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On 2/27/2019 at 10:41 AM, Vance Harral said:

Over the course of the last 15 years, we have on three separate occasions added new partners to our policy who had no instrument rating, no Mooney time, and essentially zero complex time.  This is on a 1976 M20F with a hull value of about $60K, and the traditional $1M/$100K sublimit liability.  In each case, the cost of our policy for the first year of participation by the new partners increased from the $1200-ish range to the $2700-ish range.  Assuming the market hasn't changed in the last 5 years (which may be a bad assumption), I'd guess the hit would be somewhere between $1000-$1500 for the first year.

And do you remember if there were added requirements to the new insured? 10 hours dual or anything along those lines? 

Edited by Mcstealth
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35 minutes ago, Mcstealth said:

And do you remember if there were added requirements to the new insured? 10 hours dual or anything along those lines?  

Yes, though the details varied in each case.  In one case, all the underwriter required of the new pilot was a "checkout" from a CFI, i.e. any CFI was effectively empowered to decide when the new partner was competent to be insured.  That was nice, especially since one of the partners was a CFI at the time, and therefore had a vested interest in deciding when the new partner was ready..  The two other cases involved some nominal amount of dual instruction, I think it was 10.  I do recall one case where our existing underwriter wanted the new partner to accumulate something like 35 hours of make-and-model time before being insurable.  We thought that was unreasonable, and simply worked with our broker to switch to an underwriter with more reasonable requirements.

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10 hours ago, Awful_Charlie said:

Good timing for a thread of this direction - thanks for starting it.

I'm hoping to make it over the the US the coming summer, and my current insurance is "Worldwide excluding USA and territories" for 3rd party, but they will graciously extend my hull coverage (albeit with a much higher excess), so need to sort something out. Given that I'm not at all familiar with the US insurance requirements or norms, a bit of direction as to what the "standard" and recommended are for a 4 seater would be most appreciated, as well as a ballpark figure for say 4 weeks in the US

FWIW, over here for 3 passenger seats and SDR 6M of CSL (Combined Single Limit - I have a feeling this is what you call a "smooth"?) is just under EUR1000 pa, and hull is 0.85%

There is no federal government mandate for aircraft owners and operators to carry insurance, except for those holding a DOT certificate (charter, airline, etc.).

First try to see if your insurance agent has a way to quote the USA exposure.  A US insurance agent could probably get something done, but it may be through a Lloyds sydicate if you don't have some kind of residence or business address here.

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5 hours ago, mike_elliott said:

Parker, for the first time in 20 years I have encountered a carrier wanting to charge $200 additional to have me added as named insured pilot with a waiver of Subrogation. The carrier was avemco. The new owner was a 80 hr pilot without any Mooney time they were wacking for close to 4K  to insure an E  as it was.  This is considerably more than my 2M smooth 800K non owned as it is, and I realize  it is based on the low time/low MM risk profile. Adding me actually would mitigate some of that risk profile so I am confused to the additional premium.

Previously, with all other carriers, this has been done without charge (One agent wanted a "vig"  once, but not the carrier, and he lost the bus because of his greed glands) to the owners. 

Do you notice a trend in the avemco direction of carriers wanting to hedge their insurance bets with the assets of the cfi, or is this just a carrier to be avoided?

Charging for Additional Insureds is not unheard of as a general rule, but has not been a frequent occurrence the last 10+ years due to a soft aviation insurance market.

However, most companies have not made a strong point of not charging for Additonal Insured as respects flight training providers.  They see owners who are hiring good, competent instructors as a positive thing and are willing to afford the requested coverage.  I have only seen two companies, including your report about Avemco, charging for Additonal Insureds as respects flight training.

All this said, adding Additional Insureds does increase the exposure for the insurance company (greater legal defense cost and another target for settlement) and it does have a way of diluting the policyholder's coverage as the policy limits are now shared between the policyholder and any Additonal Insured who is involved in a particular occurrence.

Unless the pilot's age was 70-75 or more, or there is significant other adverse underwriting conditions, the $4000 premium is quite high for today's market.

 

As a side note, I recommend any flight instructor carrying their own Non-owned liability policy.  It's nice to have a policy that's 100% in your interest.

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53 minutes ago, Parker_Woodruff said:

 

 

As a side note, I recommend any flight instructor carrying their own Non-owned liability policy.  It's nice to have a policy that's 100% in your interest.

Thanks Parker,

My non owned adds considerably to my hourly fee I have to charge, however, and this is passed on to the clients. Right now it is upwards of $35/hr/ and why I had to raise my instruction rates for the first time in 10 years. Nope, I won't let a carrier hedge their bet with my wife and my assets, so I still insist on a WoS. Bedsides, It is also nice to have all the lawyers sitting on the same side of the table when you are added as named insured pilot with a waiver of subrogation. The carriers liability limits are still the same, the maximum exposure shouldn't change for the carrier. The carriers cost of defense is minimal with their on staff counsel to add another defendant.

One of the least understood aspects of insurance by plane owners is the sublimits. 100K isnt much for anyone, but it buys a cheap policy. 5K medical will cover the ambulance ride, but not much else. Careful consideration should be given by prospective insured to getting coverage in line with a potential loss, vs what a slip and fall guy will use to negotiate his 1/3 plus expenses. 

 

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Several references over the past six months have cited increases in aviation insurance premiums  are due to the market "Firming up." An uptick in the local aviation scene doesn't appear to be visible... so this seems confusing.

What does the Aviation Market "Firming up" really mean and how has this come to be?

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15 hours ago, David_H said:

Several references over the past six months have cited increases in aviation insurance premiums  are due to the market "Firming up." An uptick in the local aviation scene doesn't appear to be visible... so this seems confusing.

What does the Aviation Market "Firming up" really mean and how has this come to be?

Hi David,

There are a few forces at work here.

1) Even the most conservative aviation underwriting companies basically reached the point in rates where they were losing money.  There's a point where they must raise rates even if it means losing market share.

2) Interest rates going up.  As interest rates go up, there is an expectation for higher returns on investment.  When the safe play (a CD/bond) gets you 2.5%, there had better be a much greater return from an aviation insurance carrier.

The first half of 2018 basically saw a willingness from many carriers to not go below the expiring premium (unless there was significant underwriting reason to do so).  It seems the latter half of 2018 was carriers pushing minimum 5-10% increases .  And this is all what I had seen when I left my underwriting job at a major carrier at the end of 2018 to start the agency.  I think we'll see the same sustained for at least the first half of this year.

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Open pilot: I may have learned something new.  If someone were to fly my plane under the open pilot warranty, is it correct that if something happened, the insurance company would seek to be reimbursed by said pilot? And if so, what is the purpose of the open pilot warranty when it comes the pilot flying who is not named? 

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1 hour ago, ragedracer1977 said:

Open pilot: I may have learned something new.  If someone were to fly my plane under the open pilot warranty, is it correct that if something happened, the insurance company would seek to be reimbursed by said pilot?

That's indeed possible, and in fact likely.

1 hour ago, ragedracer1977 said:

And if so, what is the purpose of the open pilot warranty when it comes the pilot flying who is not named?  

The purpose is to protect you, the owner of the airplane.  Since the pilot flying the airplane was "qualified", the insurance company will reimburse you for your hull loss, and for any liability attributed to you, in a timely manner.  They are then likely to try to recover their costs from the pilot.

This is why smart pilots flying non-owned aircraft (particularly CFIs) either carry their own independent non-owned insurance, or insist on a waiver of subrogation from the insurer of the airplane they are going to fly.

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Interesting.  I had just assumed the pilot flying would be covered the same as I am. Sort of like a car.  I've never heard of an insurance company suing a non-named driver of a personal vehicle. But, of course, I'd never even considered the possibility. It seems like that should be clearer in the policy.  A layman would read it and assume the "open" pilot would be considered no different than the named insured.  Is there coverage a pilot can buy to cover an assortment of non-owned planes???

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Not unless they are a named insured, just like yourself. Otherwise it's as Vance explained above.

Next you'll want to understand the difference between sub-limits versus smooth; probably the second most miss understood aspect of insurance. These days the typical sub-limits of 100K is nothing.

 

 

Sent from my iPhone using Tapatalk

 

 

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9 minutes ago, kortopates said:

Not unless they are a named insured, just like yourself. Otherwise it's as Vance explained above.

Being a named pilot vs. named insured.

In addition to open pilot warranty, there is a lot to unpack there.

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6 hours ago, kortopates said:

Not unless they are a named insured, just like yourself. Otherwise it's as Vance explained above.

Next you'll want to understand the difference between sub-limits versus smooth; probably the second most miss understood aspect of insurance. These days the typical sub-limits of 100K is nothing.

 

 

Sent from my iPhone using Tapatalk

 

 

I’m still not understanding the concept.  And I’m a former insurance guy.  Licensed and everything.  If the policy states that a pilot with such and such hours and experience is covered, how can the insurance company then turn around and sue them for the coverage they said they were providing? 

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7 hours ago, Vance Harral said:

This is why smart pilots flying non-owned aircraft (particularly CFIs) either carry their own independent non-owned insurance, or insist on a waiver of subrogation from the insurer of the airplane they are going to fly.

This is my biggest soap box when I'm talking to other pilots.  Make sure you have your own coverage for the hull if you're flying someone else's aircraft unless you fully understand the subrogation language in the other person's policy. 

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5 minutes ago, ragedracer1977 said:

I’m still not understanding the concept.  And I’m a former insurance guy.  Licensed and everything.  If the policy states that a pilot with such and such hours and experience is covered, how can the insurance company then turn around and sue them for the coverage they said they were providing? 

What the policy is saying is that the policy is "in effect" while the named pilot and/or person meeting the OPW are flying the aircraft.  So, the Named Insured is covered for the hull and any liability while the subject pilot has the full protection of the policy with respect to any liabilities (think Property Damage and Bodily Injury).  However, there is typically a provision in the policy that provides no benefit to the bailee with respect to damage to the hull.  That being the case, the carrier can subrogate against the liable party.  The policy is basically giving someone else permission to fly the Named Insured's aircraft but is still holding them accountable for any damage that they may cause to it. 

Take insurance out of it and simply say you let someone borrow your aircraft.  They then damage it.  Just because you let some one use it does not give them the right to damage it without consequence.  The carrier now steps into those same shoes once the loss has been settled. 

The OPW and N. Pilot list is way for the underwriters to better understand/control the risk.  If it is anyone other than the N. Insured, OPW or N. Pilot, the claim could likely be denied in its entirety. 

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15 minutes ago, ragedracer1977 said:

I’m still not understanding the concept.  And I’m a former insurance guy.  Licensed and everything.  If the policy states that a pilot with such and such hours and experience is covered, how can the insurance company then turn around and sue them for the coverage they said they were providing? 

The carriers are not in business to take risks, but to make money, and their legal departments know how to write confusing language that will confuse insurance guys as witnessed above. You can be sure that the carriers will seek all relief of any loss they possibly can to maximize their profit. I just refuse to let them hedge their bets with my meager assets. If the policy is clear and states such a waiver of subrogation is provided to a pilot meeting the open pilot warranty, then no issue. If not, then simply have the carrier provide the pilot meeting the open pilot warranty a waiver of subrogation and have him added as named additional insured pilot. Sometimes, even the agents will say "coverage is provided in the policy", so I ask they simply send this layman the exact language in the policy that provides this. Most of the time, they come back with a waiver from the carrier and every now and then, can point to a clause that does provide this depending on carrier. Now I wont have to use my non owned policy to defend against a suit from a clients insurance company also, and he doesn't have to worry about defending a suit from me. Plane owner and CFI 1, carriers and their and lawyers 0.

It doesnt work this way with car insurers, but might someday.

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1 hour ago, mike_elliott said:

The carriers are not in business to take risks, but to make money, and their legal departments know how to write confusing language that will confuse insurance guys as witnessed above. You can be sure that the carriers will seek all relief of any loss they possibly can to maximize their profit. I just refuse to let them hedge their bets with my meager assets. If the policy is clear and states such a waiver of subrogation is provided to a pilot meeting the open pilot warranty, then no issue. If not, then simply have the carrier provide the pilot meeting the open pilot warranty a waiver of subrogation and have him added as named additional insured pilot. Sometimes, even the agents will say "coverage is provided in the policy", so I ask they simply send this layman the exact language in the policy that provides this. Most of the time, they come back with a waiver from the carrier and every now and then, can point to a clause that does provide this depending on carrier. Now I wont have to use my non owned policy to defend against a suit from a clients insurance company also, and he doesn't have to worry about defending a suit from me. Plane owner and CFI 1, carriers and their and lawyers 0.

It doesnt work this way with car insurers, but might someday.

^This is 100% true.

If you read the Policy Definitions of "Named Pilot" and "Named Insured" in your policy you will see that being a "Named Pilot" without a "Waiver of Subrogation" leaves the "Named Pilot" with a significant amount of exposure. It's my understanding that this basically places the "Named Pilot" in the same category as a "Rental Pilot." The "Named Insured" liabilities are covered... the "Named Pilot" is not completely covered by the policy. In this case, the insurance company has cleverly hedged their bets against the "Named Pilot" while also increasing the annual insurance premium.

It takes reading the policy over several times to connect the dots. You may become angry after doing so.

Parker, correct me if I'm wrong.

Edited by David_H
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13 hours ago, ragedracer1977 said:

Open pilot: I may have learned something new.  If someone were to fly my plane under the open pilot warranty, is it correct that if something happened, the insurance company would seek to be reimbursed by said pilot? And if so, what is the purpose of the open pilot warranty when it comes the pilot flying who is not named? 

Some insurance policies leave this open to the company's option and some policies consider pilots flying under the open pilot warranty (OPW) Insureds, so they would not come after them.

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2 hours ago, David_H said:

^This is 100% true.

If you read the Policy Definitions of "Named Pilot" and "Named Insured" in your policy you will see that being a "Named Pilot" without a "Waiver of Subrogation" leaves the "Named Pilot" with a significant amount of exposure. It's my understanding that this basically places the "Named Pilot" in the same category as a "Rental Pilot." The "Named Insured" liabilities are covered... the "Named Pilot" is not completely covered by the policy. In this case, the insurance company has cleverly hedged their bets against the "Named Pilot" while also increasing the annual insurance premium.

It takes reading the policy over several times to connect the dots. You may become angry after doing so.

Parker, correct me if I'm wrong.

Again, some policies automatically provide a Waiver of Subrogation for Named Pilots.  Some policies include pilots flying the aircraft with the policyholder's permission as Insureds.

Some policies only Name pilots to keep the policy in effect for the Named Insured and leave the possibility for subrogation open.

There is value to be had with certain carriers and their broader language.

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1 hour ago, ArtVandelay said:

What is the rules regarding if your mechanic does a test flight?


Tom

Many insurance policies remove the Pilot Requirements when the aircraft is in the care, custody, and control of an FAA Certified Repair Station.  If your mechanic is not operating within the capacity of a CRS, his qualifications should be verified to make sure he meets the requirements of your pilot warranty.

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