How do you insure?

Discussion in 'Flight Following' started by Challenged, Jun 13, 2018.

  1. Challenged

    Challenged Cleared for Takeoff

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    Do you insure your airplane for the full purchase price and then continually upgrade the hull value each year as you add avionics or repaint, etc...? Historically I just insured for purchase price and then considered anything I added after that lost. Any general rule of thumb for how much each additional $10k in hull would cost a person per year or would it vary widely?
     
  2. EdFred

    EdFred Touchdown! Greaser!

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    I insure it for what I think I could sell it for.
     
  3. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    I insure for what it would cost us to replace the aircraft with something comparable. Keep in mind that may be above what it would sell for as in some cases you have an aircraft that is not readily available on the market. For example, something older and generally of a lower resale value that you've put a very nice panel in. In that case, you may need to include enough money to buy an airplane and then upgrade it to be like what you had.

    You can update the hull value of your aircraft anytime throughout the year. So if you make a major change/upgrade, it's important to tell your broker immediately. For example, after I put the MT props on the 414 I increased the hull value by $40k and was able to do that immediately. Had I not and geared up the plane prior to upping it at renewal, I wouldn't have been made whole for that damage.

    One friend had a total loss on his 310 when the hangar it was in caught fire. It was an older 310B, but a very nice one, insured for well above resale value but at a price that made him whole again financially. He replaced it with a 310Q and is happy.
     
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  4. frfly172

    frfly172 Touchdown! Greaser!

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    Pick a number ,that your comfortable with. Then insure the airplane for agreed upon value.
     
  5. chemgeek

    chemgeek Pre-takeoff checklist

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    I agree with insuring for estimated replacement cost. Especially if you have made significant improvements to an owned airplane over the years. Most planes on the market will not have the quality of improvements that a long-term owner has lavished on it, and such well-maintained, low-time, well-appointed planes are available, they cost a pretty penny.
     
  6. cowman

    cowman En-Route

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    Yeah I figure what it would cost me to replace my plane with one that's at least as good factoring in stuff like pre-buys, ferry/fuel to get it home, the first higher $ annual, and the fact that the odds of finding two airplanes equipped the same exact way and of the same exact value are pretty much nil. I added about $10,000 to my purchase price. It's not an exact science after all.
     
  7. Clark1961

    Clark1961 Touchdown! Greaser!

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    I insured for what I figured was a reasonable sales price. It kept the premiums low.
     
  8. Twin_Flyer

    Twin_Flyer Cleared for Takeoff

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    :yeahthat:
     
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  9. Chip Sylverne

    Chip Sylverne En-Route

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    Fear is the poison of our lives.
    At least on a new purchase, many underwriters will not write a hull value in excess of the purchase price. Increases must be documented. Read your application and policy.
     
  10. Clark1961

    Clark1961 Touchdown! Greaser!

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    Worse yet, insurers may increase rates when hull value is held steady while the market drops. The concept of being made whole again is not embraced.
     
  11. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    I’ve never had that issue in 9 years and4 airplanes. Find a new broker.
     
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  12. Clark1961

    Clark1961 Touchdown! Greaser!

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    LOL. Ted has all encompassing experience and perspective....not.
     
  13. Ryanb

    Ryanb Final Approach PoA Supporter

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    As if that part wasn’t obvious enough already..

    :rolleyes:
     
  14. Isosceles

    Isosceles Pre-Flight

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    i take liability only and pocket the difference.
     
  15. MauleSkinner

    MauleSkinner En-Route

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    There comes a point where that's the best answer...I had hull on one airplane for the entire time I owned it, dropped hull during ownership of one, and didn't put hull on one at all.

    The one I had hull on the entire time (based on what it would cost to build up an identical airplane) proved to be well worth the investment.
     
  16. mondtster

    mondtster Pattern Altitude

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    How does the underwriter know what you paid for the airplane? I've never been asked.
     
  17. denverpilot

    denverpilot Taxi to Parking

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    I self-insure with my billions.

    Oh wait, no I don't. I pick a number I'd be fine getting if something happened to the airplane and dream of self-insuring. :)
     
  18. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    Never said that. But I've seen lots of people who think they do, when what they really have is a bad broker or a bad insurance company.

    "I've used Avemco for years" means "I haven't shopped around at all and have a terrible insurance company."
     
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  19. Clark1961

    Clark1961 Touchdown! Greaser!

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    So? You made a claim that I needed a different broker. You have no basis for that claim since you don't know which broker I was using or the circumstances of the quote.
     
  20. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    I did make that claim, and I still think it's true. If I was getting the results you are, that's what I'd do and as I said, I haven't had that problem. I really couldn't care less what you pay for insurance.

    Insurance is ultimately driven by markets. The past year following the hurricanes that produced significant damages in Houston and the Caribbean, insurance as a whole went up. Still, I was able to find reasonable rates transitioning to a hard-to-insure aircraft. Much of that had to do with previous experience, but much of that also had to do with a good broker.
     
  21. Twin_Flyer

    Twin_Flyer Cleared for Takeoff

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    When I first insured I took the average of what thought were good planes on the market, throwing out the junk and the ones the owner thought were platinum, and came up with a number. Insurance broker never asked, we just went with that number. That number, btw, was above what I paid for the plane. It was all about replacement cost to me...:yes:
     
  22. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    I've never been asked what I paid for a plane, nor have I been asked to justify an initial request for hull coverage. Whenever I have requested an increase in hull coverage they do ask for a reason which I provide and I've never been questioned. MT props adding $40k to hull value, no issue. Avionics upgrades and engine overhauls are usually the other things that I use to add to the hull value.

    I have friends who have their planes way, way overinsured, and they don't have an issue getting coverage, either.
     
  23. bradg33

    bradg33 Cleared for Takeoff

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    Depends on a lot of factors. Underwriters, of course, have access to valuation data. If you want to insure your airplane for a number that is far outside the "range" of values for your aircraft model/year (for example, you want to insure your 1963 Cessna 172 for $500k), they start to ask questions. If you want to insure it at a value that fits within the underwriter's range of value, seems they usually just say "ok."
     
  24. midwestpa24

    midwestpa24 Line Up and Wait

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    From my experience with autos, most insurance companies are more than happy to charge you higher premiums to over insure your property. That is especially true with antique or unique cars that book values are hard to ascertain.
     
  25. weilke

    weilke Touchdown! Greaser!

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    In an 'agreed value' policy, the only interest the company has in not over-insuring an item, is that they dont want to create an incentive for a fraudulent claim. With the premium calculated as a percentage of hull value, they are just a-ok with a customer insuring on the high end of the value range.

    There is some downside to having a an abnormally high insured value. The point where insurance 'totals' an aircraft is based on percentage of the claim vs. agreed value. If you just added up all your avionics purchases, the new propeller etc. and decide that your 172 is worth $80,000, you may be able to get it insured at that value. If you now taxi into a hangar corner and mash a a wing leading edge to the tune of $37,000, the insurance will send your plane to a metal shop to get the wing repaired or replaced. You'll be out of a plane for 6 months and when you get it back, you now have a plane with major damage history and a couple of extra rivet lines to prove it. Had you insured the plane at its actual replacement value for $60,000, the insurance would have written you a check on friday for a boboo that happened on monday.
     
  26. midwestpa24

    midwestpa24 Line Up and Wait

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    That can also be a downside to being under valued. I've seen good aircraft at insurance auctions that are "totaled", with relatively minor damage. The owner of the aircraft got a check from the insurance company that didn't cover the actual cost to replace with a like aircraft, and the bidders at the auction just got a hell of a deal. I knew a guy (A/P and IA) that was paying for his retirement by buying lightly damaged "totaled" aircraft, repairing them and selling them.
     
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  27. Chip Sylverne

    Chip Sylverne En-Route

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    Fear is the poison of our lives.
    I'm not arguing what brokers "usually do", or what is accepted common practice. I'm saying look at the fine print of your next renewal form. IIRC, it was Starr's that clearly said they will insure no more than the purchase price. This stuck with me because I got a pretty good below market deal on my airplane, and it took a few renewal cycles to get an agreed value I am comfortable with. I understand they are trying to control fraud claims and "unjust enrichment", nevertheless, the language may be there and they may attempt to enforce it in the event of a loss, especially in the first year of ownership.
    Always read carefully. If it ain't in the contract, it ain't. If it is, it is, regardless of what the broker/salesman says.
     
  28. Chip Sylverne

    Chip Sylverne En-Route

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    Fear is the poison of our lives.
    That's not fair Ted. They may be expensive, and like to write split limits, but the claims service is pretty darn good.
     
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  29. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    You make a fair point, Chip. Having never had to make a claim on any aircraft, I can't say how Avemco or any other company I've dealt with is from a claims perspective first hand, and there is more to insurance than lowest cost.

    However I've observed Avemco's rates (if they'll even quote) on a lot of aircraft to be way out of line with the rest of the industry, and I've seen plenty of successful claims from companies that are more reasonably priced.
     
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  30. Checkout_my_Six

    Checkout_my_Six Final Approach

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    service with a smile.... :D
     
  31. bradg33

    bradg33 Cleared for Takeoff

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    I'd like to see that application. I've filled out several insurance applications over the years for several companies, and (a) I've never seen that limitation and (b) I've never been asked what I paid for the airplane (either by my broker or on an application).
     
  32. Mtns2Skies

    Mtns2Skies Super Moderator Management Council Member

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    I followed @Ted DuPuis' advice and insure for what I would need to replace the aircraft. Considering 180 values have skyrocketed the past 6 months I've already increased my hull value on that premise alone with no issue. Of course we also have the same broker so YMMV.
     
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  33. bradg33

    bradg33 Cleared for Takeoff

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    I've had the same experience with Avemco. Their rates tend to be comically high (they seem to target the folks who don't shop around at all) and their training requirements laughable. Just for fun, I got Avemco to quote my Twin Bonanza. The rate was more than 4x what I was quoted by several other companies, and Avemco insisted that I go to formal "type school" for the airplane (ignoring the fact that no such thing exists for the Twin Bonanza).
     
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  34. Ted DuPuis

    Ted DuPuis Administrator Management Council Member

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    Back in the day I talked to them about my Aztec when I first got it and insurance in general. The experience was not a positive one, and I didn't go back.

    I think their business model is that they get $100 hamburger customers who don't shop around. I don't know anyone who uses them for a serious go-places airplane. That doesn't mean they don't have those customers, I'm sure they do, but it seems their standard customers don't fall in that category.
     
  35. Chip Sylverne

    Chip Sylverne En-Route

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    Fear is the poison of our lives.
    Pretty much spot on. They target Cessna, Piper, Beech single engine fixed tricycle gear owners with massive advertising, and the rates for split limits are pretty competitive. Smooth limits and complex airplanes are not what they want to cover. But they honor their contracts generally without much grief.

    I'm an AVEMCO Corp alum from the 90's. I don't think much has changed under HCC, and now Tokio Fire and Marine.
     
    Last edited: Jun 14, 2018
  36. Mtns2Skies

    Mtns2Skies Super Moderator Management Council Member

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    +1 on avemco being absurd. Quoted me ~2x what anyone else was on the 180.
     
  37. chemgeek

    chemgeek Pre-takeoff checklist

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    I ditched Avemco 30+ years ago. Maybe they are better now, but they have never come in competitive with my broker. First year I owned my AA1A my premium was $600. At renewal, with 100+ hours in type under my belt, I was quoted $1200. Dropped them like a hot rock, and insured through my type club for less than I paid in year one. I have never paid more than about $800 since then, including for a well insured AA-5 now. Rates go up and down a bit with national claims history. A major WX disaster can inflate rates for a year or two. It pays to shop. If you have a type club with a good safety record, you can get good rates.
     
  38. Fearless Tower

    Fearless Tower Touchdown! Greaser!

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    That’s been my experience as well.

    Avemco seems to do a good job of providing competitive/reasonable coverage for the entry level 2-4 seat fixed gear singles and non-owned. But as you move up to the higher performance airplanes and twins, Avemco’s quotes tend to be at least 2-3 times what everyone else is.
     
  39. Fearless Tower

    Fearless Tower Touchdown! Greaser!

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    You guys both use TJ?
     
  40. Fearless Tower

    Fearless Tower Touchdown! Greaser!

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    I will say this about Avemco: they are good to work with if you have a claim.
     
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