Posted by: Tom Chappell | February 4, 2010

20 Questions

I contacted a broker for an insurance quote on my airplane.  I supplied him with all the appropriate information about my pilot experience and the specifics on the airplane, but he is asking about my current insurance policy’s expiration date and who the current insurer is.  Why does he need this information?  Why can’t he just get me a quote?

The answer to that question is fairly simple; your new insurance broker asks questions – any questions – for two reasons:

  1. He is trying to better understand your situation in order to make determinations on the types of coverage that you might want or need.
  2. He is gathering information that underwriters request in order to quote.

There are several reasons that an insurance underwriter will need information about your current insurance situation:

Insurance policies are written as annual contracts.  Insurers will only accept new business at its renewal / expiration date and will quote it, generally, 60 to 90 prior to that date.

The current market placement is part of the underwriting of a risk. The market where the current coverage is placed tells a competing underwriter a lot about the risk, based on the known appetite of the expiring insurer.  Each underwriter also knows from experience if he is able to offer a competitive quote against the market where it is currently insured.

Expiration dates help prioritize the underwriting workload. Underwriters can receive hundreds of quote requests each day.  A soon-to-expire policy will take priority over one that is still months away.

It is best to be open and forthcoming with all the facts when shopping for insurance terms.  Brokers can’t do a good job if the aircraft owner withholds or selectively parses out limited information.  Underwriters are less enthusiastic about quoting risks when presented with limited or incomplete information.

The more complete of a picture that your broker can paint about your risk, the better the response will be from all underwriting markets.

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