Dennis Jankelow

When insuring your aircraft it is vital that you make your broker aware of all “material” information relating to the risk to be insured. Failure to disclose material information can provide Insurer with grounds to deny claims, even if the loss itself was unrelated. The question then is, what is “material” information and will it really impact your insurance premiums?

“Material” information has got nothing to do with the fabric covering the seats in your aircraft! “Material” information is any information which would affect a reasonable Insurer’s assessment of the risk in terms of premium or conditions to be imposed or, indeed, the decision whether to offer a policy at all.

Material information certainly can affect the premium to be charged. However, to withhold material information in order to keep the premium low would be really stupid, as you may end up with no insurance at all.

The “materiality” of information can vary from risk to risk or even Insurer to Insurer, particularly where the insurance is placed offshore, in the Lloyd’s market for example. Overseas you have insurance underwriters who do not necessarily have first-hand knowledge or experience of Africa, particularly those areas that are considered to be “hot” zones and which are often viewed negatively by underwriters owing to the efforts of the world press.

So what sort of information is “material”?

Information regarding regular flight schedules can be material, especially if you are continually visiting a politically “unstable” area. Insurers may require details of the security measures taken in such areas, time spent on the ground or overnight, etc., so it is as well to offer that additional information before it is asked for.
The hourly utilisation of the aircraft. If the average for a Kingair is, say, 500 hours/annum but yours flies 1500 hours, most Insurers would consider that to be extremely material. Conversely, a very low utilisation may give your broker the opportunity to negotiate a lower rate, increased No Claims Bonus, etc.
The types of landing strips used. A Cessna 206 is expected to operate into unimproved landing areas….but a Citation V?! Better let the Insurers know about that private landing strip, rather than let them believe your beautiful jet only visits international airports.
The accident history of the owner, operator(s) and any named pilots. At least three year’s worth should be given, but many Insurers will require 5 years. Don’t guess. If you don’t know, you need to find out.
Pilot experience. The full experience of all named pilots should be provided i.e. total time, hours on type, ratings held, instrument rating, special training undertaken and, of course, a full disclose of incidents, accidents and violations.
The areas of operation of the aircraft. Where will it go and how often, etc.
Purposes of use. Exactly what your aircraft is to be used for and by whom. Disclose everything.
Any other information you feel should be disclosed. Put yourselves in the insurance underwriter’s shoes and ask yourself whether there is anything that you feel would negatively affect his judgement of your risk. If there is, disclose it and trust your broker to still negotiate the best possible deal for you.

Having dealt with what’s material, any other positive information should also be volunteered. The more information underwriters have presented to them the better they can visualise your risk. The more your broker can bring your particular risk “alive”, the better the terms you are going to achieve. Try providing a picture of your beautiful aircraft, or the spotless hangar you keep her in, and you will be improving your broker’s chances of getting a great quote for you. However, don’t cheat: provide a picture of SAA’s hangar at JIA and pass it off as your own and you will stand accused of deliberate misrepresentation and that is as foolhardy as withholding material information.