Buying or Selling? Here’s What Happens to Your Aircraft Insurance Policy

Whether you’re upgrading to a faster aircraft, selling your current plane, or buying your first, there’s a critical detail many owners forget:

Insurance doesn’t transfer with ownership.

It’s a simple but costly assumption. One that can leave both buyers and sellers exposed, and one we see every single month.

In this post, we’ll break down what happens to your insurance policy when an aircraft changes hands, what to do before, during, and after the sale, and how to ensure coverage is never missed.

Why Aircraft Insurance Doesn’t Transfer

Aircraft insurance is tied to the named insured on the policy. That means the person or entity listed on the declarations page.

When you sell your aircraft, that policy no longer applies to the new owner.

Why?

The risk profile has changed (new pilot, experience level, flying habits)
The aircraft may be relocated or stored differently
Liability cannot be assigned to someone not named on the policy

That’s why every aircraft transaction should include a clean handoff of insurance responsibility.

If You’re the Seller:

1. Cancel Your Policy the Day Ownership Transfers

Once the bill of sale is signed and the aircraft is delivered, you’re no longer legally responsible.

Call your broker to cancel the policy as of that date. Don’t wait. You may be eligible for a pro-rated refund.

2. Get Written Confirmation from the Buyer

Make sure the buyer has bound a policy before they take possession. If they taxi away uninsured and something happens, you could be dragged into litigation.

3. Remove Any Financing Language

If your old policy listed a lienholder or financier, ensure it’s cleared before cancellation so your records stay clean.

If You’re the Buyer:

1. Get a Quote Early

Start the quote process as soon as you go under contract. It often takes 24–72 hours to quote, bind, and issue.

2. Bind Your Policy to Start on the Delivery Date

Your coverage should go live the day you take possession, whether or not you fly it immediately.

3. Confirm Any Training Requirements

Especially if you’re new to the aircraft type, underwriters may require transition training before the policy is valid in-flight.

4. Don’t Assume the Seller’s Policy Applies

Even if the seller says you’re “good to go,” you’re not. Their policy is invalid once the aircraft changes hands.

Special Considerations for Brokers and Dealers

If you’re an aircraft dealer, broker, or part of a shared ownership agreement, policies can be written to reflect multiple owners or short-term coverage.

But these policies require advance planning and customization. Talk to an aviation-specific broker who understands these use cases.

Real-World Example: The $85,000 Ferry Flight Mistake

A buyer took delivery of a high-performance Mooney and planned to ferry it home across state lines.

He assumed he was covered under the seller’s policy and didn’t get his own coverage in place.

En route, a gear-up landing led to substantial damage. The claim was denied.

Total cost to the new owner: $85,000.

If he had bound a policy before the flight, he would have paid less than $2,500 annually for full coverage.

How BWI Helps You Transition Coverage Smoothly

At BWI, we handle hundreds of policy transitions every year. We know what to ask, when to time policies, and how to coordinate coverage between both parties.

We help: