Insurance - age surcharge

ejensen

ejensen

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Eric Jensen
Just got my quote for renewal in November. 1968 Mooney Executive. I've been with USAIG through AOPA since I bought the plane 5 years ago. Much to my surprise I found that USAIG put a surcharge on OLDER aircraft. Didn't ask how old but my evidently is. Surcharge is about 25%. They found a lower quote with AIG but it was 100,000 per seat instead of smooth and they won't right smooth on OLDER aircraft.

I'm having trouble imagining what age has to do with liability.
 
Are you sure the surcharge is on the liability, and not the hull? I could understand the hull side, since the increasing price/decreasing availability of many parts for older planes is making many of them total constructive losses at much lower damage levels when 20 years ago they would have been economically reparable after that much damage. But I can't see the connection between older planes and higher liability rates unless there's actuarial data to show a higher overall accident rate on older planes.
 
ejensen said:
Just got my quote for renewal in November. 1968 Mooney Executive. I've been with USAIG through AOPA since I bought the plane 5 years ago. Much to my surprise I found that USAIG put a surcharge on OLDER aircraft. Didn't ask how old but my evidently is. Surcharge is about 25%. They found a lower quote with AIG but it was 100,000 per seat instead of smooth and they won't right smooth on OLDER aircraft.

I'm having trouble imagining what age has to do with liability.
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Ouch! 25%! I have heard of this but I assumed (which is always wrong) that is was due to hull, not liability, same as Rev. Ron. I don't know if its a year in general or specific to aircraft type that dictates the surcharge. I believe there is also an "age" charge for us humans after a certain point.

Well time to get that 201 Eric. :)
 
USAIG raised this issue with me on the A-36 and the P-Baron. 25 years old seems to be when they try to do this. They didn't on my A-36 last year because I was a long time customer, but they raised the issue. On the P-Baron, they flat told me if it was 25 years old when I brought it to them, the rates would be different. I didn't go into a lot of details with them because it didn't apply to me currently, but I'm well aware, the issue is dangling around out there. They are finding more and more reasons to go to 100,000 per seat from 1MM smooth.

I brought the P-Baron elsewhere to get the 1MM smooth. USAIG offered to look at it again when I have 500 hours in the plane. Gave me know manner in which to reasonably build that time with coverage or any sort. Their attitude was just go somewhere else until we like you. Didn't leave a very good taste in my mouth. I expressed that to the broker very succinctly.

Best,

Dave
 
Ron Levy said:
Are you sure the surcharge is on the liability, and not the hull? I could understand the hull side, since the increasing price/decreasing availability of many parts for older planes is making many of them total constructive losses at much lower damage levels when 20 years ago they would have been economically reparable after that much damage. But I can't see the connection between older planes and higher liability rates unless there's actuarial data to show a higher overall accident rate on older planes.
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Assuming I understood the agent, the AIG limit on liability was due to the age. He said AIG wouldn't write 1 million smooth on older aircraft. For USAIG I'm not sure. It sounded that way. I'll ask when I call to accept. If it was only hull then the increase was more like 50%. Total bill went from $1420 to $1700 after being almost flat for 4 years. This is 1 million smooth and $65,000 hull; Single pilot, 1500 hrs (150/yr), PP-IR.

Mooneys are still very well supported for parts since most are interchangeable with the later models. There are a few orphans parts, the hydraulic flap pump being well known.
 
Here is my cynical view; admittedly this is from a person who really doesn't know much about the industry.

I think they have admin people/bean counters whose sole purpose is to figure new ways to enhance their bottom line. So they come up with these plans such as 'exclusions' and 'underwriting-after-the-claim', and now someone has hit on "what techniques are available for us to upwardly modify premiums ". And the seminar these folks will go to discusses such things, including titles such as "How To Get The Client To Swallow These Upward Modifications". Well, age - of course! Some,... or most of them would buy that! So that is the lastest ploy, can anyone predict their next scam?!

The gas price people have their own scam-generating crowd. "See! I told you if we jacked prices through the roof they would be jumping with glee when they 'drop' to $4.00 per gallon of avgas!" Most of us can't remember the standards of last summer, when people would be upset with what; $2.75 per gallon? We are just 'delighted' to find $3.75 gas now.
 
<Ignorance Alert!!>

Ok, what do y'all mean by "smooth" in this context, please?
 
etsisk said:
<Ignorance Alert!!>

Ok, what do y'all mean by "smooth" in this context, please?
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Liability is $1,000,000 with no per passenger sublimits. So if I have one pax, they and get the entire amount not just the $100,000 sublimit. Basically you have 1 million total for any and all liability claims.
 
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etsisk said:
<Ignorance Alert!!>

Ok, what do y'all mean by "smooth" in this context, please?
Click to expand...

Many aviation insurance policies will have a $1 million aggregate liability limit but then have a $100,000 per seat limit for passenger liability. IOW, you have a four seater and a $1M/$100k policy? Well then you have 3-$100,000 passenger liability policies and a $700,000 liability policy for anyone or anything on the ground. Usually the premium decreases somewhat, but not as much as you might think given that the company's liability is for all intents and purposes capped at 30% of the policy stated liability limit. Why somone would pay money for such a sham has always baffled me, but apparently Barnum (or was it Bailey) was right.

A policy without such "bumps" or sub-limits is refered to as a being "smooth" coverage.
 
Ed Guthrie said:
Why somone would pay money for such a sham has always baffled me,
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Ed do you think it a good reason if a person has a personal or business umbrella pol that will provide further protection?
 
Let'sgoflying! said:
Ed do you think it a good reason if a person has a personal or business umbrella pol that will provide further protection?
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Dave, many umbrellas require higher limits on the underlying primary insurance. And many, many (no, most) umbrella policies except aviation from coverage.

My home/auto insurer requires $300K liability on the primary auto policy and will not cover aviation liability with their umbrella policies.
 
Dave:

I have $1MM smooth on each plane and a $1MM umbrella but it does exclude aviation. Of all the discussion on this I've heard on different boards and groups I'm in, only one insurer doesn't exclude aviation in their umbrella. That insurer wanted all the rest of your coverage: house, car, life etc. Didn't make sense to me.

What I've done is segregate assets and keep them in different entities to make it more difficult to get to them. In Texas, it's difficult for them to take your personal or business homestead. Your federal retirement plan is difficult to attach. Many other options available. At some point, you may want to discuss this with a professional that specializes in financial planning and asset protection. Be happy to chat with you in general, but I'm more of a client than an advisor on this issue.

Best,

Dave
 
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Followup -

Just got off the phone with Bruce at AOPAIA. I asked if the surcharge applied to just the hull coverage or the whole policy. He said it applies to the whole policy!! He doesn't know how age affects liability either. Also asked when this kicks in --- over 30 years (1974 now).

Eric
 
ejensen said:
Followup -

Just got off the phone with Bruce at AOPAIA. I asked if the surcharge applied to just the hull coverage or the whole policy. He said it applies to the whole policy!! He doesn't know how age affects liability either. Also asked when this kicks in --- over 30 years (1974 now).
Click to expand...

Thanks for the udpate. Now I have four years to get a newer plane. :)

I agree, another "tool" in which to generate revenue. Somebody made VP over this one. Sheesh.
 
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