The Agent, the Broker, and You (Part 1)

No, it’s not the beginning of a very bad joke … hopefully. If you ever intend to skim through sale ads with the honest intention of buying an airplane, you might want to read this. There’s a lot involved in airplane-buying and not all of it is all that obvious. With a budget in mind, you can eagerly scan the pages in print or on screen, drooling at some marques, laughing at others, and finally settling in on one or two types that realistically meet your budget, your skill level, and your needs for aerial recreation or transportation. But there’s more to it than that.

You’re a pilot and you’re responsible — you want to talk to someone about aviation insurance. The result will impact your total flying budget, so you need someone fair and honest. How can you know that you’ve gotten the best deal?

When most people talk about an insurance professional, they *think* they’re talking about an ‘agent.’ If you call someone who advertises himself or herself to be an ‘agent,’ however, you must ask a few questions to see if they’re giving you the best possible deal on your insurance.

By Definition: An agent’s job is to represent the interests of the insurance carrier, the ‘underwriter’ that’ll issue the policy and, if need be, pay money to fix or replace your airplane, or to defend you in court.

HOW IT WORKS: An insurance ‘agent’ is an agent of one or more insurance companies. The agent will gather information from you and take it to his or her insurance company, who will decide whether or not it wishes to make a quote (more on that in a moment), and if so, at what price. The upside is that the agent will likely be very familiar with the provisions of the policy being sold, and may be quicker and more complete with answers to your questions. The downside is a narrow range of options. When you speak with an agent it’s like walking into McDonalds for a hamburger — you can get a Big Mac at the Big Mac price, but you won’t even be offered a Whopper or a Wendy’s Double.

A ‘broker,’ is generally more responsible to represent the customer, meaning you. By Definition: A broker will take your information, to every insurance company you qualify for, in your airplane and with your experience. The upside: It’s like asking for a hamburger, and instead of simply being handed a Big Mac at the Big Mac price, being given the lowest-cost hamburger around. The downside: While, you could ask questions about what’s on the hamburger or how it’s made, (what’s covered under the policy, and what the limits of liability are) and the broker will have that information for you as well. You might not always want to buy the lowest-cost policy available, if it doesn’t meet you particular needs.

Insurance is a tricky business — and right now, general aviation is trapped in a very tight market. Now that you know a little bit about whom you’ll be talking to, next week we’ll take at how to get the information you want out of them.