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Ask Jim -Your Aviation Insurance Questions AnsweredAsk Jim -Your Aviation Insurance Questions Answered

August 2015August 2015

Disclaimer: The following material is provided for informational purposes only and does not constitute legal advice. For questions concerning your specific circumstances, consult a local attorney. Jim

JIM: I am leasing an Arrow to finish my commercial and CFI ratings.  I insured the plane through a broker and plan on cancelling the policy when I take my CFI check ride.  While the plane was in my possession we incurred a prop nick, I suspect we picked something up off the runway as the damage was only to one blade and was not a prop strike incident.  This is an older airplane and unfortunately the nick was such that the prop could not be repaired.  The owner had a last run replacement prop installed.  I turned the claim into insurance but have not settled with them on a final payment nor signed anything as yet.  My question is this:  Should I take the insurance settlement or just pay off the owner myself?  I do not want this to follow me for future insurance issues.  My brother and I own a 172 and insure thru a different carrier.  This was bad luck and not pilot error.  I do not even know if it happened while I was in the plane, we have 4 pilots on the policy. Do you have an opinion on this?

JIM: Jim – thank you for the question. Unfortunately, you may be in a tough spot for a while. Generally upon renewal of your aircraft insurance policy, you’ll get asked if there were any accidents, incidents, or claims in the last 5 years. From your question, it sounds like you may have to answer yes on two of these. You may have an accident because of the damage and a claim because a claim was made. In insurance, a claim is a claim regardless if payment or settlement was made. If you accept payment, you’ll also have to disclose the amount paid.

It may not all be bad news, if your C172 is insured through AOPA, was underwritten by certain carriers, and you participate in AOPA’s Accident Forgiveness (please reference http://www.aopa.org/Pilot-Resources/Air-Safety-Institute/Air-Safety-Institute-Accident-Forgiveness), your renewal rate could be safe from increasing as a result of the accident.

MICHAEL: Hi Jim, I am a pre-solo student pilot and had a few less than stellar landings the other day with my flight instructor. Who would be at fault if damage would have occurred to the airplane or to the airport?

JIM: Michael – First, I want to congratulate you on your choice on becoming a pilot. Second, don’t get discouraged by a few less than picturesque landings. With enough practice & dedication, you’ll soon have the technique and finesse down to an art. Now on to your insurance question, liability generally follows who was pilot in command (PIC). With that said, there is generally an important caveat to PIC, and that is for students. Being pre-solo signifies that a CFI is in the plane, flying with you. The CFI’s responsibility is to not only provide instruction, but to do so in a safe manner. They should be ready at the controls to quickly correct any deviation from safe operation. Most likely, they would be held responsible in this particular instance – however, once you solo and are operating the aircraft on your own, you most likely would be held responsible. Please be sure to consider renter or non-owned coverage, especially as you solo.

GARRY:  I am a private pilot with 27 years’ experience, most of it in a C-172.  If I were to purchase a LSA aircraft, get transition instruction and training, does AOPA have advice on hull and liability options to meet this situation?

JIM: Garry – Thank you for your question. The guidelines for insuring a Cessna 172, a LSA aircraft, or rotor wing, for that matter, are fairly consistent. We recommend considering hull coverage for the value of the aircraft. So what does value mean? Value generally starts at V-ref (please reference AOPA’s V-ref- http://www.aopa.org/Pilot-Resources/VREF-Aircraft-Valuation) or similar aircraft in the marketplace and is then adjusted for any material changes (newer or older engine, paint, avionics, etc.) This may not necessarily equal your investment in the airplane as avionics depreciate and engines and airframes build hours. On the other hand, maybe you got a great deal on an aircraft, in which your purchase price could be much lower than V-ref or market value.  

We recommend insuring for what it would take to purchase your exact aircraft in today’s market. If you over-insure, an insurance company will be forced into giving more consideration to repairing the aircraft – which could leave you with an aircraft with extensive damage history. On the other hand, if you under-insure, you may not be compensated fully for the amount needed to replace your aircraft with one of similar quality. 

Liability on the other hand takes different consideration and can be different for everyone. What are you trying to protect and what options are offered are two great starting points. Are you trying to protect all the financial assets and interests you’ve worked all your life to accumulate? Consider what you are trying to safeguard, the various liability options offered, their costs, and then decide what’s best for you and your situation. 

Garry, we’re also going to send you our “Crash Course in Protecting Your Plane” booklet (please reference our booklet request website-https://insurance.aopa.org/landing-pages/guidebook-request ); it’s a quick read and contains great information about aircraft insurance.

Jim is always ready to assist and answer your questions about aviation insurance. Email your question, and it may just be highlighted in an upcoming Ask Jim Edition and you will receive a complimentary hat.

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