What every prospective aircraft owner should know about insurance. It behooves the pilot considering an aircraft purchase to become familiar with the legal ramifications of aircraft insurance.
Insurance is a form of economic self-protection and is available in two different forms.
Hull insurance protects your investment in your airplane from damage or loss. Liability insurance protects you in the event that your aircraft does damage to other people or their property. While no legal obligation to carry hull insurance exists, you will probably be required to obtain it by the lending institution that holds the note on your airplane. If you pay cash for your airplane, or when you pay off the loan, the decision whether to carry hull insurance is yours. If you do not carry insurance and are involved in an accident or incident in a state that requires it, your aircraft may be seized.