Insurance Question

Aeric

Aeric

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Aeric
From day-one my airplane has been on leaseback with an insurance cost of $2208 per year. This rate is due to the airplane being used for training. It is a Cessna 150L with an insured hull value of $25,000 and the liability limit is $1,000,000. I will go about calling for premium estimates on Monday, but I thought I would see if I could get some ballpark figures from some of the POA community.
I am trying to figure out if it would make more financial sense to take it out of the club and insure it for myself. There are many other things to take into consideration but insurance is one of the financial biggies.
I have 190 total hours and I was certified last November. I don't have an instrument rating yet and I am an ASEL Private. My driving record is clean going back 15 years or so, and I am 50 years old. I would be flying about 60-90 hours a year (maybe more if I can control costs).
Also, if I have the airplane insured for myself, how would the insurance work when I hire a CFI to do training in the future?
Approximately how much do you think insurance would be for me and if I may be so bold, what are some real-world figures that some of you pay?
 
I just pulled the paperwork on my insurance for the 152 I had purchased when I was finishing my license (Oct of 2010):

$1,000,000 with $100,000 sub-limit: $183
$25,500 Hull Premium: $530

Insurance Total: $713
 
For the 177RG, I am paying $1,825 (Liability is $659, hull $1,166) my first year ($65k hull and $1M/$1K sublimits, Starr Aviation via AIR Pros). I had about 7 Complex hours (in the Cutlass) and 85 total when I bought the Cardinal. Especially because of the retract factor I expect insurance will go down considerably after the first year of ownership. At my current pace of flying I'm have a good bit more than 100 hours in type by the time I renew it. Insurance required 10 dual and 5 solo before carrying passengers.
 
Aeric said:
I am trying to figure out if it would make more financial sense to take it out of the club and insure it for myself.
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It's pretty simple math once you get that insurance figure, and I'd guess something on the order of $800/year is probably in the ballpark for $1M/100K liability plus hull.

I have 190 total hours and I was certified last November. I don't have an instrument rating yet and I am an ASEL Private. My driving record is clean going back 15 years or so, and I am 50 years old. I would be flying about 60-90 hours a year (maybe more if I can control costs).
Click to expand...
How many hours a year is the plane flying now, and how much are you getting for it?

Also, if I have the airplane insured for myself, how would the insurance work when I hire a CFI to do training in the future?
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Insurance policies generally include coverage for the policy holder when receiving training from a qualified CFI.
 
Challenged said:
I just pulled the paperwork on my insurance for the 152 I had purchased when I was finishing my license (Oct of 2010):

$1,000,000 with $100,000 sub-limit: $183
$25,500 Hull Premium: $530

Insurance Total: $713
Click to expand...
Thank you, this decision got a bit easier.:yesnod:
 
Ron Levy said:
It's pretty simple math once you get that insurance figure, and I'd guess something on the order of $800/year is probably in the ballpark for $1M/100K liability plus hull.

How many hours a year is the plane flying now, and how much are you getting for it?

Insurance policies generally include coverage for the policy holder when receiving training from a qualified CFI.
Click to expand...
Extrapolated, the airplane has done about 270 hours/year but that includes my 190 hours. And I've paid the club's ops fee on all those hours, not to mention the extra 100-hour inspections that are required. Just with the two figures and your estimate, my course is becoming much more clear.
Oh, and how much am I getting for it? It's quite complicated, but suffice to say, I am probably in the red more than if it were not on leaseback.
 
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Aeric said:
Extrapolated, the airplane has done about 270 hours/year but that includes my 190 hours. And I've paid the club's ops fee on all those hours, not to mention the extra 100-hour inspections that are required. Just with the two figures and your estimate, my course is becoming much more clear.
Oh, and how much am I getting for it? It's quite complicated, but suffice to say, I am probably in the red more than if it were not on leaseback.
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Well, if you got into such a bad deal, and realize it, why are you still in it?
 
Ron Levy said:
Well, if you got into such a bad deal, and realize it, why are you still in it?
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Ha, very good question. There are a few reasons that I have moved slowly, even with gleaning information regarding insurance. Part of it is the support I get from the club owners, they really are knowledgeable and helpful at times. Being new in the aviation world can be a bit daunting at times, but I am reaching out to others in the know (here included). Another part is the fact that I am having a ton of fun being challenged in a good way. I just didn't add up the extra $1400/yr for insurance, the extra $1000+ for the required 100hr inspections and the ops fee that for some reason I pay.
 
Leasebacks often bite the leasing owner because the owner doesn't due the necessary homework ("due diligence") before agreeing to the deal. The is especially common with a first-time owner who doesn't really understand all the costs of ownership. Also, why are you paying a fee that you seem to be saying you didn't know about? Is that in the contract?
 
My insurance dropped 70% when I went from leaseback to private ownership.
As CRon points out, leasebacks are a business proposition, not some crutch to defray ownership. I've been on all sides of the situation: renter, club operator chasing leasebacks, lessor.
 
If leasebacks made money, the people wanting you to leaseback would have just bought a plane themselves........
 
n20junkie said:
If leasebacks made money, the people wanting you to leaseback would have just bought a plane themselves........
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There are a number of reasons why they don't. On the other hand, leasebacks can make money or else nobody would do them (and we as lessees wouldn't be able to keep them).
 
Ron Levy said:
Also, why are you paying a fee that you seem to be saying you didn't know about? Is that in the contract?
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I did know about the fee and it is in the contract. I just didn't realize that this isn't the norm (at least with other clubs I've contacted).
 
n20junkie said:
If leasebacks made money, the people wanting you to leaseback would have just bought a plane themselves........
Click to expand...
It is possible to come out ahead on a leasback with the right airplane in the right market, coupled with the right contract and FBO but from what I've seen the odds aren't good. Worst case is a FBO that looks at their leasebacks as time fillers for the maintenance shop (and a contract that lets them milk the lessor) in a down market with an airplane that doesn't see high utilization.

And even with the best conditions a leaseback but's virtually all the risk on the lessor, which is why FBOs love them so much. If things go bad all the FBO loses is one customer.
 
n20junkie said:
If leasebacks made money, the people wanting you to leaseback would have just bought a plane themselves........
Click to expand...

Very true! I considered doing this at one point and a flight school I was at tried very hard to convince me what a good idea it is. The fact that they tried very hard to get other people to buy the planes spoke volumes to me :rolleyes:

I have three big problems with leasebacks.

1. Costs are very high because insurance is high, you need 100 hr inspections, and renters are hard on them so maintenance costs are high.
2. Renters are hard on them. Like a rental car. They don't care. So you own a beat up plane.
3. Your only chance to make money is to provide the cheapest plane most likely to rent. Probably the level of plane you don't personally want.

Better to find a partnership if you want more plane than you can own outright.
 
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