When selling an aircraft, what should the owner do regarding their insurance policy?

When selling an aircraft, it is essential for the owner to handle their insurance policy appropriately, especially as it relates to liability and coverage risks once the ownership changes. The correct action is to cancel the insurance once the sale is finalized.

This is crucial for several reasons. Firstly, maintaining an insurance policy after the sale could lead to unnecessary costs, as the owner would be paying for coverage on an asset they no longer own. Furthermore, the new owner should obtain their own insurance policy to ensure they are covered under their specific needs and circumstances. If the seller’s policy is still active, it may complicate liability in the event of an incident involving the aircraft after the transfer of ownership.

Keeping the insurance (as suggested in one of the alternatives) could imply ongoing responsibility for the aircraft, which is legally and financially problematic. Ensuring that the insurance is properly canceled protects the seller from potential claims related to the aircraft after it has been sold. Therefore, canceling the insurance upon finalizing the sale ensures clarity in ownership and responsibility, aligning with best practices in aviation transactions.