Aviation Insurance Market Update

[Parker_Woodruff]

27 minutes ago, EricJ said:

A friend in the industry offered the opinion that a lot of weather-related claims (e.g., airplanes destroyed on the ground in hurricanes or whatever) and the fact that more people are flying due to favorable economic conditions has increased claims payouts.   We're seeing the natural response to that.

This is true. Most noticeably in flight schools where claims are up significantly as fleet utilization has increased.

[daytonabch04]

5 hours ago, ArtVandelay said:

I’m sure I’m not the only one who would like to know who your new broker/underwriter is?


Tom

I went with Ladd Garner Aviation Insurance. The underwriter is IAT Insurance Group. First time going with them as last time was with AOPA. I was ok with a $0 increase from what I’ve been hearing but jumped on a rate decrease. 

[Herlihy Brother]

With the premiums I've paid I could have bought two m20es. No more insurance for me. Biggest rip off ever. Sold only by fear and deception. The big asset owners all self Insure, aka go naked. Legislated or "industry" mandated Insurance is growing and taking over more areas....with zero value add imo. Do the math, take emotion and fear out, and decide for yourself.

[DonMuncy]

7 hours ago, Herlihy Brother said:

With the premiums I've paid I could have bought two m20es. No more insurance for me. Biggest rip off ever. Sold only by fear and deception. The big asset owners all self Insure, aka go naked. Legislated or "industry" mandated Insurance is growing and taking over more areas....with zero value add imo. Do the math, take emotion and fear out, and decide for yourself.

Airplane insurance is no different than any other kind of insurance. IMHO one should only insure what he can not reasonably afford to cover himself without insurance. After you have reached a stage in life where everyone who depends on you could live fine without you. It is foolish to pay for life insurance. If you  can reasonably afford to replace your $30,000 car (or airplane) in the event of a total loss, car (or hull) insurance is a poor expenditure of money. If you or your estate could reasonably cover 5 or 10 million dollars in a lawsuit, you could probably do without liability insurance. I agree there is some wiggle room in the term "reasonably afford".

Insurance companies are very well equipped to analyze risk, spread over large numbers, and they are capitalized to the be able to live over paying out on large losses. But they do have to earn a profit, which we have to pay in order to buy their policies. 

And, no, I do not buy extended warranties (just insurance, no matter what they call it) on appliances, tools, etc.

[Parker_Woodruff]

16 hours ago, daytonabch04 said:

I went with Ladd Garner Aviation Insurance. The underwriter is IAT Insurance Group. First time going with them as last time was with AOPA. I was ok with a $0 increase from what I’ve been hearing but jumped on a rate decrease. 

We have the ability to access IAT.  Sometimes their rates have been really good, as in your experience.  I have recently turned in a claim for one of their insureds and it has gone well so far.

[Parker_Woodruff]

2 hours ago, DonMuncy said:

If you  can reasonably afford to replace your $30,000 car (or airplane) in the event of a total loss, car (or hull) insurance is a poor expenditure of money. 

Insurance companies are very well equipped to analyze risk, spread over large numbers, and they are capitalized to the be able to live over paying out on large losses. But they do have to earn a profit, which we have to pay in order to buy their policies. 

And, no, I do not buy extended warranties (just insurance, no matter what they call it) on appliances, tools, etc.

Unless the rates are so cheap that it makes sense to have hull coverage.  Rates on pro-flown  corporate jets over $4,000,000 in value have frequently been written for a ten cent rate (0.1% of hull value) with no deductibles.

When you've got a $5,000,000 jet capable of getting $90,000 bird strikes, it's well worth the $5000 in hull premium.

Even just the regular losses in the piston aircraft world have exceeded the premium taken in the past few years.

One other advantage is it's also nice to have a company that *must* take your airplane from you if it is a total loss.  You walk away with a check and no hassle.

[ArtVandelay]

For an off field landing, what is the insurance companies responsibilities, if the plane is fixable or if it’s total loss?


Tom

[tigers2007]

Parker explained that in a previous thread but I’d like to see how it works again.
I had a total loss on my old C150 and it was nice to get a fat check minus the $500 deductible. Shame on me for underinsuring it though; it a was easily worth $16+ but I forgot to up the coverage from $12.5 after a bunch of work was done on it.
Parker, what happens if the plane is OVERinsured? Like if I get $70k coverage for my $50k or so plane?


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[Parker_Woodruff]

37 minutes ago, ArtVandelay said:

For an off field landing, what is the insurance companies responsibilities, if the plane is fixable or if it’s total loss?


Tom

If the aircraft owner purchases physical damage coverage...

...If there is no damage, then most companies have an allowance for the cost to get the plane recovered to a place where repairs can be made.

...If the aircraft is off airport, damaged, and fixable, the insurance company will generally pay the expenses to move the aircraft for repairs.

...if the aircraft is a total loss, they will generally pay the expenses to move the aircraft and will not deduct those expenses from the total loss settlement.

It’s generally considered an expense of handling the claim.

[Parker_Woodruff]

25 minutes ago, tigers2007 said:

Parker explained that in a previous thread but I’d like to see how it works again.
I had a total loss on my old C150 and it was nice to get a fat check minus the $500 deductible. Shame on me for underinsuring it though; it a was easily worth $16+ but I forgot to up the coverage from $12.5 after a bunch of work was done on it.
Parker, what happens if the plane is OVERinsured? Like if I get $70k coverage for my $50k or so plane?


Sent from my iPhone using Tapatalk

1) The insurance company has a bit more room to fix An aircraft that’a insured for a higher value

2) the Ins co has a lot less incentive to total an aircraft because it will bring them lower salvage value (less avionics value, etc)

 

You may end up with a plane you don’t want back...

[bonal]

I was advised by my carrier a few years ago that if you only have liability you would have to cover whatever costs were tied to recovery so not only have you lost your airplane but you could also be on the hook for the recovery expenses 

[Parker_Woodruff]

22 minutes ago, bonal said:

I was advised by my carrier a few years ago that if you only have liability you would have to cover whatever costs were tied to recovery so not only have you lost your airplane but you could also be on the hook for the recovery expenses 

Correct.  In most circumstances, the insurance company would only be on the hook for any bodily injury and property damage.

[Herlihy Brother]

6 hours ago, DonMuncy said:

Airplane insurance is no different than any other kind of insurance. IMHO one should only insure what he can not reasonably afford to cover himself without insurance. After you have reached a stage in life where everyone who depends on you could live fine without you. It is foolish to pay for life insurance. If you  can reasonably afford to replace your $30,000 car (or airplane) in the event of a total loss, car (or hull) insurance is a poor expenditure of money. If you or your estate could reasonably cover 5 or 10 million dollars in a lawsuit, you could probably do without liability insurance. I agree there is some wiggle room in the term "reasonably afford".

Insurance companies are very well equipped to analyze risk, spread over large numbers, and they are capitalized to the be able to live over paying out on large losses. But they do have to earn a profit, which we have to pay in order to buy their policies. 

And, no, I do not buy extended warranties (just insurance, no matter what they call it) on appliances, tools, etc.

That's very true, and really worth it when loans and thin balance sheets are involved. And it seems most people want insurance. I agree with you and I don't buy extended warranties either. I believe that the extended warranties are not a good value proposition for me because I believe that the premiums are set a  level to cover not just the administrative costs of the insurance, but also the claims made by other purchasers who, and I would like to think unlike me,  abuse their tools, do not know how to operate their tools, are not proficient with their tools, may not have been educated properly on the proper use of their tools, loan their tools to potentially unqualified users, leave their tools laying around exposed to the elements etc.   And I agree with you too, that airplane insurance is no different than any other kind of insurance.  But with aircraft insurance, the premiums can be so incredibly high--for example I recently had quotes from 4% to as high as 14% of my hull value. That high quote was $12k per year on a $85k aircraft.  I bought the $4k policy but that policy had such low limits that I would not have been protected in the scenario presented above where the litigation was over $1m.  And that policy excluded gear up claims... When I go naked, or even with a policy that excludes gear up events, I find myself taking a lot of interest in the landing gear condition and maintenance and upkeep.  Thanks to Parker for helping navigate the caveats and gotchas--I learned a few things here.

[DonMuncy]

Listen to Parker. He knows insurance far better than I do.

[Parker_Woodruff]

9 minutes ago, Herlihy Brother said:

And I agree with you too, that airplane insurance is no different than any other kind of insurance.  But with aircraft insurance, the premiums can be so incredibly high--for example I recently had quotes from 4% to as high as 14% of my hull value. That high quote was $12k per year on a $85k aircraft.  I bought the $4k policy but that policy had such low limits that I would not have been protected in the scenario presented above where the litigation was over $1m.  And that policy excluded gear up claims... 

Multi-engine transition?  I'm guessing the gear up "exclusion" you refer to was was just a higher deductible for gear up landings?

[Herlihy Brother]

6 minutes ago, Parker_Woodruff said:

Multi-engine transition?  I'm guessing the gear up "exclusion" you refer to was was just a higher deductible for gear up landings?

That's correct. And it makes sense. My daughter is studying to take the actuarial exam and I can see the fascination and interesting side of applied math and stats.

[RobertGary1]

On 9/25/2019 at 1:28 PM, Parker_Woodruff said:

Correct.  In most circumstances, the insurance company would only be on the hook for any bodily injury and property damage.

Nowadays I also worry about environment mitigation costs. I have insurance on my boat that covers me for mitigation. I'm not sure if my aircraft policy has that.

If I dump 60 gal of 100LL in a nature preserve its going to cost a lot to clean that up.

-Robert

Edited September 27, 2019 by RobertGary1

[tgardnerh]

On 9/24/2019 at 11:53 PM, Herlihy Brother said:

With the premiums I've paid I could have bought two m20es. No more insurance for me. Biggest rip off ever. Sold only by fear and deception. The big asset owners all self Insure, aka go naked. Legislated or "industry" mandated Insurance is growing and taking over more areas....with zero value add imo. Do the math, take emotion and fear out, and decide for yourself.

liability insurance isn't really for you, its for the poor shmuck who you injure or whose property you damage. The way I see it, until I am willing and able to write a million dollar check in the unlikely event that a mistake of mine leaves somebody maimed or dead, I have a moral obligation to carry insurance while flying (or driving, for that matter).

Hull insurance however is rarely mandated, and I don't carry it on airplanes or cars for exactly your logic. 

Edited September 27, 2019 by tgardnerh

[jetdriven]

Liability insurance, although it is designed to protect someone you harm,  Is also designed to protect you. You may not be around to realize the benefits of this but your bereaved spouse may when they don’t have to give everything to the plaintiffs

[Bravoman]

54 minutes ago, jetdriven said:

Liability insurance, although it is designed to protect someone you harm,  Is also designed to protect you. You may not be around to realize the benefits of this but your bereaved spouse may when they don’t have to give everything to the plaintiffs

And don’t forget us plaintiff’s lawyers. I have to flash more than my good looks at the self serve if I want that avgas to flow

[DonMuncy]

Just now, Bravoman said:

And don’t forget us plaintiff’s lawyers. I have to flash more than my good looks at the self serve if I want that avgas to flow

And the defense lawyers. If there were no plaintiff's lawyers there would be no need for defense lawyers. 

[Jerry 5TJ]

On 9/25/2019 at 2:53 AM, Herlihy Brother said:

....The big asset owners all self Insure, aka go naked.....

The few high net worth pilots I know certainly don’t do that — to the contrary, they carry a big umbrella policy above their regular coverage.  

[tgardnerh]

1 hour ago, Jerry 5TJ said:

The few high net worth pilots I know certainly don’t do that — to the contrary, they carry a big umbrella policy above their regular coverage.  

Hell, I'm a negative net worth pilot (student loans...) and I carry an umbrella policy. I pay less for $1M in coverage than I do for netflix.  

[FloridaMan]

On 9/25/2019 at 3:52 PM, Parker_Woodruff said:

1) The insurance company has a bit more room to fix An aircraft that’a insured for a higher value

2) the Ins co has a lot less incentive to total an aircraft because it will bring them lower salvage value (less avionics value, etc)

 

You may end up with a plane you don’t want back...

That last statement was my rationale for how I set my hill value. I estimated the damage that would merit me not wanting it back at 75% of the hull value as I somehow have the understanding that they’ll total a hull at 75% of insured value. I think I would be unable to replace either plane for the insured value when you factor in what goes into the first year of ownership of a new plane. 

[HRM]

FWIW--my insurance has come due, it went up by 0.1 AMU--no big deal.

I have been quite happy with Travers Aviation, at the end of the day they all shop around--except perhaps AVEMCO.