Advancing age and insurance

[Ron McBride]

I had a claim against my business liability.  My insurance company paid attorneys to represent them.  I ended up hiring an attorney that specializes in insurance law.  It was very interesting and prevented my insurance company from putting me under part of the bus….    Glad to retire and end that headache.

[Pinecone]

9 hours ago, PT20J said:

Do you really think a $400/hr lawyer would be involved in a $2000 insurance claim?

Yes, as the insurance company is paying that $400 per hour whether the lawyer is working a case or sitting drinking coffee.  Their lawyers are full time for them.

The incremental cost for additional liability protection can be pretty low.  A while ago my insurance company did a review of my policies.  I asked about raising my auto liability coverage from $250K to $1M.  It was $6 per month, covering 3 cars.  DUH!.

[A64Pilot]

16 hours ago, bluehighwayflyer said:

There is a very direct correlation between the cost of an insurance policy and the amount of risk that it covers.  Cheap umbrella policies are cheap for a reason.  Because they cover very little risk. 

Sometimes, but not always.

What your saying of course is “you get what you pay for” which is not always the case, more and more things are sold that are grossly overpriced including services and as always a lot of add ons are sold, that very often drive the price up with very little value.

This is true with pretty much everything so in order to protect yourself you need to have more than a basic knowledge of the product or service you’re purchasing. I know quite a bit about somethings and insurance is not one of those things, so I basically have to rely on what seems logical, but I do know enough to understand that’s a poor knowledge base.

In short I’m the furthest thing from a subject matter expert when it comes to insurance, in fact I’ve pretty much avoided insurance as a rule.

However I know of several instances where the ambulance chaser refused what seemed to be a guaranteed win based solely on the the person at fault either had no insurance or very low limits. I believe in lawyer speak they were “judgement proof”.

I think their first step is to ensure that payment of a large judgement is viable, if it’s not they don’t pursue the case, because of course it’s a business and they exist to make money, not to help people or ensure justice is done etc.

So it seems logical if during discovery they discover you have a very large insurance policy they would sue as opposed to almost none and your assets would be difficult to get, it would seem that maybe the best way to protect yourself is to do whatever you can to protect assets and that a large insurance policy could possibly increase the likelihood of you being sued and possibly you lose your assets as well as the policy amount.

Maybe we are better off with just the legally required min insurance?

This from a Retired perspective as I think my Mil Retirement, disability and Social Security are difficult to get which just leaves primarily Retirement savings to protect as I think the house is also safe, Mooney and other vehicles aren’t I don’t think enough to get them excited 

 

[Jetpilot86]

23 hours ago, 1980Mooney said:

Except, as has been pointed out, the umbrella insurance policy lawyers aren’t going to lift a finger if it’s Aviation related.  You will have to completely rely upon your aircraft insurance policy lawyers. They have a responsibility to protect you against any claim, but once it’s clear that the claims will overrun the limits of the aircraft policy, they no longer have any “skin in the game”. 

So if you have a high net worth, you will likely be “hiring lawyers to protect your net worth” regardless. 
 

He wanders back and forth across that line in his post. I dealt with the non-aviation side. However, I have an Umbrella and I know it doesn’t cover Aviation any more than my life insurance covers GA. I pushed for as much liability as OR would sell me and that was also $1 Mil. Since I’m new back to GA after a nearly 30 year hiatus, I hope to revisit this next year. I also have a different asset/retirement setup than @A64Pilot and my setup may not be any more appropriate for him, than his for me. 

Ironically, my Umbrella company offered to sell me Airplane insurance. I declined since even that would not get my Umbrella coverage to cover me with them. If they would have, I’d have added it even if it was not the best quote. 

At the end of the day, my CFP, also a pilot, recommended enough Umbrella to cover my net worth to force insurance to protect themselves and me as a result. His assertion, He’s also an attorney, is that Judges tend not to let plaintiffs reach beyond large Limits.

Unfortunately, there is no foolproof way to protect yourself in the event of a GA incident that gets you sued if you own an airplane.  We take more than average risk flying GA, and I choose to up my protection the best I can. 

[Jetpilot86]

11 hours ago, A64Pilot said:

Sometimes, but not always.

What your saying of course is “you get what you pay for” which is not always the case, more and more things are sold that are grossly overpriced including services and as always a lot of add ons are sold, that very often drive the price up with very little value.

This is true with pretty much everything so in order to protect yourself you need to have more than a basic knowledge of the product or service you’re purchasing. I know quite a bit about somethings and insurance is not one of those things, so I basically have to rely on what seems logical, but I do know enough to understand that’s a poor knowledge base.

In short I’m the furthest thing from a subject matter expert when it comes to insurance, in fact I’ve pretty much avoided insurance as a rule.

However I know of several instances where the ambulance chaser refused what seemed to be a guaranteed win based solely on the the person at fault either had no insurance or very low limits. I believe in lawyer speak they were “judgement proof”.

I think their first step is to ensure that payment of a large judgement is viable, if it’s not they don’t pursue the case, because of course it’s a business and they exist to make money, not to help people or ensure justice is done etc.

So it seems logical if during discovery they discover you have a very large insurance policy they would sue as opposed to almost none and your assets would be difficult to get, it would seem that maybe the best way to protect yourself is to do whatever you can to protect assets and that a large insurance policy could possibly increase the likelihood of you being sued and possibly you lose your assets as well as the policy amount.

Maybe we are better off with just the legally required min insurance?

This from a Retired perspective as I think my Mil Retirement, disability and Social Security are difficult to get which just leaves primarily Retirement savings to protect as I think the house is also safe, Mooney and other vehicles aren’t I don’t think enough to get them excited 

 

My first disclaimer is to talk to a PI attorney to see what they do/would go after. 
My research has indicated to me that if you have net worth, it will be gone after, ESPECIALLY if there is not enough liability insurance to cover/offset the value of your assets. The insurance company is supposed to isolate you from that to the extent of your limits.

A paid off house and paid off airplane, as assets, especially in our inflated plane market, are almost certainly targets. If they have leans, I’m not certain if they could take the asset, and leave you with the leans. Refer to my disclaimer above. 
 

PI Lawyers want EASY money unless they have a chance at monster money, I’m talking corporate level money. But as I understand, the insurance, no matter the kind is designed to isolate or minimize your assets from a judgment against them. Based on that assumption, low liability limits would only encourage PI attorneys to go after whatever assets you have. Your “judgment proof” scenario would require no/low insurance AND no assets. 
As part of the policy, your insurance company should require the other party to release you from further liability once they pay, as the insurance is there to pay FIRST, Aviation or otherwise. 
Now the nightmare scenario here is your incident has multiple lawsuits against you for the same occurrence that the combination of far exceeds your coverage and puts your assets at risk anyway. 
Not a SME either, but what I’ve learned over the years. 
 

[LANCECASPER]

8 hours ago, Jetpilot86 said:

My first disclaimer is to talk to a PI attorney to see what they do/would go after. 
My research has indicated to me that if you have net worth, it will be gone after, ESPECIALLY if there is not enough liability insurance to cover/offset the value of your assets. The insurance company is supposed to isolate you from that to the extent of your limits.

A paid off house and paid off airplane, as assets, especially in our inflated plane market, are almost certainly targets. If they have leans, I’m not certain if they could take the asset, and leave you with the leans. Refer to my disclaimer above. 
 

PI Lawyers want EASY money unless they have a chance at monster money, I’m talking corporate level money. But as I understand, the insurance, no matter the kind is designed to isolate or minimize your assets from a judgment against them. Based on that assumption, low liability limits would only encourage PI attorneys to go after whatever assets you have. Your “judgment proof” scenario would require no/low insurance AND no assets. 
As part of the policy, your insurance company should require the other party to release you from further liability once they pay, as the insurance is there to pay FIRST, Aviation or otherwise. 
Now the nightmare scenario here is your incident has multiple lawsuits against you for the same occurrence that the combination of far exceeds your coverage and puts your assets at risk anyway. 
Not a SME either, but what I’ve learned over the years. 
 

Laws regarding liens vary from State to State, but in Texas where I am, some types of real property are exempt from having a judgment lien placed on them. Homestead property is the most common exemption. 

[Jetpilot86]

44 minutes ago, LANCECASPER said:

Laws regarding liens vary from State to State, but in Texas where I am, some types of real property are exempt from having a judgment lien placed on them. Homestead property is the most common exemption. 

As a former Texas resident, I’d  forgotten about that one. Can’t recall what FL is in comparison. 

[Hank]

7 hours ago, 1980Mooney said:

 

I think that you are kidding yourself if you are worrying about whether a big umbrella policy will potentially make you a “big target”….as if you are already not considered to be a big target.   By virtue of being an “airplane owner” you immediately draw attention and rise to the top of the list of targets for the PI lawyers to further consider and analyze.  When 99% of the population hear you are an “airplane owner” they think “$$$”. They don’t know the difference between a Mooney and a TBM or Pilatus or King Air or Cirrus.  For the PI lawyers we are immediately in the “cream” that has risen to the top which they want to filter.  

My coworkers were gaga when I bought my plane. They asked what it was, I said "Mooney," they all rushed goggle-eyed to their keyboards to look it up. "Wow, I wish I had 700K to buy an airplane with" was typical of the first comments. I answered back, "me, too. That's why I bought a 1970 model." More blank looks . . . "Hey, Scott, that plane's older than you!" and they began picking on each other again instead of on me.

But it's the typical reaction to hearing that someone owns a plane. My coworkers were probably shocked and saddened to see "just" 700K rather than 2.5M. Few get excited about an airplane that is worth the price of a new SUV . . . . And the big PI lawyers know this, too; the small ones will learn it early in their investigation against you. An airplane worth a house may interest them longer.

[Danb]

Just sent my hours etc, to the agent for March renewal. 

[Parker_Woodruff]

On 12/27/2023 at 9:58 PM, Stephen De Klerk said:

 

1. One insurance company is being sued for age discrimination, so how the issue of age will be handled by the insurers may change in the future.

 

Where'd this news come from?  I'd be really surprised if that went anywhere.

[MikeOH]

1 hour ago, Parker_Woodruff said:

Where'd this news come from?  I'd be really surprised if that went anywhere.

Curious your reasoning on why that won't get anywhere?

Does the actuarial data actually support a dramatic increase in accidents/claims to match the dramatic increase in premium past a certain age?  If not, then it seems to me the suit has some merit.  I.e. the rate increases are arbitrary and capricious based only on age alone; sounds like age discrimination.

[PT20J]

What law prohibits insurance companies from charging more based on age?

[hammdo]

For instance, my medical and life insurance goes way up as I age but, I can still get insurance as I get older. I think simply ‘not offering’ because of age would be challengeable . We’ll see …

-Don

[MikeOH]

44 minutes ago, PT20J said:

What law prohibits insurance companies from charging more based on age?

I believe there are rather well established employment laws against discrimination by age, race, gender. etc.  While many states are 'at will' an employer needs to be pretty careful in both hiring and terminations to avoid running afoul of discrimination laws.

I'm curious why the same principle would not apply to the purchase of products such as insurance.  If they can provide actual data to prove that older pilots are having more accidents then a higher premium would clearly be justified.  Absent that evidence...seems like age discrimination to me.

[dkkim73]

This is a much more general question.

Perhaps a lawyer will step in on the legal basis of insurance practice.

Insurance companies discriminate heavily and in a fine grained manner based on many things. No way they will give the same policy to a healthy 25 yo as to a fat 52 yo with a positive family history. 

Even the gravy train of last resort (the government) implicitly does this with up front selection eg for military, as they may own the lifetime risk, eg disability determination when mustering out etc. 

We may see something interesting with the "all people should be made perfectly equal" vibe in political society currently. There is already some mandated risk acceptance in the law, eg portability. I suspect there won't be enough of a lobby to force companies to take hits on GA, not enough of an audience of voters to appeal to. Just my hunch. Not an insurance guy, just a physician who's watched the govt play Econ 102 Sim Lab with healthcare for 15yrs...

DK

[MikeOH]

2 hours ago, dkkim73 said:

This is a much more general question.

Perhaps a lawyer will step in on the legal basis of insurance practice.

Insurance companies discriminate heavily and in a fine grained manner based on many things. No way they will give the same policy to a healthy 25 yo as to a fat 52 yo with a positive family history. 

Even the gravy train of last resort (the government) implicitly does this with up front selection eg for military, as they may own the lifetime risk, eg disability determination when mustering out etc. 

We may see something interesting with the "all people should be made perfectly equal" vibe in political society currently. There is already some mandated risk acceptance in the law, eg portability. I suspect there won't be enough of a lobby to force companies to take hits on GA, not enough of an audience of voters to appeal to. Just my hunch. Not an insurance guy, just a physician who's watched the govt play Econ 102 Sim Lab with healthcare for 15yrs...

DK

Interesting comments! The whole ‘equity’ thing is a good point.

Still, your points are based on demonstrable differences in the served customer that would justify higher healthcare premiums.

My beef is the apparent arbitrary rate hikes based solely on reaching an arbitrary age when it comes to aircraft insurance.

[dzeleski]

10 hours ago, MikeOH said:

I believe there are rather well established employment laws against discrimination by age, race, gender. etc.  While many states are 'at will' an employer needs to be pretty careful in both hiring and terminations to avoid running afoul of discrimination laws.

I'm curious why the same principle would not apply to the purchase of products such as insurance.  If they can provide actual data to prove that older pilots are having more accidents then a higher premium would clearly be justified.  Absent that evidence...seems like age discrimination to me.

But this isnt employment or health services. You are effectively buying a service from a company, they can provide that service or not. Car insurance companies have been giving women cheaper rates for decades due to lower risk. If thats legal there is no chance in hell age gets removed as a variable for rates.

NY has something that protects older car drivers, which basically says they can charge more but not excessively more. In the US cars are considered somewhat mandatory for most of the country, personal airplanes.... probably not so much.

https://www.dfs.ny.gov/insurance/ogco2001/rg108221.htm

Also scientifically there are so many studies that show that as we age our reaction times worsen and our cognitive abilities worsen. I know none of us want to admit that but its a simple fact of life unfortunately.

 

[LANCECASPER]

I'll take the other side for a moment. At this point the FAA isn't saying that you can't fly GA after a certain age. 

The insurance companies are a for-profit business. When they see an age category in which they are paying out more in claims than collecting in premiums, they understandably raise the rates. At a certain age they may determine that the risk is high enough that they won't offer a policy. I think if a 16 year old male wanted to insure a new Ferrari the answer would be the same. They couldn't charge enough in premiums to cover the potential risk.

This may work to everyone's advantage though. It's tough to tell someone you are close to that they shouldn't drive any more or fly any more. The simple fact is that for most people, and there are always a few exceptions, cognitive abilities decline with age. I am the youngest of 4 children in a family with a large age span and I am seeing this in two of my older brothers now. The problem with exceptions is that everyone thinks that they are the exception.

This is not going to be popular, but I think there should be a reasonable cognitive test for a Class 1, 2 and 3 Medical and Basic Med. We get a license that gives us the privilege of carrying passengers with us. It works out most of the time, but when someone who is declining in cognitive ability is put in a high stress situation, the outcome isn't good. Having another pilot onboard is not a bad thing. Being limited to day vfr is not bad either. There are ways to address this but to think that most people past a certain age have the same reflexes and decision making abilities they once had is not realistic. In many instances, if your airport doesn't require you to carry insurance you could fly without it or with just liability, but that's not really the point - you are being told that you are higher risk by someone who would have a profit motive to keep you insured. It's not a bad idea to listen to what they are saying and get an unbiased medical opinion to see where you stand.

We tend to minimize the importance of mental health - it's just starting to get the attention it deserves. It's a catch-22 since cognitive decline and inability to judge one's own capabilities seem often to go hand-in-hand. Modesty is recognizing our own limitations. Opposing that, being a pilot has always carried some pride with it, since, as an example, only about 2 out of 1000 citizens in the U. S. carry a pilot's license. Sorting out a balance between those two characteristics can be difficult.

We're all getting older, one day at a time.

[Skates97]

On 12/27/2023 at 8:03 PM, PT20J said:

Do you really think a $400/hr lawyer would be involved in a $2000 insurance claim?

I happen to know a bit more about the second deal and it was more of a "you take care of this and I'll help you with that" deal.

On 12/28/2023 at 5:23 AM, Pinecone said:

Yes, as the insurance company is paying that $400 per hour whether the lawyer is working a case or sitting drinking coffee.  Their lawyers are full time for them.

We keep a lawyer on retainer for the corporations that handles most of what we need for a flat monthly fee. Some things fall outside the scope of our agreement with him and we get billed hourly rates for those, but the vast majority falls under our monthly retainer. 

[hammdo]

I fly with my CFI monthly to keep me sharp. We do various approaches and task saturation events to keep me on ‘edge’. He is a King Air instructor and evaluator so he has a high standard. He’ll let me know if I’m not on my game. I find that to be a good way for me to gauge. Since I also deal with software architectures and lots of math/designing as my everyday job, that helps keep the mind very active.
 

Flying often has really helped me now that I’m in my 60s. Quarterly Medical’s with my Primary (full workups) and twice yearly exams with my specialists keep me in check. I’m very aware of what age related issues arise so I know it will eventually come time to stop flying. I’m doing what I can to keep sharp and in shape. It takes more work as we age just to maintain what we have currently have. I fly 100+ hours a year and at least weekly (when not down for maintenance). Been doing that the last 3 years and getting my Instrument rating really pushed me.
 

I also do monthly FAA Safety classes/programs. It’s a lot of work but I love flying and want to do it for as long as I can.

MAPA - did that 2 years ago and plan on this year since it’s in Texas again.

-Don

[Parker_Woodruff]

15 hours ago, MikeOH said:

Curious your reasoning on why that won't get anywhere?

Does the actuarial data actually support a dramatic increase in accidents/claims to match the dramatic increase in premium past a certain age?  If not, then it seems to me the suit has some merit.  I.e. the rate increases are arbitrary and capricious based only on age alone; sounds like age discrimination.

Auto insurance companies charge more for younger drivers and older drivers and auto insurance is much more regulated than aviation insurance.  Auto insurers allowed to require a medical exam for older drivers.

Insurance underwriting is discernment and some might call it "discriminatory" on many underwriting factors.  One insurance company flat out won't cover non-hangared planes in many coastal states.  

Aviation insurers don't have the large numbers.  But there's no reason to think that just because someone is in an airplane rather than a car at an older age that their skills aren't subject to decline.

Check out Wilson vs. Associated Aviation Underwriters where the there was an attempt at employment and housing regulation to be imposed on insurance underwriting. https://caselaw.findlaw.com/court/ca-court-of-appeal/1846912.html

Insurance as a viable product cannot survive if consumers demand that the exceptions dictate the rule...

[Parker_Woodruff]

2 hours ago, MikeOH said:

 

My beef is the apparent arbitrary rate hikes based solely on reaching an arbitrary age when it comes to aircraft insurance.

It's not arbitrary though.  I can think of different insurance underwriting companies with age related underwriting guidelines at ~65, 69, ~72, 75, and 79.

The more the government gets involved, the less options there are.

A lot of aircraft owners and aviation operators in Missouri found this out a few years ago and the course is finally being corrected.  Basically, aviation insurance underwriting regulation in Missouri became so heavy handed that major companies just stopped insuring or writing new business there.  I heard one company even got in trouble for charging *too little* on a policy.

The same is happening in California where all kinds of insurance companies are just leaving because of regulation.  I'm not aware of any aviation insurers leaving California, but I know some of them refuse to get set up to do business there.

[hammdo]

Looking at the accidents listed, looks like most are in F/J/K/M/R/S models. More plane/faster reflex’s needed?

where 1 A, 1 B, 5 Cs. I wonder if some of the newer/faster models become too much to keep up with if not flying enough to stay sharp? I’d be curious to know the number of hours flown from the pilots in the last couple of years on the accident planes…

-Don

[MikeOH]

1 hour ago, Parker_Woodruff said:

Auto insurance companies charge more for younger drivers and older drivers and auto insurance is much more regulated than aviation insurance.  Auto insurers allowed to require a medical exam for older drivers.

Insurance underwriting is discernment and some might call it "discriminatory" on many underwriting factors.  One insurance company flat out won't cover non-hangared planes in many coastal states.  

Aviation insurers don't have the large numbers.  But there's no reason to think that just because someone is in an airplane rather than a car at an older age that their skills aren't subject to decline.

Check out Wilson vs. Associated Aviation Underwriters where the there was an attempt at employment and housing regulation to be imposed on insurance underwriting. https://caselaw.findlaw.com/court/ca-court-of-appeal/1846912.html

Insurance as a viable product cannot survive if consumers demand that the exceptions dictate the rule...

I'd point out that all of us pilots have to have a medical exam; so, not exactly apples and apples with auto insurance.  Again, I have no issue with higher rates if there is DATA to support higher accident rates with older pilots; clearly, there are plenty of data for the age adjustment with car drivers.

Same with the not covering planes close to the coast; I bet there is data showing a much higher loss rate.

I think your third paragraph nails my animus on this subject: the ASSUMPTION that just because you are old makes you unsafe and, therefore, we can justify a higher rate.  The response sounds like, well we can't prove it, so that 'logic' is an infallible reason to justify the higher rate!

And, for the record, I am NOT advocating for more government 'help'!!

 

Finally, that is a pretty weird cite (if I'm reading the brief correctly) as the whole issue was whether the FEHC had jurisdiction; they said "no we don't", the plaintiff got a writ to overrule that, then the FEHC, on appeal, got the writ overturned.

[MikeOH]

1 hour ago, Parker_Woodruff said:

It's not arbitrary though.  I can think of different insurance underwriting companies with age related underwriting guidelines at ~65, 69, ~72, 75, and 79.

The more the government gets involved, the less options there are.

Hmm, that actually sounds like proof of my claim that it is arbitrary: each company has picked a different age where they've arbitrarily 'decided' the pilot is unsafe!

Again, to be clear, I'm certainly NOT advocating for government involvement!