What will insurance pay for

[Subsea]

After reading that my automobile policy doesn't cover nuclear war, it got me thinking about my plane policy.

I know my automobile insurance will not cover my engine repair unless it was damaged in an accident, but in aviation, the engine can cause the accident.

Typically, if you have hull insurance (in motion and not in motion) will insurance cover your engine if:

1. Start-up your engine while over priming and the engine catches on fire and burns up (just the engine).

2. Start up and immediately throw a rod out of the cases.

3. Take-off roll and you throw a leg out of bed, and skid pass the threshold and crack a wheel pant (starting a claim).

4. In flight catastrophic failure, and non-event landing.

5. In flight failure, and you bend the plane up, but not totaled.

 

[Stewartb]

I can tell you from experience that unless you pay extra for no-damage remote recovery benefits #2 and #4 will be on your nickel. If you do have recovery coverage they'll bring it back to a service facility but the engine is your problem. In my case they didn't want a helicopter to lift my plane out so they paid for transportation of a new engine and mechanics to install on a remote riverbank. They did not pay a nickel for the engine, prop, or prop governor. (broken rod in-flight. gaping hole in the crankcase)

 

[James331]

What will they pay for, as little as possible.

 

[Henning]

After reading that my automobile policy doesn't cover nuclear war, it got me thinking about my plane policy.

I know my automobile insurance will not cover my engine repair unless it was damaged in an accident, but in aviation, the engine can cause the accident.

Typically, if you have hull insurance (in motion and not in motion) will insurance cover your engine if:

1. Start-up your engine while over priming and the engine catches on fire and burns up (just the engine).

2. Start up and immediately throw a rod out of the cases.

3. Take-off roll and you throw a leg out of bed, and skid pass the threshold and crack a wheel pant (starting a claim).

4. In flight catastrophic failure, and non-event landing.

5. In flight failure, and you bend the plane up, but not totaled.

1. Yes

2. Partial, will explain.

3. I have no clue what you mean by 'throw a leg out of bed'.

4. Partial

5. Partial

Here's the deal on partial, and it's a point of argument and negotiation for an engine. The legal standard on catastrophic (not wear and tear) failure is 'the point of failure is not covered, all damages stemming from that are.'

So let's just stay with the engine itself from here on because all the rest of the plane and resultant damage is covered no question. The question becomes what can you negotiate as the initial point of failure. If you are dealing with an in house adjuster, they may want to use "the engine" as the initial point of failure and remove it from the claim. They can only get away with this if you agree. Their next negotiating stop is the rod, but they will accept rod bolt, and pay for everything but the rod bolt that broke first. If you have an outside, independent adjuster which most aviation insurance companies use, this is an easy negotiation since they get paid on a percentage of the claim. However, if an adjuster sits on 'rod failure' I would accept it because it probably involves getting more people involved in the claim at the office, and that almost never has a desirable result for anyone involved. Not having the rod covered is a small hit in the grand scheme, and you probably wouldn't win the claim in court, and the continued process will cost more than rod.

 

[Henning]

What will they pay for, as little as possible.

That's not totally fair. Often times insurance companies will spend money they could easily and legally deny to maintain customer loyalty and retention. I've personally written the checks for Allstate where they went way above and beyond for a little old lady. Allstate is very good to their little old ladies. Even aircraft insurance companies value retention, and the very best way to do that is to provide excellent claims service.

 

[Henning]

I can tell you from experience that unless you pay extra for no-damage remote recovery benefits #2 and #4 will be on your nickel. If you do have recovery coverage they'll bring it back to a service facility but the engine is your problem. In my case they didn't want a helicopter to lift my plane out so they paid for transportation of a new engine and mechanics to install on a remote riverbank. They did not pay a nickel for the engine, prop, or prop governor. (broken rod in-flight. gaping hole in the crankcase)

Did you hire an independent adjust to represent you? You missed out on a potential fortune on punitive damages there.

 

[Stewartb]

Insurers don't care about punitive damages. They don't cover mechanical failures. If you think you have a claim against a manufacturer for the failure that's on you. Been there, done that.

I wasn't the least bit interested in punitive damages. I was interested on a pro-rated allowance for a catastrophic failure of a 900 hour since NEW engine that had well documented defective rods. We came to a reasonable agreement.

 

[Subsea]

3. I have no clue what you mean by 'throw a leg out of bed'.

Colloquial term for "throwing a rod".

 

[James331]

Did you hire an independent adjust to represent you? You missed out on a potential fortune on punitive damages there.

And once alls said and done you'd have been better off saving the money you spent on premiums, deductibles, lawyers and the like and just licked your own wounds.

 

[Stewartb]

And once alls said and done you'd have been better off saving the money you spent on premiums, deductibles, lawyers and the like and just licked your own wounds.

Also not correct in my experience. What was yours? You guys like to make stuff up. It shows.

 

[James331]

Also not correct in my experience. What was yours? You guys like to make stuff up. It shows.

Ok

Two engine failures, zero damage.

One car claim, not me driving, utter disappointment in the insurance company, should have just not bothered with insurance.


Did the math on insurance that I've used and those close to me have used, would have been cheaper just putting all that money into a savings account.


Just depends on how much risk you have in your life, and the likely and realistic level of damage you'll do?


I've never had any crazy claims which would have been life changing, with the minor couple times I've dealt with insurance I've felt ripped off.


Having, or not having, insurance is a gamble, what if something happens? what if nothing happens?


Risks on both fronts


YMMV.

 

[asechrest]

The answer is to read your policy.

I have no knowledge of aviation policies, but generally, war, nukes, wear and tear, and inherent vice are nearly universal exclusions even on an open perils policy. As Henning mentions, it is also generally the case that the thing that causes the damage is not covered. To relate it to something in your home, if your dishwasher drain line busts and floods your kitchen, the water damage will be covered, but the dishwasher will not.

 

[asechrest]

Ok
Did the math on insurance that I've used and those close to me have used, would have been cheaper just putting all that money into a savings account.
YMMV.

This is true by definition for many. But you forgot to talk to the lady with the $60k water damage loss. Or the total fire loss. Or the vehicle theft.

 

[James331]

This is true by definition for many. But you forgot to talk to the lady with the $60k water damage loss. Or the total fire loss. Or the vehicle theft.

Or the lady who never had a claim and paid six figures to insurance companies over her lifespan.

Again, risks on both fronts.


In other news imsurance companies sure are turning some good profits.

 

[Subsea]

This is true by definition for many. But you forgot to talk to the lady with the $60k water damage loss. Or the total fire loss. Or the vehicle theft.

I have been in AIG's building in NY. Pretty nice place. They are obviously charging way more for their policies than they pay out in claims...I would be interested in knowing the percentage that we overpay for the "average policy" in order to pay the executives, agents, salesmen, janitors, commercials, ect.

 

[asechrest]

Or the lady who never had a claim and paid six figures toms incurrence companies over her lifespan.

Thus, my point. It's true by definition that many will pay more than they ever get. This is not surprising, because if it wasn't the case, you'd have no company willing to bear your risk.

 

[asechrest]

I have been in AIG's building in NY. Pretty nice place. They are obviously charging way more for their policies than they pay out in claims...I would be interested in knowing the percentage that we overpay for the "average policy" in order to pay the executives, agents, salesmen, janitors, commercials, ect.

Ahhh, capitalism. But they are one of the largest public companies on earth, you know.

Insurance company profits are complex, but you might be surprised to learn that AIG's 2014 combined ratio for personal insurance was 99.9%. Meaning they just scraped by with an underwriting profit. This doesn't mean the company was not profitable, because insurance companies have a number of ways to make money, including investing premiums. You can look up their annual report online.

 

[Henning]

Insurers don't care about punitive damages. They don't cover mechanical failures. If you think you have a claim against a manufacturer for the failure that's on you. Been there, done that.

I wasn't the least bit interested in punitive damages. I was interested on a pro-rated allowance for a catastrophic failure of a 900 hour since NEW engine that had well documented defective rods. We came to a reasonable agreement.

Insurance companies quake and tremble at the phrase, "bad faith". You are wrong, if you have a claim against the manufacturer that you have insured, it becomes a subrogation claim for the insurance.

What you could have got was everything covered except the rod with an easy sentence. "It says here in the policy that the only thing not covered is the initial point of failure, and that seems to be this rod bolt. If you're going to deny the rest of the engine, that seems like bad faith to me". Those two words will set off alarms all the way to the CEO and CFO offices, they turn your $30,000 engine into a $3,000,000 bad faith settlement in court, and insurance companies almost always lose in front a jury when sued by their own insured; juries hate insurance companies.

I'll ask again, did you hire your own adjuster or lawyer to rep you?

 

[Henning]

I have been in AIG's building in NY. Pretty nice place. They are obviously charging way more for their policies than they pay out in claims...I would be interested in knowing the percentage that we overpay for the "average policy" in order to pay the executives, agents, salesmen, janitors, commercials, ect.

The actuaries are typical trying to maintain a 30% margin on a pool. The funny thing is that stock market performance in the sectors they can invest in is the largest single factor in setting premiums.

 

[JB1842]

And once alls said and done you'd have been better off saving the money you spent on premiums, deductibles, lawyers and the like and just licked your own wounds.

Nope. I've owned my plane not quite 3 years, and my insurance already paid out more in repairs than what I have paid in premiums. Of course my insurance sued my CFI for the money, since he was the one who screwed up.

 

[Stewartb]

Insurance companies quake and tremble at the phrase, "bad faith". You are wrong, if you have a claim against the manufacturer that you have insured, it becomes a subrogation claim for the insurance.

I'll ask again, did you hire your own adjuster or lawyer to rep you?

Yes, I was represented. My statements have been 100% accurate.

To the guys who want to know? Call your insurer and ask for yourselves.

 

[Fearless Tower]

Yes, I was represented. My statements have been 100% accurate.

To the guys who want to know? Call your insurer and ask for yourselves.

You did get that part right. This is one of those things that varies greatly between underwriters. Some will cover engine repairs and some won't.

I can tell you from personal experience with my 170, that Avemco does cover engine issues. When I had my inflight mag failure (broke a gear tooth off and sent shredded metal throughout the engine) that Avemco paid for the full engine removal, teardown inspection, re-assembly and reinstallation. The only thing they didn't pay for was any additional and unrelated repairs that were done to the engine during teardown. But again, that was Avemco. I know that other underwriters aren't so generous.....but then, that may be why Avemco tends to cost more.

 

[Bill]

This is true by definition for many. But you forgot to talk to the lady with the $60k water damage loss. Or the total fire loss. Or the vehicle theft.

People seem to forget the whole concept of insurance and shared funds for large loss.

 

[Fearless Tower]

In other news imsurance companies sure are turning some good profits.

They wouldn't be providing the service if it wasn't profitable.

 

[JoseCuervo]

Or the lady who never had a claim and paid six figures to insurance companies over her lifespan.



Again, risks on both fronts.





In other news imsurance companies sure are turning some good profits.

The whole purpose of insurance is to pool the risk of many to cover the few individual losses.

By definition, many will never have claims, and most will pay more for premiums than they ever collect. By design.

And, most insurance companies lose money on the underwriting risks, and only profit based upon the performance of their investments.

 

[JoseCuervo]

They wouldn't be providing the service if it wasn't profitable.

And they readily walk away from markets, segments, and geographies where they can't turn a profit. No sense losing money...

 

[Fearless Tower]

And they readily walk away from markets, segments, and geographies where they can't turn a profit. No sense losing money...

Which is why some underwriters won't touch certain airplanes...

 

[Stewartb]

You did get that part right. This is one of those things that varies greatly between underwriters. Some will cover engine repairs and some won't.

I can tell you from personal experience with my 170, that Avemco does cover engine issues. When I had my inflight mag failure (broke a gear tooth off and sent shredded metal throughout the engine) that Avemco paid for the full engine removal, teardown inspection, re-assembly and reinstallation. The only thing they didn't pay for was any additional and unrelated repairs that were done to the engine during teardown. But again, that was Avemco. I know that other underwriters aren't so generous.....but then, that may be why Avemco tends to cost more.

Thanks for the comment. I use Avemco and just called to compare my previous experience with my current policy. Avemco does cover subsequent damage from a failed part. That's clearly different than AIG had been in my broken rod event. And that's no criticism of AIG as they were really great to deal with until they pulled out of the Alaska market. I feel even better about Avemco now, and I've been with them for about 15 years. Their unrestricted off airport Alaska coverage is the best that I've found.

 

[Henning]

The whole purpose of insurance is to pool the risk of many to cover the few individual losses.

By definition, many will never have claims, and most will pay more for premiums than they ever collect. By design.

And, most insurance companies lose money on the underwriting risks, and only profit based upon the performance of their investments.

That is one point most people aren't really clear on, it's the money the money makes that makes up most of the profits, not the money you give them.

 

[JB1842]

That is one point most people aren't really clear on, it's the money the money makes that makes up most of the profits, not the money you give them.

Yep. State Farm has been having a big push the last few years getting involved in banking and investment products. More money for them in the long run.

 

[steingar]

Someone must have the world's worst insurance policy. Mien bought me a new roof, even though the old roof was 20 years old. Couldn't believe it myself, but the roofer said to call them and the adjuster (my house tried to eat him) said it was justified. New roof for the Steinholme.

When my convertible spun out they cut me a very nice check, pretty much right away. They could have argued that the crash was my fault, I'm still not entirely convinced it wasn't. Heck, when I plowed my Goldwing into the back of an SUV they paid the damages and lowered my rate.

 

[Henning]

Yep. State Farm has been having a big push the last few years getting involved in banking and investment products. More money for them in the long run.

Also many more product/investment opportunities. The insurance industry is the most stringently regulated as to what they may and may not invest funds. Banking and investment funds gets them into derivatives.

 

[Henning]

Someone must have the world's worst insurance policy. Mien bought me a new roof, even though the old roof was 20 years old. Couldn't believe it myself, but the roofer said to call them and the adjuster (my house tried to eat him) said it was justified. New roof for the Steinholme.

When my convertible spun out they cut me a very nice check, pretty much right away. They could have argued that the crash was my fault, I'm still not entirely convinced it wasn't. Heck, when I plowed my Goldwing into the back of an SUV they paid the damages and lowered my rate.

I don't know why people always take this into consideration, it's irrelevant. You are insuring yourself against your own mistakes as well, that's part and parcel of the deal.

I went to a snow and ice storm in Detroit some years back. Lots of ice dams, I'm buying lots of gutters and sheet rock from where the melt backed up under the shingles and came in, but so far I haven't bought a roof yet due to no real damage, shingles just aren't designed to work in a pond. I show up at one gentleman's house, "I think I need a new roof." I explained how it was doubtful but he asked if I would look, so out comes the ladder and I climb the roof. Holy crap, it is destroyed. "What happened?" His wife pipes up, "Wanna see? I've got it on video!" I watch the video, the dude is on the roof with his snowblower, slides off the back side into a snowdrift that is near the roof line. He asks, "Does that mean you're not paying for my roof?" "Oh no, your roof is covered no problems, you were acting in good faith to protect your property from further damage, it's not a problem. Just don't do that again, you'll get yourself killed, I'd rather pay to rebuild the house collapse."

The most likely person to cause the loss is the insured, it's a given.

 

[Jimmy cooper]

And once alls said and done you'd have been better off saving the money you spent on premiums, deductibles, lawyers and the like and just licked your own wounds.

That's not the way it turned out for me. I went light sport in 2002. Had a trophy winning TCRAFT. Hangar collapsed due to snow storm. Avemco paid me full insurance within ten days. However...the head adjuster did say. " had this been a moving accident , this could have been DIFFERENT." He did not elaborate. I'm very glad I had it insured. The check was for twenty eight grand. I have used Avemco for over fourty years. Money well spent.

 

[zwaustin]

Time to read all the small print on my policy!!

 

[Jimmy cooper]

Time to read all the small print on my policy!!

I've always been very satisfied with Avemco. You might want to call them and ask about their coverage. One to ask about is fly ins. Some policy's don't cover them for obvious reasons. They are very knowledgeable and easy to deal with. In the winter months you can reduce your rates and simply go to hangar insurance. I did this often with the stearman.

 

[Hank S]

Winter flying is great! Granted, not in an open cockpit. In WV, I've headed out with temps as low as 8°F; the climb rate is terrific. Coat,scarf,hat and gloves for preflight, by the time I pull onto the runway, Cabin Heat is noticeable and a few minutes later I'm opening and removing the outer layers.

Now that I'm back where I belong, winter flying is even better since I don't freeze my hiney off during preflight. But summer flying can be difficult due to heat and humidity . . . Sometimes the sweat is so heavy it's hard to see to takeoff.

 

[James331]

That's not the way it turned out for me. I went light sport in 2002. Had a trophy winning TCRAFT. Hangar collapsed due to snow storm. Avemco paid me full insurance within ten days. However...the head adjuster did say. " had this been a moving accident , this could have been DIFFERENT." He did not elaborate. I'm very glad I had it insured. The check was for twenty eight grand. I have used Avemco for over fourty years. Money well spent.

What do do you pay per year, what have you paid in over those 40 years?

Why would it have been different?

 

[Fearless Tower]

What do do you pay per year, what have you paid in over those 40 years?

Can't speak for Jimmy's case, but I was paying around $300-$400 more per year when I was with Avemco. But I had around a $8k claim 3 years after buying the airplane. It would take at least 20 years to make up $8k at $400/year.

Even today, Avemco has paid me more than I've paid them. And I didn't even have an accident.

 

[Subsea]

40 years of my premiums will not cover half of my "hull value". Yes I realize that my hull value goes down and insurance will go up every year.