get toaccident sites, depending on
severity and everything thathappened, but their job is to
work with the aircraft owner andget the aircraft owner whole
again and, if the aircraft canbe repaired, get the aircraft
owner whole again.
And if the aircraft can berepaired, let's get it repaired?
(26:26):
If it can't be repaired, howcan we get that check out to
them as soon as possible?
So all the communication oncewe turn into the insurance
company happens between theaircraft owner and the insurance
company's adjuster and if thereare any issues between the two
of them, our customers canalways reach out to us and we
can get involved.
We can talk to the insurancecompany and get involved as well
(26:48):
.
Speaker 1 (26:49):
That's huge.
No, I appreciate that, becausejust giving brokers an overview
of what the claims process lookslike I think is important for
them to know and to realize that, like you said, you know,
having a insurance broker ontheir side can help save them
from.
You know broker on their sidecan help save them from inflated
premiums or difficulty gettingcoverage in the future or how
other people have handled it.
(27:09):
That's really key.
I know we're kind of runningout of time a little bit, but
I'd love to just kind of getinto the brokerage side.
As far as E&O insurance or whatkind of coverage do you think
jet brokers need to protectthemselves in this wild west
that we call private aviation?
Speaker 2 (27:24):
Yeah, absolutely so.
I'd love to break that down.
So a couple of points here.
There's kind of three maincoverages in aircraft insurance,
just so everybody knows.
Number one whole coverage.
Right, this is physical damageto the aircraft.
Usually aircraft insurancedifferent than car insurance
it's written on agreed value,right?
Car insurance is likedepreciation and all that.
(27:45):
Aircraft insurance is, like youknow, my service is worth 1.2
million.
It's insured for that Ifthere's a total loss.
Here's a check for 1.2 million,less than deductibles, right?
So number one whole coverage.
Different than auto insurance,aircraft insurance is a greed
value.
Second coverage liabilitycoverage.
(28:05):
Right, this protects theaircraft owner from bodily
injury, property damage that iscaused as a result of the
operation of the aircraft, right?
So, passengers, people on theground, damage to other aircraft
, etc.
And this is typically offereddepending on the aircraft.
(28:26):
You know, for your singleengine land aircraft, a million
dollars per occurrence is thetypical coverage limit here and
that's limited to 100,000 perpassenger, you know.
And of course, turbines, jets,all that.
You can go up to 10, 50, 100million in liability coverage.
So the second coverage isliability.
(28:46):
And then the third is errorsand omission.
This is more so we're talkingabout errors and omissions
coverage for brokers, managementcompanies and part 135
operators.
And so errors and omissions,when you think about it, like
writ large it coversprofessional mistakes, right,
(29:08):
writ large it coversprofessional mistakes, right.
So like you give incorrectadvice or you missed a deadline
and it caused financial loss.
So when you're advising, youknow your aircraft buyers or
you're managing their aircraftand if you make a paperwork or
regulatory mistake, e&o protectsyou, protects you
professionally Right.
(29:28):
And that's what E&O coverageyou know in a nutshell does and
you know I definitely recommendit for aircraft brokers.
Speaker 1 (29:39):
And is that the same coverage?
So if I get E&O and someonecomes to my office and they slip
and fall in the hangar in myoffice like, does the E&O cover
that as well?
Speaker 2 (29:47):
No, that's premises liability.
That's a separate coverage.
Speaker 1 (29:51):
So as a broker, if I have an office, I would need
other coverages for that sort ofthing when I'm talking to
people.
Or what if I go to a pre-buyand I try to open the door and I
kind of break the door doing ashowing?
Speaker 2 (30:06):
Yeah.
So let me break down the threedifferent situations.
Oh, wow, Okay, Sorry, I didn'tmean to, Because I'm thinking
like risk manager, like hang ona second, I got to.
You know we want to make sure.
So the first one is you know,let's talk about slip and fall
coverage, right, Premisesliability.
So if you occupy an office,right, as soon as you rent that
(30:29):
office and you sign, you know,you sign the application or
whatever it is to rent an officespace the landlord's going to
require you usually to havepremises liability.
So that's a general businesscoverage for anybody in the
office.
Slips and falls Pertains toaircraft brokers, everybody.
The next one is E&O coverage foraircraft brokers, 100%.
(30:55):
You should have this if you areacting in a professional
capacity, If you're representingyourself, as you know a
professional and aircraftprofessional, that connotation
is going to come with you knowthe liability of making mistakes
and people are going to comeafter you if you don't have that
E&O coverage and you do make amistake.
(31:17):
We're all human, we all makemistakes.
It's going to, it's going tobite hard, it's going to hurt.
So that's, those are the first.
Two are the first two.
The third is you're walkingaround and you hit your head on
an aircraft or a propeller or awing or something, and there's a
couple different ways to lookat that.
(31:38):
So the primary coverage on thisis whoever owns the aircraft
owns.
That's whose insurance policythis is going it's going to.
It's going to be a liabilityand whole insurance policy based
on whoever owns the aircraft,right?
So if you're in the middle of atransaction, you have a buyer
and a seller.
The seller probably insures theaircraft up until you sign the
(32:00):
deal and the buyer becomes theaircraft owner.
But up until that point it'sgoing to go on the seller's
insurance policy.
Speaker 1 (32:08):
So if I'm showing the aircraft to a potential buyer
and by my opening the door Ibreak a mechanism on the door,
now the guy's got to pay $10,000to fix the door.
I know that first is going tobe paid for by his aircraft's
insurance for the hull.
(32:29):
The hull like what.
You know that that piece ofit's it can be.
It can be it can go throughthere.
But I imagine they're going tosubrogate and try to go after me
for having been the personresponsible for breaking the
door.
Speaker 2 (32:39):
Now yeah, I don't, I don't think so.
I mean they, they could, youknow, they could litigate,
subrogate against whoever theywant to sure um?
Speaker 1 (32:48):
is there coverage for me as a broker if I break
somebody's plane?
I guess is my question Notunder airs and emissions
insurance.
Right.
Is there any insurance thatwould cover if I break someone's
airplane?
Speaker 2 (32:58):
Yeah, yeah, but I mean it's always going to be.
The primary is always going tobe, you know, whoever owns the
aircraft.
Speaker 1 (33:05):
Sure, okay, I get that, they're getting.
That's going to okay.
Okay, gotcha, gotcha Um doesinsure.
Do we can anybody get this ENOcoverage that we're talking
about here?
Do you need to be anestablished broker or working
with the brokers, like if I justam starting?
You know, I found some randomguy on YouTube that says he can,
you know, pull back the curtainand help them buy and sell AV
and private jets no experiencefor that.
(33:26):
You know to get started.
Be a private jet experiencewithout you know to get started.
Can I just go to you, matt?
Speaker 2 (33:32):
and you hook me up with some.
You know insurance.
How's it work?
Yeah, no, that's a greatquestion.
So you know insurance, as muchas I recommend it, it's not for
everyone it's.
It's specifically designed forif you're providing a
professional service or advice,right?
So it's not for aircraftbrokers, a hundred percent.
But for you know, it doesn'tapply to everyone.
(33:52):
If you want to get an E&Oinsurance policy, you typically
need to be licensed, right?
So you're a licensed broker,you're a licensed dealer, you're
an advisor or you, or you're acharter company or you're an
aircraft manager or some type ofaviation consultant.
Basically, like, you're in arole where you make professional
(34:14):
decisions and you giveprofessional advice and if you
make a mistake, it couldfinancially harm somebody else.
So when you go to apply for E&Oinsurance, the insurance
company is going to askquestions on their application.
They're going to want to knowwhat your experience is.
(34:37):
Is this your first transaction?
Have you been doing this forfive years, 10 years?
What is your experience?
What is your history of doingthis?
They're going to want to knowwhat services you're offering,
right, um?
And they're going to want tolook at if you have contracts or
disclaimers or good riskcontrols in place.
So what are your you know ifyou're an aircraft broker, what
(34:59):
are your risk controls?
Uh, as you manage thattransaction right, do you have
you know what contracts do youhave?
Do you have you knowdisclaimers on your email?
You know what contracts do youhave?
Do you have you knowdisclaimers on your email?
You know all that, all that funstuff.
You don't have to be inbusiness like 10 years to get a
good E&O policy.
They just want to understandyour business, understand your
(35:20):
history and look at your.
You know your risk controls.
Speaker 1 (35:24):
Okay, okay, so so my disclaimers on my emails do they
?
Do they actually help me?
Speaker 2 (35:30):
Um, they help but they're not bulletproof.
So like if you in your email,if you add in like this is not
legal advice, you know you'renot an attorney, you know always
consult with an attorney orsomething Um, what it does is it
helps us set expectations foryour customers and it does
(35:52):
provide a little context ifsomething goes sideways but it
doesn't like.
Those disclaimers don'teliminate your liability right,
Especially if the client isrelying on your advice and
suffers a financial loss.
If you gave them guidance thatdirectly influenced their
decision, like how to title anaircraft, how to structure
(36:14):
ownership, whether it meets someFAA requirement, et cetera and
that guidance is wrong, youcould still be liable, whether
or not you have the that makessense, you're still there, tom.
Speaker 1 (36:39):
Sorry, did I lose you ?
I thought I lost you for asecond.
Okay, so good.
The emails do help.
I'm glad to hear that.
Well, hey, matt.
Final piece of advice foraspiring brokers and insurance
or do you just want to shout outyour website?
Tell us what you're up to andhow people can find out more
about you.
Speaker 2 (36:56):
Yeah, final piece of advice is um kind of like we
talked about in the beginningfind an insurance professional,
and specifically an aviationinsurance professional that you,
that you work, that you getalong great with, that, you can
trust and just work with onebroker, right, don't get
multiple brokers involved.
Find somebody you can trust andyou know, when you're acting as
(37:18):
an aircraft broker, you'regiving professional advice and
you want to back that up withgood working relationships on
the insurance side and on thefinancing side, et cetera, et
cetera.
Um, that that's my one piece ofadvice.
Get, find somebody you cantrust.
Um, and, and that's all I got.
Speaker 1 (37:37):
That's awesome man.
We'll definitely connect withMatt.
He is somebody that you cantrust.
Like I said, uh, jackie's anamazing, uh member of his team
and I anytime anybody asked meabout aircraft insurance.
Actually she's so good that Ilost the listing because of her.
And it was a good thing becausehe was like, if my insurance
goes up, I'm going to list thatyou can sell it.
(37:58):
If my insurance doesn't, then Istill want the plane.
And we got her involved.
I think she ended up saving theguy like $1,100 or something
like that.
So so the plane.
But that made us feel good too,because we're not in this to
steal someone's airplane fromthem and make them sell it when
they don't want to.
We want people to be involvedin aviation and it's a great
(38:19):
testament to your team and thecharacter of your team that they
want what's best for the clientat the end of the day.
So you definitely have a greatteam.
I hope more people will checkthat out.
Speaker 2 (38:29):
Appreciate it.
Thanks, Tom.
Hello and welcome.
My name is Tom Lelio.
I'm your ultimate jet guide andon this channel we pull back
the curtain on private aviation,help you buy or sell that
private jet with no experiencenecessary to get started.
Today we're talking theexciting world of aviation
insurance and you may not thinkthat it's super exciting, but it
could be very, super scary ifyou find yourself in a situation
(00:28):
where you need it but you don'thave it.
And so to talk about all ofthis, I've invited the man, the
myth, the legend.
Mr Matt White is with me todayand Matt is the guy, he's the
go-to.
He's the company owner of BWIfly, which is actually where I
get my ENO coverage from.
(00:50):
Uh, his, his, his girl, jack is, uh, is amazing.
She's a wonderful broker.
That that's helped me and shealso helps out.
She's the one I recommend toclients when it comes to hey, I
need insurance for my aircraft.
Um, matt is also a YouTuber, soif you're interested in what
he's talking about, you can getsome more Matt in your life by
(01:11):
subscribing to him on YouTube atBWIFly.
I am subscribed to my otherchannel, but I'll go ahead and
give you another sub right there.
Sorry if it's a littleembarrassing right there, but
Matt welcome to the channel man.
Speaker 2 (01:23):
Thanks for having me, tom, so excited to talk about
everybody's favorite subject inthe world aircraft insurance.
I know you guys can't wait totalk about those.
Speaker 1 (01:33):
Well, you know, it's interesting and fun to talk
about when it happens tosomebody else.
Speaker 2 (01:37):
And.
Speaker 1 (01:38):
I think that's what we're going to talk about.
It's like seeing an accident onthe road and you just have to
look and see like, wow, what didthose people do?
So that's kind of what we'regoing to talk about.
We're going to get right intosome mistakes and we're going to
gear this primarily towardsprofessionals, towards brokers,
people that are involved inaviation, not just owners,
because we've already done apodcast for owners, which you
(01:58):
can go check out on both mychannel and Matt's channel.
So today we're pulling back thecurtain for brokers when it
comes to aviation insurance.
Speaker 2 (02:07):
Awesome, absolutely Happy to get into it.
Speaker 1 (02:11):
I'll let you go.
Let you go.
We got four mistakes that we'regoing to talk about in the very
beginning.
Is that correct?
Speaker 2 (02:15):
Yep, yep, cool, let's do it.
So the first one is kind ofwhat are the main gotchas that
specifically kind of an aircraftsales broker should look out
for insurance wise?
And you know these are somepretty important points here.
But there are a few, you know,major gotchas that I want to
(02:37):
kind of go over that you want tobe aware of, especially when
you're transacting in aircraft.
Number one is pilot approval.
So if the buyer is planning tofly the aircraft themselves,
especially if it's a turbine ora jet, they may not meet the
underwriter's minimumrequirements and I've seen deals
(03:00):
fall apart at closing becausethe owner was assuming they
could be approved and we didn'tget a quote until the final hour
before the deal was closing andit's too late and the deal
falls apart.
So pilot approval is a big one.
We've got to get the pilotapproved and that happens
through insurance.
Speaker 1 (03:22):
So, okay, pilot approval.
So I own a jet in my world.
I own a jet, I'm alreadyapproved, I have insurance, I
went through you, I made sureeverything was good to go, but
now we need to relocate forclosing, or maybe we close in
Florida and the plane has to bedelivered to New York, or
something like that.
If we don't know, if we haven'thad these conversations, if we
(03:45):
haven't talked to someone likeyourself, the person picking up
the plane may not be covered.
Right, right, gotcha, okay, nowyou just said it right there.
It's a huge risk.
Is this illegal?
If you don't have insurance onan aircraft, maybe we should let
the brokers know whether or notis insurance required when it
comes to aircraft.
Speaker 2 (04:05):
Insurance is not legally required, except for two
or three states.
I think Minnesota is one ofthem, but the other 47 states do
not legally require insurance.
I think they should, but theydon't right now don't require
insurance.
So it's not illegal.
But on the insurance side, youknow, you have your approved
(04:26):
pilots and so this is.
You know, you've given yourlogbook, all the information to
your insurance broker, you gotto prove you're a named pilot on
the policy and then there's theopen pilot warranty, right?
So these are other pilots thatif they meet the underwriters
minimum qualifications, they canfly.
They don't need to be named.
(04:53):
The number one reason whyaircraft insurance claims get
denied is because somebody wasflying the airplane and they
were either not named on thepolicy or they didn't meet the
open pilot warranty.
That's the biggest reason why Isee aircraft insurance claims
get denied.
And it's so easy.
It's less of a risk with jetsand turbines, more of a risk
with your Cessna 172s, 180s.
You know, hey, let me let mybuddy go fly around, the pattern
(05:16):
, something like that.
And then something happens andthen there's no insurance
coverage.
Speaker 1 (05:21):
Would a bank or a lender require insurance for
closing sometimes?
Speaker 2 (05:26):
100%.
Yep.
If the aircraft's the aircraftfinance, they're always going to
require insurance.
They're going to require, uh,that the aircraft is insured up
to the whole value of thepurchase price, and they're
going to want to be named as anadditional, as a lien holder on
the policy and so in this casewe're going to closing.
Speaker 1 (05:43):
Maybe a buyer thought yeah, no problem, I can get
insurance.
But either they didn't get theinsurance or, like you said, the
guy that they hired to relocatethe aircraft doesn't meet the
open policy or isn't named onthere, and so now we're just
kind of stuck to the expertiseas an aircraft broker in guiding
(06:03):
your customers when they'rebuying an aircraft.
Speaker 2 (06:10):
right, if you know that the deal is going to be
financed, we're probably goingto want to get insurance
involved early.
We're going to want to get themlisted as a lien holder.
We're going to want to get thewhole value, you know, et cetera
.
If you know that the aircraft'sgoing to be ferried, we're
going to probably want to getthe pilots approved and go
through that process.
And all that comes down to yourexpertise and your expertise
working with an aircraftinsurance broker together, um to
(06:31):
make that deal successful.
Speaker 1 (06:33):
Perfect, perfect.
All right, let's go to numbertwo.
What's, what's gotcha?
Number two Gotcha.
Speaker 2 (06:37):
Number two is this is a big one.
This is, you know, aircraftsales uh, one-on-one it's there.
Probably should be a aninsurance part of it, but it's
misunderstanding how insurancequotes work.
Um, insurance, specificallyaircraft insurance carriers.
They don't want to see the sameaircraft, the same tail number,
(06:58):
submitted by five differentinsurance brokers.
Um, so this, this is a mentalchange from, like auto insurance
.
You know you shop aroundeverywhere and you know you're
you're comparing every year,you're trying to save money.
That's the complete opposite ofhow you want to, the approach
you want to take in aircraftinsurance, because there's like
(07:20):
a limited number of underwritersand hundreds of thousands of
submissions and when they getyour aircraft and pilots, but
specifically your tail number,but even your name and shirt,
when they get that from four orfive different brokers, they
will shut down and they'll stopquoting it and they'll start
declining it.
They'll start ignoring itbecause they want, they want to
(07:41):
see you with.
You know they only want to seeit one time and they want to
give it their best effort theone time they do see it.
So when an aircraft salesbroker refers a client, you know
if they refer a client to liketwo or three different brokers.
They are actually hurting theircustomer because those two or
three brokers are going to startshopping around.
Aircraft sales brokers reallyneed to find, like one, aviation
(08:06):
insurance professional andstick to it a hundred percent.
Speaker 1 (08:10):
I appreciate that Now for most.
Let me ask you this questionwhen a aircraft broker is
looking for insurance brokers,is it kind of like some
specialize in heavy, somespecialize in light, some
specialize in GA versus businessapp, or is the industry pretty
small that if you're an aviationinsurance broker you probably
(08:34):
have places to go for all typesof business?
Speaker 2 (08:38):
Yeah, that's a great question.
So it's very specialized.
So, for example, I have afriend who owns an aircraft
insurance agency and hespecializes in insuring
Comanches and Gyros.
Like two planes, comanches andGyros, that's it.
And he can quote your 172s,your 180s and he can do a decent
(09:00):
job on those, but he justreally likes to specialize in in
like two makes and models.
And so you're you're going tohave, like your smaller brokers
are way more specialized andyour larger brokers, they, they
will have people you, if they're, if they're a good larger
broker that they will haveagents that specialize in
(09:21):
different things within thatindustry.
Right, so I'll have somebodythat specializes in jets and
turbines, another one, I meancommercial.
You know part 135 and part 91.
And like we have people at BWIthat just specialize in Alaska,
we have an office in Alaska andthat's all they do is aircraft
in Alaska.
It's a completely differentthing and, yes, it's very unique
(09:44):
and specialized.
So me saying, you got to findone broker that you know that
you can trust, but then they allspecialize in different things.
It's hard, um, but youdefinitely don't want to go find
three or four and have them allshopping at the same time.
That's, that is a recipe fordisaster right there no, I I
(10:05):
understand.
Speaker 1 (10:06):
I appreciate that.
Cool, all right.
Wow, moving right along.
What uh gotcha?
Speaker 2 (10:09):
number three okay gotcha number three part 135
usage or future charter plans.
This is a big one, especiallywhen you're trying to offset the
cost of buying a jet.
Um, if, if one of your buyersthinks that they're going to put
the jet on a chartercertificate down the line, they
should bring that up to you.
Now, right, they need to letyou know during the sales
(10:31):
process, because part 135policies insurance policies
structured totally differentthan like part 91 or pleasure in
business or anything like that.
It's, it's a completelydifferent type of insurance
policy.
Business or anything like that,it's a completely different
type of insurance policy and youcan't change the usage.
Right, you can't bind apleasure in business policy or
(10:52):
part 91 policy and then, likesix months later, say, hey,
we're going to convert this toallow for 135 use.
No-transcript.
Speaker 1 (11:29):
Now if they're thinking about it, but it's more
just like.
You know, I had a buddy thatyou know said I should do this
one time and maybe in like five.
And they're not like superserious, like that's one thing,
but like if you ask them pointblank, like hey, what's the plan
?
And they're like, oh, you know,I'm probably going to buy it
and then I'm going to put it ona one 35.
That's a whole differentscenario, right, totally
(11:51):
different, yeah.
Speaker 2 (11:52):
Different insurance policy, different underwriting,
different questions.
Everything's different.
Speaker 1 (11:58):
Yeah, it's people.
It's not like Airbnb.
Jets are not like an Airbnbwhere you can just kind of throw
the same you know policy on to,or the same financing, or the
same whatever you know,understanding part 91, part 135.
Um, it's why working with aprofessional broker lenders is
(12:18):
super important.
Okay, cool.
Speaker 2 (12:20):
I like it.
Yeah, let me ask you a questionhow many of your customers do
you think plan to rent out, youknow, or charter out a jet that
they purchased, like?
What's the percentage of that?
Speaker 1 (12:33):
Of the phone calls that I get and people just
shopping, and how many of thoseactually will bring that up?
I'd say probably about 30%.
You know, we'll say the reasonI'm shopping is because I'm
thinking of you know doing thisthing, but of you know that's a
very small number when it comesdown to like who actually closes
like out of my closings,probably 10 of them like one out
(12:58):
of 10 you know end up puttingit on a 135.
So it's, it's, it's, but it'simportant, like you said, to
have those conversations upfront.
That way you can guideeverybody along the way and not
waste time and really educatethem.
It's like okay, are you sureyou want to do this Right?
Is there a big jump ininsurance premiums from a 135
(13:21):
versus a part 91?
Speaker 2 (13:23):
A% Way more exposure for the insurance companies.
You know insurance policies arealways written on like how much
risk is it right?
How much exposure do they haveout there on the policy?
And when you have you know theaircraft doing different things,
especially like a 135 versus a91, the exposure level increases
and therefore the premium isalso going to increase.
(13:45):
Is it like?
Speaker 1 (13:47):
or triple, or 10 times.
Speaker 2 (13:49):
I would say it's like 120 to 150 percent more.
And you know, it all depends,depends on the usage, depends on
the routes where we're flying,how many people, how many
passengers, liability.
You know all the value of theaircraft, all that stuff yeah,
but if you?
Speaker 1 (14:08):
but then I mean worst case scenario again we, you try
to do 134 and a half right, youdon't insure correctly and you
saved yourself, you know 120percent, you know for a couple
of years, but now all of asudden you have a catastrophic
loss.
Not only do you have the wholevalue if you're chartering your,
your plane's at least worth amillion dollars, um, but God
(14:30):
forbid any, any lives wereimpacted, you know.
As a result, I mean, thenyou're, you're, you're just
completely sunk, all to save acouple thousand dollars, right.
Speaker 2 (14:39):
You're putting your whole business and, if you're
the business owner, yourlivelihood in jeopardy at risk
if you don't have.
If you don't have a policy andif the policy is not written
correctly which is probably thesecond or third biggest reason
why claims are denied inaircraft insurance is that the
policy is not written correctly.
(14:59):
But that's a different, that'sfor another day.
Speaker 1 (15:03):
Great, I got a couple more gotchas.
What else you got, matt?
Okay.
Speaker 2 (15:06):
My last one is lien holder and breach of warranty
language.
And I see this so many timesyou know, probably two or 300
times in the last 12 months.
But if the aircraft we talkedabout this earlier but if the
aircraft is going to be financed, the insurance policy has to
reflect that perfectly right.
(15:27):
It's got to have the correctlender name, the endorsements.
Breach of warranty language anylittle mistakes here can delay
funding for the aircraft and itcan leave the lender exposed.
So you got to make sure youknow.
That's why in the process, asprofessionals, we have to ask
(15:50):
these extra questions.
You're buying an aircraft,that's why.
That's why you know you're theprofessional buying aircraft.
And then you work with aprofessional who does aircraft
insurance.
These are the questions we ask.
We try and get the informationout of like from the beginning
of the of the whole processeither buying or selling an
airplane or getting insurance.
You gotta, you gotta go throughthese questions and a lot of
(16:12):
times, aircraft owners.
You know they, they, they don'twant to give, they don't want
to answer these questions.
And again, you know it kind ofhinders us from being able to
write the policy correctly anddo our job.
But this is a big one.
You've got to get the leanwhole, or breach of warranty
language.
Speaker 1 (16:30):
And I think this is the benefit of working with
multiple professionals, so thatif I have a level of trust with
the owner and you have a levelof trust, we can say like, hey,
listen, you can come back to meand be like hey, tom, this is
the answers I got.
I really need you to make surethat these are accurate and it's
fleshed out enough, because Iwant to make sure he's covered.
(16:51):
Now I can go back to the ownerand be like, hey, listen, I know
you might be worried aboutsaying something that's going to
impact you negatively or giveyou higher premiums or something
like that, but we need thisinformation X, y, y and z to
make sure we fill it outappropriately and so you can
kind of tag team it to make sure, at the end of the day, you
know it's at the owner's uh, theclient's, best interest.
We're not just trying to shopfor higher premiums like we see
(17:14):
stuff happening 100.
Do you mind sharing, uh and Iknow we will come back to kind
of explain coverages and gaps incoverage and all that kind of
stuff but do you mind sharingmaybe some of some stories or
examples where you've seen thesegotchas happen in real life and
what was the?
What was the result of some ofthese mistakes that people have
(17:37):
made?
Speaker 2 (17:38):
Yeah, yeah, 100 percent.
So you know, a lot of thesemistakes or gotchas aren't, you
know, realized until there's anaccident or a claim.
And then it's like, oh, wedidn't do that, oh, we didn't
add this, oh the policy doesn'treflect that, and now it's a big
problem, right, and that's like.
(17:58):
That's the whole reason.
Like, I get excited aboutinsurance.
I know insurance.
Everybody, you know, seems tohate insurance.
But you know, and I totallyunderstand it, but when, like,
we can write something correctly, and then when there is an
accident and you have insuranceand we're like, nope, we're
there, you're covered a hundredpercent, that's the whole reason
people buy insurance, right,and any of those mistakes that
(18:22):
cause, you know, there to be alapse in coverage or, you know,
for the claim to get denied,that's, that's the kind of stuff
that that no aircraft ownerwants to go through, but you
don't know that until itactually happens.
Speaker 1 (18:36):
That.
That must be a good feelingwhen you know you write the
policy, you know obviously youget the premium, you get a
commission, like that's a greatfeeling.
But you know it's.
It's yucky when someone callsyou and says, hey man, I had a
claim and here's what's going on.
But it must be a really coolfeeling after that call when you
go back to the policy and youtake a look and be like, yeah,
you are covered, you know,because you did your job.
(18:58):
You can go back to the ownerand say, hey, listen, look, I
did my job and yes, you arecovered, and get them.
You know what they deserve inthat time of an accident.
That must be kind of a coolfeeling.
Speaker 2 (19:10):
It is.
And it's like you know,insurance is a scam until you
need it, until it pays.
You know, for your $1.2 millionbrand new Cirrus SR 22, right,
cause you, you know you had anaccident and a lot of accidents
SR 22, right Cause you.
You know you had an accidentand a lot of accidents.
They're not avoidable, you know, like some a good majority are,
(19:30):
but some accidents, like youcouldn't have avoided that flock
of geese.
You know, like there's there'sa lot that happens that's
outside of your control, and soyou know, if you don't have an
insurance policy just in casesomething like that happens, you
know it's, it's, it's never.
You know it's an ego hit.
Of course, whenever you ground,loop it or something, you know
(19:52):
you're feeling bad.
I should have landed thatbetter, I should have done
different, and it's like adouble whammy when you go and
you're like, and now I alsodon't have insurance coverage,
like you feel devastated.
That's not something we want,you know.
And so one of the things we doat BWI specifically, so we have
about 150 to 170 airplanecrashes or claims a year, so
(20:15):
about one every other day isreported to us by our customers
and most of these are, like youknow, prop strike, ground, loop,
hangar, rash, right, you knowthese are not all fatalities and
the thing we do is, because weknow how important insurance is,
we want to be there on theother side especially, like
that's the whole reason ofinsurance.
(20:36):
What we do is we have a reviewprocess that the agent has to go
through before they canactivate a policy.
It's called the bind review.
It's like a step-by-stepprocess, verifies everything,
the name, pilots, open pilot,work, like everything on our
side, and then, after we boundthe policy, there's a separate
third party we review our adminteam does.
(20:57):
It called the policy review andagain it's a third party set of
eyes reviewing the policymatches, the quote, matches, our
system, line by line by line,all the way down to make sure
it's perfect.
Because, like I said, we dohave people.
Every other day somebody turnsa loss into us and we've never
(21:18):
had somebody where we're likethere's no coverage.
That's not a position we'llever want to be in.
Speaker 1 (21:25):
That's not.
That's not a position that I'llever want to be in.
Huh, that's huge.
That's I don't.
Well, let's talk about thisthen.
What does the claim statusactually look like from a
broker's perspective?
So, you know, just walkingsomebody through, like what is
the claim status?
Is it pretty much, like youknow, know, a geico claim where
I just go on my app and I clickon it or how does that kind of
(21:45):
work?
And yeah, like what is theclaims?
Like reporting the claim, butthen, like what's the average on
, like how long it takes for itto get worked out?
Do they just send a check?
Do they bring anybody out toconfirm, like what's going on?
Yeah, I'm kind of curious.
I think it's a little bitdifferent than like a car or a
(22:05):
home or an auto claim.
Speaker 2 (22:07):
Right, yeah, I can be happy to walk through that.
So a couple of things.
So, first of all, you know youhave an accident and you know a
lot of times aircrafts, the endof the runway, and now what do
we do?
Right, and the steps is numberone, of course, passenger
security and safety first, takecare of the passengers, make
sure medically.
You course, passenger securityand safety first, take care of
the passengers, make suremedically.
You know that's always thefirst priority, first concern
(22:29):
Get everybody out of theairplane, get them safe, Get
them off the runway.
The second thing, the secondstep this is before you even
talk to me or your insurancebroker.
The second step isdocumentation.
So if you can take pictures ofthe accident, the wreckage, the
aircraft, any pictures, anythinglike that, that's step number
two.
And then the third step, afterthose two, is to get your broker
(22:55):
involved and let them know, andso there's a lot of different
ways you can call us.
You can go online and submit aclaim report and we have a
process where this is monitored24-7, 24-7, 365.
So you're going to get aresponse from us, no matter what
time you submit it you knowholidays, weekends, all that
(23:16):
stuff.
When we get the response, thefirst thing is we want to
collect as much data.
What happened?
Who was flying, time of day,what is the damage?
What is the estimate?
Do we think it's just a bentrudder?
Do we need to rebuild theengine?
Was it a prop strike?
We want to know as muchinformation as we can.
(23:36):
The minimum is just like anaccident happened phone number,
tail number.
You know somebody to contact,somebody for us to get back to.
We don't, after we collect thisdata, we don't turn it into the
insurance company right away.
We look, we look at the dataand we look at the accident and
we pull up your file and yourpolicy and your quote and we're
(23:58):
going to do a quick five minutereview.
So so we're going to look atthe whole situation.
This is where we, you know ourexpertise is as your aviation
insurance risk manager.
This is where the expertisereally comes in.
So we're going to look at yourfile and we're going to say,
okay, what do we think?
You know the severity of thedamages, what do we just
ballpark estimate, how much isit going to cost to repair the
(24:19):
aircraft?
And then we're going to look atyour file and we're going to
come back if we can and we'regoing to advise you whether to
proceed or not.
It's not an automatic thing thatevery claim gets turned in.
It's hey, you know, this issome hanger rash.
It might cost you $3,000 to$5,000 to repair this if our
(24:39):
customer paid for it on his own.
But then they're not going tohave a claim on their record and
they're turning let.
But then they're not going tohave a claim on their record and
they're turning.
Let's say they're 68, they'returning 70 in two years with a
claim on their record.
They won't, you know, be ableto get insurance and so it's
probably worth, like it's ajudgment call.
It's us advising If, if one ofour customers wants to turn a
(24:59):
claim in, a hundred percentwe'll turn it.
But this is our opportunity toadvise our customers.
Hey, this is the best course.
This is what we've seen happenin a similar situation when you
turn a claim in.
Here's how it plays out.
And we might get told hey, Ijust can't afford that.
We got to turn it in.
(25:20):
Great, we'll turn the claim inand that's we report it Once
they get.
They get the report, they turnit over to an adjuster and the
adjuster, like once we turn tothe company company, turns it to
get, handles it to, hands it toan adjuster and then the
adjuster gets in contact withthe aircraft owner and they
(25:41):
start working through the wholeclaims process.
Right, send me a copy of yourlogbook.
Send me a copy of the pictureof the aircraft, the accident,
the incident, whatever.
Usually they're going to ask dothey have a repair shop in mind
that is local, that can startgetting estimates?
I want to get estimates of therepair.
The adjuster's job is to analyzethe situation and sometimes
(26:05):
they will go out to accidentssites and look at aircraft.
They can fly around and get toaccident sites, depending on
severity and everything thathappened, but their job is to
work with the aircraft owner andget the aircraft owner whole
again and, if the aircraft canbe repaired, get the aircraft
owner whole again.
And if the aircraft can berepaired, let's get it repaired?
(26:26):
If it can't be repaired, howcan we get that check out to
them as soon as possible?
So all the communication oncewe turn into the insurance
company happens between theaircraft owner and the insurance
company's adjuster and if thereare any issues between the two
of them, our customers canalways reach out to us and we
can get involved.
We can talk to the insurancecompany and get involved as well
(26:48):
.
Speaker 1 (26:49):
That's huge.
No, I appreciate that, becausejust giving brokers an overview
of what the claims process lookslike I think is important for
them to know and to realize that, like you said, you know,
having a insurance broker ontheir side can help save them
from.
You know broker on their sidecan help save them from inflated
premiums or difficulty gettingcoverage in the future or how
other people have handled it.
(27:09):
That's really key.
I know we're kind of runningout of time a little bit, but
I'd love to just kind of getinto the brokerage side.
As far as E&O insurance or whatkind of coverage do you think
jet brokers need to protectthemselves in this wild west
that we call private aviation?
Speaker 2 (27:24):
Yeah, absolutely so.
I'd love to break that down.
So a couple of points here.
There's kind of three maincoverages in aircraft insurance,
just so everybody knows.
Number one whole coverage.
Right, this is physical damageto the aircraft.
Usually aircraft insurancedifferent than car insurance
it's written on agreed value,right?
Car insurance is likedepreciation and all that.
(27:45):
Aircraft insurance is, like youknow, my service is worth 1.2
million.
It's insured for that Ifthere's a total loss.
Here's a check for 1.2 million,less than deductibles, right?
So number one whole coverage.
Different than auto insurance,aircraft insurance is a greed
value.
Second coverage liabilitycoverage.
(28:05):
Right, this protects theaircraft owner from bodily
injury, property damage that iscaused as a result of the
operation of the aircraft, right?
So, passengers, people on theground, damage to other aircraft
, etc.
And this is typically offereddepending on the aircraft.
(28:26):
You know, for your singleengine land aircraft, a million
dollars per occurrence is thetypical coverage limit here and
that's limited to 100,000 perpassenger, you know.
And of course, turbines, jets,all that.
You can go up to 10, 50, 100million in liability coverage.
So the second coverage isliability.
(28:46):
And then the third is errorsand omission.
This is more so we're talkingabout errors and omissions
coverage for brokers, managementcompanies and part 135
operators.
And so errors and omissions,when you think about it, like
writ large it coversprofessional mistakes, right,
(29:08):
writ large it coversprofessional mistakes, right.
So like you give incorrectadvice or you missed a deadline
and it caused financial loss.
So when you're advising, youknow your aircraft buyers or
you're managing their aircraftand if you make a paperwork or
regulatory mistake, e&o protectsyou, protects you
professionally Right.
(29:28):
And that's what E&O coverageyou know in a nutshell does and
you know I definitely recommendit for aircraft brokers.
Speaker 1 (29:39):
And is that the same coverage?
So if I get E&O and someonecomes to my office and they slip
and fall in the hangar in myoffice like, does the E&O cover
that as well?
Speaker 2 (29:47):
No, that's premises liability.
That's a separate coverage.
Speaker 1 (29:51):
So as a broker, if I have an office, I would need
other coverages for that sort ofthing when I'm talking to
people.
Or what if I go to a pre-buyand I try to open the door and I
kind of break the door doing ashowing?
Speaker 2 (30:06):
Yeah.
So let me break down the threedifferent situations.
Oh, wow, Okay, Sorry, I didn'tmean to, Because I'm thinking
like risk manager, like hang ona second, I got to.
You know we want to make sure.
So the first one is you know,let's talk about slip and fall
coverage, right, Premisesliability.
So if you occupy an office,right, as soon as you rent that
(30:29):
office and you sign, you know,you sign the application or
whatever it is to rent an officespace the landlord's going to
require you usually to havepremises liability.
So that's a general businesscoverage for anybody in the
office.
Slips and falls Pertains toaircraft brokers, everybody.
The next one is E&O coverage foraircraft brokers, 100%.
(30:55):
You should have this if you areacting in a professional
capacity, If you're representingyourself, as you know a
professional and aircraftprofessional, that connotation
is going to come with you knowthe liability of making mistakes
and people are going to comeafter you if you don't have that
E&O coverage and you do make amistake.
(31:17):
We're all human, we all makemistakes.
It's going to, it's going tobite hard, it's going to hurt.
So that's, those are the first.
Two are the first two.
The third is you're walkingaround and you hit your head on
an aircraft or a propeller or awing or something, and there's a
couple different ways to lookat that.
(31:38):
So the primary coverage on thisis whoever owns the aircraft
owns.
That's whose insurance policythis is going it's going to.
It's going to be a liabilityand whole insurance policy based
on whoever owns the aircraft,right?
So if you're in the middle of atransaction, you have a buyer
and a seller.
The seller probably insures theaircraft up until you sign the
(32:00):
deal and the buyer becomes theaircraft owner.
But up until that point it'sgoing to go on the seller's
insurance policy.
Speaker 1 (32:08):
So if I'm showing the aircraft to a potential buyer
and by my opening the door Ibreak a mechanism on the door,
now the guy's got to pay $10,000to fix the door.
I know that first is going tobe paid for by his aircraft's
insurance for the hull.
(32:29):
The hull like what.
You know that that piece ofit's it can be.
It can be it can go throughthere.
But I imagine they're going tosubrogate and try to go after me
for having been the personresponsible for breaking the
door.
Speaker 2 (32:39):
Now yeah, I don't, I don't think so.
I mean they, they could, youknow, they could litigate,
subrogate against whoever theywant to sure um?
Speaker 1 (32:48):
is there coverage for me as a broker if I break
somebody's plane?
I guess is my question Notunder airs and emissions
insurance.
Right.
Is there any insurance thatwould cover if I break someone's
airplane?
Speaker 2 (32:58):
Yeah, yeah, but I mean it's always going to be.
The primary is always going tobe, you know, whoever owns the
aircraft.
Speaker 1 (33:05):
Sure, okay, I get that, they're getting.
That's going to okay.
Okay, gotcha, gotcha Um doesinsure.
Do we can anybody get this ENOcoverage that we're talking
about here?
Do you need to be anestablished broker or working
with the brokers, like if I justam starting?
You know, I found some randomguy on YouTube that says he can,
you know, pull back the curtainand help them buy and sell AV
and private jets no experiencefor that.
(33:26):
You know to get started.
Be a private jet experiencewithout you know to get started.
Can I just go to you, matt?
Speaker 2 (33:32):
and you hook me up with some.
You know insurance.
How's it work?
Yeah, no, that's a greatquestion.
So you know insurance, as muchas I recommend it, it's not for
everyone it's.
It's specifically designed forif you're providing a
professional service or advice,right?
So it's not for aircraftbrokers, a hundred percent.
But for you know, it doesn'tapply to everyone.
(33:52):
If you want to get an E&Oinsurance policy, you typically
need to be licensed, right?
So you're a licensed broker,you're a licensed dealer, you're
an advisor or you, or you're acharter company or you're an
aircraft manager or some type ofaviation consultant.
Basically, like, you're in arole where you make professional
(34:14):
decisions and you giveprofessional advice and if you
make a mistake, it couldfinancially harm somebody else.
So when you go to apply for E&Oinsurance, the insurance
company is going to askquestions on their application.
They're going to want to knowwhat your experience is.
(34:37):
Is this your first transaction?
Have you been doing this forfive years, 10 years?
What is your experience?
What is your history of doingthis?
They're going to want to knowwhat services you're offering,
right, um?
And they're going to want tolook at if you have contracts or
disclaimers or good riskcontrols in place.
So what are your you know ifyou're an aircraft broker, what
(34:59):
are your risk controls?
Uh, as you manage thattransaction right, do you have
you know what contracts do youhave?
Do you have you knowdisclaimers on your email?
You know what contracts do youhave?
Do you have you knowdisclaimers on your email?
You know all that, all that funstuff.
You don't have to be inbusiness like 10 years to get a
good E&O policy.
They just want to understandyour business, understand your
(35:20):
history and look at your.
You know your risk controls.
Speaker 1 (35:24):
Okay, okay, so so my disclaimers on my emails do they
?
Do they actually help me?
Speaker 2 (35:30):
Um, they help but they're not bulletproof.
So like if you in your email,if you add in like this is not
legal advice, you know you'renot an attorney, you know always
consult with an attorney orsomething Um, what it does is it
helps us set expectations foryour customers and it does
(35:52):
provide a little context ifsomething goes sideways but it
doesn't like.
Those disclaimers don'teliminate your liability right,
Especially if the client isrelying on your advice and
suffers a financial loss.
If you gave them guidance thatdirectly influenced their
decision, like how to title anaircraft, how to structure
(36:14):
ownership, whether it meets someFAA requirement, et cetera and
that guidance is wrong, youcould still be liable, whether
or not you have the that makessense, you're still there, tom.
Speaker 1 (36:39):
Sorry, did I lose you ?
I thought I lost you for asecond.
Okay, so good.
The emails do help.
I'm glad to hear that.
Well, hey, matt.
Final piece of advice foraspiring brokers and insurance
or do you just want to shout outyour website?
Tell us what you're up to andhow people can find out more
about you.
Speaker 2 (36:56):
Yeah, final piece of advice is um kind of like we
talked about in the beginningfind an insurance professional,
and specifically an aviationinsurance professional that you,
that you work, that you getalong great with, that, you can
trust and just work with onebroker, right, don't get
multiple brokers involved.
Find somebody you can trust andyou know, when you're acting as
(37:18):
an aircraft broker, you'regiving professional advice and
you want to back that up withgood working relationships on
the insurance side and on thefinancing side, et cetera, et
cetera.
Um, that that's my one piece ofadvice.
Get, find somebody you cantrust.
Um, and, and that's all I got.
Speaker 1 (37:37):
That's awesome man.
We'll definitely connect withMatt.
He is somebody that you cantrust.
Like I said, uh, jackie's anamazing, uh member of his team
and I anytime anybody asked meabout aircraft insurance.
Actually she's so good that Ilost the listing because of her.
And it was a good thing becausehe was like, if my insurance
goes up, I'm going to list thatyou can sell it.
(37:58):
If my insurance doesn't, then Istill want the plane.
And we got her involved.
I think she ended up saving theguy like $1,100 or something
like that.
So so the plane.
But that made us feel good too,because we're not in this to
steal someone's airplane fromthem and make them sell it when
they don't want to.
We want people to be involvedin aviation and it's a great
(38:19):
testament to your team and thecharacter of your team that they
want what's best for the clientat the end of the day.
So you definitely have a greatteam.
I hope more people will checkthat out.
Speaker 2 (38:29):
Appreciate it.
Thanks, Tom.
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