When it comes to insuring your aircraft, one of the most important decisions you’ll make has nothing to do with your flying hours, the policy limits, or the broker you work with.
It’s this: What’s your aircraft worth?
At BWI, we don’t assign that number. We don’t tell you what we think your aircraft is worth.
That’s your call, because you, the aircraft owner, know your aircraft better than anyone.
What we do is help you understand how aircraft insurance works behind the scenes, especially when it comes to “agreed value,” a term that can have a massive impact in the event of a claim.
In this article, we’ll break down what agreed value really means, how it affects your policy, the risks of underinsuring, and how to make sure your aircraft is protected the right way.
What Does “Agreed Value” Actually Mean?
Unlike auto insurance or some types of homeowners insurance where a vehicle or asset is depreciated over time, aircraft insurance is based on an “agreed value” model.
Here’s how it works:
- You tell us what you believe your aircraft is worth, typically the amount it would take to replace it with a similar aircraft in similar condition.
- We present that value to the insurance marketplace on your behalf.
- If an underwriter offers a quote, they are essentially saying, “We agree with the owner that this is a fair valuation of the aircraft.”
Once your policy is in force, that agreed value becomes the amount that would be paid to you in the event of a total loss, minus any applicable deductible.
It’s clear. It’s simple. It’s locked in.
Why Agreed Value Is a Big Deal
Here’s why this matters.
If your aircraft is ever destroyed or totaled, whether from an accident, fire, theft, or weather event, you’re not going to have to fight with the insurance company to prove what it was worth.
You’re not going to be stuck with a “market value” or be subject to depreciation tables.
You’ll get a check for the full agreed value. This gives you financial certainty, faster claims processing, and less stress during a loss.
But there’s a flip side.
The Hidden Danger of Underinsuring Your Aircraft
We get it. Aircraft insurance isn’t cheap, especially for higher-value planes. And it can be tempting to “save a little” on premium by listing a slightly lower hull value when you request a quote.
That’s where trouble can start.
Let’s say your aircraft is worth $300,000, but you insure it for $225,000 to save on the premium. Then, one day, your aircraft suffers major damage, say $170,000 in estimated repairs.
Here’s what happens next. The repair cost ($170K) is 76% of the insured value ($225K).
Most underwriters will consider a plane “a total loss” when repairs reach 70–75% of the insured value. So instead of repairing it, they may choose to total it.
This means you get a check for $225,000 and the aircraft is gone, even though you might have been willing to repair it and keep flying.
All of that to save a few hundred dollars on your annual premium.
Not worth it.
How Much of Your Premium Is Hull Coverage?
Here’s another reason underinsuring doesn’t make much sense:
In most aircraft insurance policies, hull coverage makes up the majority of the premium.
Liability coverage, which covers injuries or damage to third parties, is usually just 12–15% of the total cost.
So even if you reduce your hull value by 10–15%, you’re only shaving a small amount off your total premium. The risk you’re taking on far outweighs the reward.
What Happens in a Total Loss?
Let’s take a closer look at what happens if your aircraft is declared a total loss.
If the policy was written on an agreed value basis, and almost all aircraft hull insurance policies are, the claims process is relatively straightforward:
- The adjuster confirms the damage and determines that it qualifies as a total loss.
- The insurer cuts you a check for theagreed value listed on the declarations page.
- That’s it. No negotiation. No drawn-out arguments. No unexpected reductions in the payout.
This process only works smoothly if the agreed value you chose is accurate.
How to Determine a Fair Agreed Value
Not sure what your aircraft is really worth? Start by checking recent listings on sites like:
- Controller.com
- Trade-A-Plane
- AircraftForSale.com
Look for comparable make, model, year, engine time, avionics, and condition. You can also consult with your broker, we see hundreds of quotes and policy values every week and can help guide you to a realistic valuation.
It’s not about inflating the number or being overly conservative, it’s about being fair and honest with yourself.
What would it take to replace this aircraft tomorrow?
That’s your agreed value.
Our Job: Get You the Best Rate for the Right Value
At BWI Aviation Insurance, we’re not here to guess your aircraft’s worth. We’re here to advocate for you, take your declared value to market, and negotiate with top-rated underwriters to get you the best possible rate, and the right coverages, all from the best carriers in the aviation insurance industry
Whether you’re flying a Cirrus, a Piper Cub, a warbird, or a custom-built experimental aircraft, our team knows how to match your flying situation and hull value with the right policy structure.
Final Thoughts: Don’t Gamble with Your Hull Value
Insurance is about protecting what matters most. For aircraft owners, that means making sure you can bounce back if the worst happens, without being stuck in a loss you can’t afford to replace.
So don’t guess. Don’t lowball.
Take the time to insure your aircraft for what it’s really worth.
And if you’re not sure where to start, we’re here to help.
Need a quote or want a second opinion on your current policy?
Call us at 800.666.4359 or click the button below to get a quote started.
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