If you've filed a claim and walked away with less than expected, there's a good chance the issue started before any accident happened. It started with how you valued your aircraft on the policy.
Agreed value and actual cash value are two different payout structures. Most owners know they need coverage. Fewer know which type they actually have or what it means when something goes wrong.
Agreed value
An agreed value policy locks in a specific number upfront. If the aircraft is totaled, you get that amount with no depreciation deducted. This is the most common structure in general aviation hull policies and works in your favor when you set it correctly.
Actual cash value
Actual cash value policies pay based on what the aircraft was worth at the time of loss, minus depreciation. On an aging aircraft, that number can be substantially lower than what you paid or what it would cost to replace. Less common in aviation, but worth asking your broker about if you're unsure which type you have.
The agreed value trap
Even with an agreed value policy, you can end up in a bad spot by setting the hull value too low. Some owners do this to reduce premiums. Aviation policies typically total an aircraft when repair costs reach 75 to 80 percent of the insured value. If you insured for $80,000 but the aircraft would sell for $120,000, a $65,000 repair estimate could trigger a total loss payout of $80,000. You lose $40,000 in value and the insurer takes possession. Underinsuring transfers risk back to you at the worst moment.
Setting the value too high doesn't help either. Most policies cap payouts at actual market value regardless of the agreed amount. Use current market data and talk to your broker before setting the number at renewal.
Pilot warranty
Your policy spells out who can fly the aircraft under coverage. If a pilot who doesn't meet the policy minimums has an accident, the insurer may deny the claim. If your flying situation has changed since you bought the policy, update it before anyone else gets in the seat.
What to check before renewal
Confirm whether you have agreed value or actual cash value coverage. Check that your hull amount still reflects current market value. Aircraft prices shift, and a number from two years ago may be off. Verify every pilot named on your policy meets the minimum hour requirements listed in the pilot warranty section.
Most owners focus on the lowest premium. That's a different question from whether the policy makes you whole after a loss. For aircraft insurance built for GA owners, whether you fly a single-engine or multi-engine aircraft, get a quote at skywatch.ai.
Frequently asked questions
Is agreed value standard for aircraft insurance?
It's the most common structure in general aviation hull policies. Confirm which type you have by checking your declarations page or asking your broker directly.
What happens if I set my agreed value too low?
If repair costs push the claim into total loss territory and your agreed value is below market value, you receive the agreed amount and the insurer takes the aircraft. You won't recover the difference.
Can I insure for more than the aircraft is worth to get a bigger payout?
No. Most policies cap payouts at replacement cost or market value regardless of the agreed amount. You'd pay higher premiums with no additional recovery in a claim.
How often should I update my hull value?
Review it at every renewal. Used aircraft markets move, and a value from two years ago may no longer reflect what it would cost to replace your aircraft.
What if someone else damages my aircraft while it's parked?
Hull coverage applies regardless of fault. Your insurer pays and typically pursues the responsible party through subrogation. Liability-only policies don't cover damage to your own aircraft, which is one of the main reasons hull coverage matters even if you're a careful pilot.
