Johnson bar fails and gear collapses in my Mooney 78934 at landing in KLZU

[Bob_Belville]

I was told by my agent when I put in request that insurance company will do an appraisal and will not insure the plane for more than its worth.

"What it's worth" needs to be defined. Replacement cost vs. sales value. 

 

A few years ago when I upgraded the panel of my '66E I raised the hull coverage from $60k to $100k. My agency had to shop for an underwriter who would go that high on that model. The new company needed justification for the cost which they accepted. My intention was to be sure that I could repair/replace what I had. I did not suppose that the market value was $100k, that really was irrelevant.  

[bonal]

So here is a follow up question.  California charges a property tax levied through the counties for things that are deemed to be luxuries like boats and airplanes, I wonder if the hull value (insurance) would have to match the assessed value the county taxes each year.  If you increase the hull value with your insurance company I wonder if the county would be able to increase the taxation they collect.

[kortopates]

So here is a follow up question. California charges a property tax levied through the counties for things that are deemed to be luxuries like boats and airplanes, I wonder if the hull value (insurance) would have to match the assessed value the county taxes each year. If you increase the hull value with your insurance company I wonder if the county would be able to increase the taxation they collect.

There is no relationship between the two.

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[DonMuncy]

Chris,

You are correct that if the insurance carrier will agree to your number, you can insure your plane for the full amount of anything you add to it. If you put in the cost of everything you install in your plane, eventually, you would probably reach the limit of their tolerance. But that is OK; you could stop then.

There are only two drawbacks to over insuring. The first is not too important; that is your premium will be a little higher. The second is more important. To make up some numbers. If your plane would sell for $100,000 and you managed to insure it for $150,000. Then if you have an accident which can be repaired for $120,000, they will pay for repairs. Now you have a damage history plane which most likely will be worth less than the plane you could have purchased with the $100,000 they would have paid you for a total loss, had you insured it for that.

If we were pretty sure we were going to total our plane, we should insure it for as much as we could. If we were sure we would never total it, it would probably be more economical not to insure it at all.

But probably the best way to play the odds is to insure it for what you could buy an identical replacement.

Maybe we would feel better if we bumped the insured value by the cost of the new equipment, and then at the next renewal date, drop back down to the fair market value.

[Bob_Belville]

Don, this debate with appropriate hypotheticals has been explored on at least one other thread not too long ago. The issue I tried to address was what would happen if I had a simple gear up landing which might cost an insurer $35k to repair. I have a $55k airframe with $55k panel. If I have only $60k hull coverage the insurer may well decide to write me a check for $60k instead of $35k and take the plane. Anything over $25k he gets for it is profit.   

[Marauder]

Chris,

You are correct that if the insurance carrier will agree to your number, you can insure your plane for the full amount of anything you add to it. If you put in the cost of everything you install in your plane, eventually, you would probably reach the limit of their tolerance. But that is OK; you could stop then.

There are only two drawbacks to over insuring. The first is not too important; that is your premium will be a little higher. The second is more important. To make up some numbers. If your plane would sell for $100,000 and you managed to insure it for $150,000. Then if you have an accident which can be repaired for $120,000, they will pay for repairs. Now you have a damage history plane which most likely will be worth less than the plane you could have purchased with the $100,000 they would have paid you for a total loss, had you insured it for that.

If we were pretty sure we were going to total our plane, we should insure it for as much as we could. If we were sure we would never total it, it would probably be more economical not to insure it at all.

But probably the best way to play the odds is to insure it for what you could buy an identical replacement.

Maybe we would feel better if we bumped the insured value by the cost of the new equipment, and then at the next renewal date, drop back down to the fair market value.

Don, this debate with appropriate hypotheticals has been explored on at least one other thread not too long ago. The issue I tried to address was what would happen if I had a simple gear up landing which might cost an insurer $35k to repair. I have a $55k airframe with $55k panel. If I have only $60k hull coverage the insurer may well decide to write me a check for $60k instead of $35k and take the plane. Anything over $25k he gets for it is profit.

Bob's logic is what I followed to raise the hull value of my plane. If my F prior to the upgrade was worth $50k and I kept the hull at $50k or even raised it by $20k, I was worried that being underinsured put me at risk for what Bob describes. I would rather have a repaired plane than enough money to find a viable replacement.

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[DonMuncy]

You are right too, Bob. The dangers of under-insuring are worse than over-insuring. I still contend the probable best number is the amount it would cost you to go on the open market and buy a plane equipped like the one you have, and perhaps a little over to cover some of the expense of having to buy a "new" plane.

[kortopates]

Don, with all due respect, you are assuming that someone that has invested upwards of 50K+ in the latest technology in a panel upgrade is actually going to be to able turn around and find an aircraft on the used market that has essentially the same latest gadgets in the panel. But folks like Chris and Bob realize there is not a chance of that happening. I was in the same boat after I purchased my 252 and outfitted it with dual Garmin GPS's, satellite weather and MFD to display maps, weather etc. You realize for at least the next several years your only chance of replacing that investment is to find an suitable airframe an and then once again pay full price for avionics and installation. Your argument of insuring for only market value won't make sense till the person that next buys Chris or Bob's Mooney with all its avionics at used market value, since to them, they didn't have to pay full price and expect they can do it again should they need to you. That's not viable when you have the latest and greatest but sage advice with an aircraft equipped like the average bird on the market.

If on the other hand they did only insure for market value, using your example, they'll get that check for $100K to go buy a comparable airframe without damage history but will probably spend that entire $50K+ again to get their original panel back again. In the process they just paid for all that damage history and more out of their own pocket in the process of getting whole again with perhaps a lot more down time and frustration - certainly a lot more financial uncertainty about how much out of pocket it will take to get whole just to avoid keeping the plane with damage history.

And personally, I am a believer that the damaged aircraft when properly repaired is better than comparable 30+ year old ac without it because of all the new replaced parts. And after a couple years of proven service, any concerns for MIF's should be minimal. If we where talking essentially brand new aircraft (5-10 yrs) I would feel differently, but not the typical gear up on 30+ year old aircraft. Anyway, my opinion only.   .  

[mpg]

It is all very confusing,,  money and insurance wise,,  but I wonder...

What if you insure your 50 yr old M20F for 40K.

and separately insure your big fancy expensive glass panel bits and pieces for the other 40K...

 

Now if you have a gear up, and the plane really gets wrecked up you get your 40K, for just the airplane,,,

And you keep your fancy avionics,,,,   put them in a box and install them in the replacement 40K M20F...

 

Or if your 40K M20F catches on fire and is reduced to a molten puddle of aluminum on the tarmac

Along with your 40K avionics package,,,   then your insurance pays out 40K for the plane and 40K for the panel!

[Marauder]

It is all very confusing,, money and insurance wise,, but I wonder...

What if you insure your 50 yr old M20F for 40K.

and separately insure your big fancy expensive glass panel bits and pieces for the other 40K...

Now if you have a gear up, and the plane really gets wrecked up you get your 40K, for just the airplane,,,

And you keep your fancy avionics,,,, put them in a box and install them in the replacement 40K M20F...

Or if your 40K M20F catches on fire and is reduced to a molten puddle of aluminum on the tarmac

Along with your 40K avionics package,,, then your insurance pays out 40K for the plane and 40K for the panel!

It would be awesome if insurance worked this way. Unfortunately the insurance isn't written that way. The insurers realize that the core value of the plane is the complete plane not the plane itself.

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[Parker_Woodruff]

The insurance comany is not going to do an appraisal on the plane and go against the "Agreed value" in the case of a total loss.

 

Plenty of cases of $6MM Gulfstreams having an "agreed value" with the insurance company of something much higher (Like $10MM) and the insurance company getting a pretty bad deal on a total loss.

 

"Stated value" is where you might state the value of your asset at $X but then the loss occurs and you will get the lesser of stated value or actual cash value.

 

The typical aviation policy is arguably the must cut and dry type of insurance there is and the easiest type of claim.

 

From a former insurance broker and aircraft owner's perspective, insure for what it would take for you to replace your aircraft with one of like kind and quality.

 

A good starting point is go to Controller.com and find the plane & equipment that most resembles yours and make minor adjustments for the differences.

[DonMuncy]

The insurance industry is based upon statistics and economics. It assumes that any insured property can be replaced in the marketplace with like property. For the most part, this is true. Somewhere out there, there is likely to be someone who thinks enough like you to have bought a plane like yours, equipped it similar to yours, and now wants to sell it. This is the theory, and sometimes it just isn't that way.

My comments have been based on what I believe to be the most economically feasible method of how to use insurance. I recognize I am far from infallible, and your situation may dictate you do it differently. I sure do not want to disparage someone who does what is in their best interest.

I was just trying to point out that there are risks in insuring one's plane, and no matter which way you jump, you might be wrong.

Just as we know that we will not get all our money back when we put additional equipment in our plane, we should recognize there is no way to guarantee that in the event of an accident, we will get all our losses covered. We just make the most intelligent choices we can and hope we never need the insurance at all.

[DaV8or]

At this point I have a potential buyer (this is why I chose buyout option)  but the sale is not finalized so I may end up having a pile of useless aluminum and steel on my hands.The goal, is to return my bird to the flying condition, never allowing anyone to buy it for parts, but neither my wife nor I will fly it again. Me, I am on the market for 20J with the goal to find something in October or November since I will be out of country for the entire September.

 

Interesting. You don't hear of this often. Having the plane repaired and then immediately selling it to buy another. Nobel gesture towards the airplane and I totally understand the sentiment, but ultimately, all our planes are likely to just be parts or scrap one day. Very few will survive to be museum pieces, or vintage collector status. Still, I applaud you for keeping one more going. I hope it all turns out the way you planed!  

[bonal]

So last year I moved from liability to adding hull coverage I use AOPA any way I told them the amount I wanted they said Ok and told me my new premium I'm sure the dollar amount was well within a normal range since they was no discussion of the amount. I renew next month I think I will increase the amount of value

[Bennett]

In order to justify my Hull limit, which is well above the normal range for a 1983 J, I sent my broker a complete set of photos, and a full listing of all the avionics I added, paint and upholstery invoices, and listings of other modifications (LoPresti cowl, Top Prop, PowerFlow exhaust, etc) The broker was able to obtain multiple quotes at this Hull level. I could probably not replace the airplane at the figure I used, but it would be close (less than my actual costs). If I were to sell the airplane today, the price I would want (and most likely receive from a knowledgeable buyer) is the amount of Hull coverage I carry. I think the incremental premium cost to achieve this is reasonable in light of the other costs of flying a Mooney of this vintage. I have had a economic interest in two aircraft that were destroyed in crashes (I was not in either aircraft at the time of the crashes) and the insurance settlements were quick, and painless, and for the exact amount of the Hull coverage policy limits. My advice is to follow good risk management principles and "settle the loss" before the loss. No surprises should the loss occur.

If the aircraft were to be damaged moderately in a crash, there would be plenty of room to have the repairs done correctly. If the damage was extensive, I would negotiate towards a "Constructive Total Loss" and carrier would keep the salvage.

[kommers]

To Sabremech: David, FAA finished the investigation but I got the notion that they had no desire, nor the the expertise to pursue it at the level that would deliver conclusions that can be of real value to Mooney pilots. In the end, they classified it as "incident", failiing no one in particular and establishing mechanical failure as the most probable cause. From my side, I can only state what I already know: my wife and her CFI did the routine flight that they used to do a few times before,  they did a couple of landings in another airport prior to retunring to the home base and they followed the same routine procedure  of latching the gear in down position and checking it 4 times before the landing. They both stated that green gear light was on at the moment of landing and  it stayed on to the moment when the gear started folding. The Mooney shop that is going to buy our wreckeage from us mentioned that they routinely deal with such kind of accidents and that it takes a slight misallignement in manual gear mechanism for the entire assembly to fail this way. Iust passing the info I have, not adding my own take on it...

[jetdriven]

You said earlier that the Johnson bar, at the conclusion of this incident, was "halfway between up and down" which says it came un-latched. No misalignment or preload problem can make the bar come out of its socket.

[Sabremech]

Hi Kommers,

Thank you for sharing what you did.

David

[1964-M20E]

So last year I moved from liability to adding hull coverage I use AOPA any way I told them the amount I wanted they said Ok and told me my new premium I'm sure the dollar amount was well within a normal range since they was no discussion of the amount. I renew next month I think I will increase the amount of value

Good luck my experience has been the insurance co won't want to raise the hull value. You may need to shop other providers. If u buy a plane figure the highest hull value and get that up front

[HRM]

You wind up with a major damage history plane worth considerably less than you have in it.

 

 

Same thing with a high-end car. My wife was front-ended by a drug-crazed moron, didn't blow the bags but we wound up with a $15K repair. When we went to trade all we heard was how dirty the CarFax was. The repair was flawless, but no matter. 

[kommers]

Time to close this thread with my final update:

 

I have sold the damaged plane to Mooney shop that will restore it and putt back to service. My bird will live and fly again!  Once back from vacation in the end of September, I will finalize the list of 20J candidates and will have one of these birds finding its home at LZU, hopefully for a long time to come. I was pleasantly surprised to see insurance quotes not being drastically different for 20J from 20C even though the replacement plane is going to be more than twice as expensive and my insurance history now includes one claim.

[DaV8or]

Time to close this thread with my final update:

 

I have sold the damaged plane to Mooney shop that will restore it and putt back to service. My bird will live an fly again!  Once back from vacation in the end of September, I will finalize the list of 20J candidates and will have one of these birds finding its home at LZU, hopefully for a long time to come. I was pleasantly surprised to see insurance quotes not being drastically different for 20J from 20C even though the replacement plane is going to be more than twice expensive and my insurance history now includes one claim.

 

Great to hear! You will like the new J for sure!