insurance: vote with your $

[misha]

How many of you would dare to own a new a/c without having a full hull
value coverage?

After being hit with a $15K premium with a $10K deductable, I have
decided to vote with my hard earned cash against the outrage and to only
get the mandatory liability and not-in-motion. After all, my personal
experience with car insurance is that money-wise, it does not make sense
over any 10yr period.

If we get out of mentality 'everybody does it, so should I', maybe the
insurance industry will wake up (again) to a sharp drop in revenue and
stop the rip-off. In the meanwhile many of us would save some money.
Comments?

[Mike Rapoport]

The insurance industry is not making a lot of money even at the new higher
rates, so don't expect them to decline soon. Personally I only carry
liability because I think that the hull coverage I have been offered is not
a good deal. Insurance pricing is a combination of premiums and how much
money the insurance company can make by investing those premiums before
there is a claim. Obviously the expected rate of return on those
investments is much lower than it was three years ago.

What plane are you trying to insure and what are your pilot qualifications?

Mike
MU-2


"misha" > wrote in message
...
> How many of you would dare to own a new a/c without having a full hull
> value coverage?
>
> After being hit with a $15K premium with a $10K deductable, I have
> decided to vote with my hard earned cash against the outrage and to only
> get the mandatory liability and not-in-motion. After all, my personal
> experience with car insurance is that money-wise, it does not make sense
> over any 10yr period.
>
> If we get out of mentality 'everybody does it, so should I', maybe the
> insurance industry will wake up (again) to a sharp drop in revenue and
> stop the rip-off. In the meanwhile many of us would save some money.
> Comments?
>

[Ron Natalie]

"misha" > wrote in message ...
> How many of you would dare to own a new a/c without having a full hull
> value coverage?

I hope the discussion is coverage vs. not coverage, and not full value versus
not full value. If you're going to insure it, not insuring it for the full value is a
bad idea.

>
> After being hit with a $15K premium with a $10K deductable

On what value hull or what value aircraft? I'm only paying $1500 and have no
deductable.

> After all, my personal
> experience with car insurance is that money-wise, it does not make sense
> over any 10yr period.

If you're talking collision, I might be inclined to agree. The question is can
you afford the loss. On cars it's common for many to drop the collision (hull)
coverage once the value of the car drops (and the loan is paid off).

> If we get out of mentality 'everybody does it, so should I', maybe the
> insurance industry will wake up (again) to a sharp drop in revenue and
> stop the rip-off. In the meanwhile many of us would save some money.

We saw a steep jump in our premium last year but it dropped back down to
what it's been all the prior years this year.

[misha]

> I hope the discussion is coverage vs. not coverage, and not full value versus
> not full value.

Right.

> On what value hull or what value aircraft? I'm only paying $1500 and have no
> deductable.

See prev. post.

> If you're talking collision, I might be inclined to agree. The question is can
> you afford the loss.

I though that chances of survival are pretty slim in a total loss event
in flight - I hope to make it to Eden and not to be too worried about
the money part. Hull insurance on the ground (not in motion) is cheap,
and we're not talking about it.

[misha]

> I guess that tells you all you need to know about what the insurance
> companies think about low time pilots in plastic planes.

What does it have to do with plastic?

In any case - I am not asking why the premium is high. The question is
whether it makes sense. I assume that experience multiplied by cost is a
constant? Are you insured *primarily* because
-it saves you money,
-it gives you good night sleep
-it is what everybody does?

If it's not the first two, why would van experienced pilot pay his$2K/yr
if the risk in the air (unlike on the road) is largly under his/her control?

[Ron Natalie]

"misha" > wrote in message ...

> > If you're talking collision, I might be inclined to agree. The question is can
> > you afford the loss.
>
> I though that chances of survival are pretty slim in a total loss event
> in flight - I hope to make it to Eden and not to be too worried about
> the money part.

You can do a lot of damage to the aircraft and still survive. If you have a loan
secured by the aircraft, they will almost certianly want insurance to protect
their interests by the way.

[Ron Natalie]

"misha" > wrote in message ...
> > I guess that tells you all you need to know about what the insurance
> > companies think about low time pilots in plastic planes.
>
> What does it have to do with plastic?

Plastic is very expensive to repair. HP aircraft are more prone to accidents
by low time pilots.

> If it's not the first two, why would van experienced pilot pay his$2K/yr
> if the risk in the air (unlike on the road) is largly under his/her control?

Who's in control is immaterial to the insurance company. It's the probability
of loss multiplied by the amount likely to be paid out. My airplane and auto
insurnace are about the same. I have $500 deductible on the car and zero
on the airplane (nice traditional metal).

[David Megginson]

misha > writes:

> In any case - I am not asking why the premium is high. The question is
> whether it makes sense. I assume that experience multiplied by cost is
> a constant? Are you insured *primarily* because
> -it saves you money,
> -it gives you good night sleep
> -it is what everybody does?

Spread out over everything, insurance is more expensive than replacing
things yourself. You're paying the extra money to minimize the risk
of extraordinary expenses, like the loss of house or car, not of
routine expenses. So ask yourself, if your plane got hit by an
unexpected blast of wind in the flare and caught a wing, would
replacing it be a significant expense for you? If so, insure; if not,
don't.

If I were a retired guy keeping a J3 Cub on my hobby farm (with
perhaps a couple of others in the barn for parts), I probably wouldn't
buy hull insurance, any more than I buy cancellation insurance for my
commercial plane tickets.


All the best,


David

--
David Megginson, , http://www.megginson.com/

[H. Adam Stevens]

You're not Ben Jackson the ex insurance agent are you?
H.
N502TB

"Ben Jackson" > wrote in message
news:fDmPa.29828$Ph3.2440@sccrnsc04...
> In article >, misha >
wrote:
> >> What plane are you trying to insure and what are your pilot
qualifications?
> >
> >SR20, I'm a new PPL with 90hr total experience.
>
> If you'd flown for another 10 hours before insuring the SR20 I bet the
> rates would be significantly better (maybe not enough to convince you
> to get it...).
>
> --
> Ben Jackson
> >
> http://www.ben.com/

[Newps]

Call the insurance company and say you made a mistake in your addition
and you really have 110 hours.

Ben Jackson wrote:
> In article >, misha > wrote:
>
>>>What plane are you trying to insure and what are your pilot qualifications?
>>
>>SR20, I'm a new PPL with 90hr total experience.
>
>
> If you'd flown for another 10 hours before insuring the SR20 I bet the
> rates would be significantly better (maybe not enough to convince you
> to get it...).
>

[H. Adam Stevens]

My P Baron was a LOT less than that; Of course, it hasn't been fixed yet,
either.
$7.7K premium, $500 deductable, $375K on the hull.
H.
N502TB

"G.R. Patterson III" > wrote in message
...
>
>
> misha wrote:
> >
> > After being hit with a $15K premium with a $10K deductable, ...
>
> On what?
>
> George Patterson
> The optimist feels that we live in the best of all possible worlds. The
> pessimist is afraid that he's correct.
> James Branch Cavel

[Ben Jackson]

In article >,
H. Adam Stevens > wrote:
>You're not Ben Jackson the ex insurance agent are you?

No. I only brought up the 100 hour point because I called an insurance
broker while thinking about buying a plane, and the difference between
<100h and >=100h was such that you'd save money by by getting in a rental
and orbiting the field for 15-20 hours if necessary.

--
Ben Jackson
>
http://www.ben.com/

[Montblack]

("misha" wrote)
<snip>
> How many of you would dare to own a new a/c without having a full hull
> value coverage?

If you "own" the plane outright, then your idea MIGHT work out for you
....only if you take those premiums and actually sock them away - just in
case something happens. Like an engine reserve account, only this is your
hull reserve account - IN THE BANK.

Remember to make the same ($$$) premium payments, only they go to YOUR bank
account (etc). It's a gamble.

Good luck

--
Montblack

[Richard Kaplan]

"misha" > wrote in message
...

> > I guess that tells you all you need to know about what the insurance
> -it saves you money,
> -it gives you good night sleep
> -it is what everybody does?

I suspect most pilots have a loan against their airplane. Most (all?,
almost all?) airplane lenders require full insurance, so the decision tree
ends there for most pilots.

I have analyzed the situation myself and decided on the same thing for my
P210 -- liability and not-in-motion hull only.

Realize the "true" value of your potential worst-case insurance payout is
not the declared hull value but rather:

Declared Hull value minus (Premium + Deductible + Expected Salvage Value).
Consider that in most airplane accidents in which you walk away it is
probable that the salvage value would be at least half the declared hull
value, and then it becomes apparent that in-motion hull insurance often has
only marginal value.

In my case for commercial hull insurance last year the underwriter quoted 6%
of the hull value with a deductible of 3% of hull value. If we assume
salvage value would typically be 50% of the hull value, then I would pay a
6% annual premium for a policy which would have an expected maximum payout
of 100% - (6% + 3% + 50%), which means a 6% annual premium for an expected
maximum payout of 41%. Those odds sound more like gambling to me than
insurance -- at those odds, I thought the money was better invested in an
engine overhaul and other meticulous maintenance. Your numbers may vary,
but the idea stays the same.


--
Richard Kaplan, CFII

www.flyimc.com

[MC]

Leland Vandervort wrote:
>
> On Thu, 10 Jul 2003 12:14:10 -0700, "Mike Rapoport"
> > wrote:
> >The insurance industry is not making a lot of money even at the new higher
> >rates, so don't expect them to decline soon. Personally I only carry
> >liability because I think that the hull coverage I have been offered is not
> >a good deal. Insurance pricing is a combination of premiums and how much
> >money the insurance company can make by investing those premiums before
> >there is a claim. Obviously the expected rate of return on those
> >investments is much lower than it was three years ago.
> >
> >What plane are you trying to insure and what are your pilot qualifications?
> >
>
> Personally, for my insurance for my PA28R-200, with my PPL and 90
> hours at the time of taking out the policy, only 4 hours on type, they
> quoted me £1750 (UK Pounds, so about $3000 / year), for £40,000 hull,
> £3 million public liability, £7.5 million crown liability (for
> government aerodromes) and a few other liabilities for various other
> countries. Deductible is only £500. I can't complain as this is even
> less premium than the car I sold to buy the airplane.

In Australia, I'm paying about AUD 4400 for a hull value of AUD 85000
and AUD 2 million public liability. Deductible is 1% of hull value.
(1 AUD is about 0.65 USD and about 0.4 GBP)

[John Galban]

"Ron Natalie" > wrote in message >...
> "misha" > wrote in message ...
>
> > I though that chances of survival are pretty slim in a total loss event
> > in flight - I hope to make it to Eden and not to be too worried about
> > the money part.
>
> You can do a lot of damage to the aircraft and still survive. If you have a loan
> secured by the aircraft, they will almost certianly want insurance to protect
> their interests by the way.

True. In fact, the majority of airplane accidents are not fatal.
Been there, done that, was really glad I had hull insurance.

John Galban=====>N4BQ (PA28-180)

[Ron Natalie]

"Montblack" > wrote in message .. .

>
> If you "own" the plane outright, then your idea MIGHT work out for you
> ...only if you take those premiums and actually sock them away - just in
> case something happens. Like an engine reserve account, only this is your
> hull reserve account - IN THE BANK.
>
You don't even need to maintain the reserve if you can live without a replacement
right away.

[[email protected]]

On 10-Jul-2003, "Mike Rapoport" > wrote:

>Obviously the expected rate of return on those
> investments is much lower than it was three years ago.


I think you have identified the primary reason why premiums have been going
up recently. Certainly claims costs have not risen as fast. On the other
hand, in my case aircraft hull and liability insurance price is still
roughly comparable to auto insurance. For $85 hull (zero deductible) and
$1M smooth coverage on our Arrow IV we pay around $2200/year. For a car
worth about $18K, and adding a reasonable portion of the cost of $1M
umbrella liability insurance, I pay about $1100/year ($500 deductible). The
key is that all named pilots of the plane have at least several hundred
hours and, very significantly, all are instrument rated.

I was recently told by an insurance broker that for a typical aircraft
owner, the cost of getting an instrument rating (in your own plane) will be
returned in less than 3 years by reduced insurance premiums. Has anybody
seen their premiums go down after getting their IFR rating?

-Elliott Drucker

[Dave Stadt]

> wrote in message
...
>
> On 10-Jul-2003, "Mike Rapoport" > wrote:
>
> >Obviously the expected rate of return on those
> > investments is much lower than it was three years ago.
>
>
> I think you have identified the primary reason why premiums have been
going
> up recently. Certainly claims costs have not risen as fast. On the other
> hand, in my case aircraft hull and liability insurance price is still
> roughly comparable to auto insurance. For $85 hull (zero deductible) and
> $1M smooth coverage on our Arrow IV we pay around $2200/year. For a car
> worth about $18K, and adding a reasonable portion of the cost of $1M
> umbrella liability insurance, I pay about $1100/year ($500 deductible).
The
> key is that all named pilots of the plane have at least several hundred
> hours and, very significantly, all are instrument rated.
>
> I was recently told by an insurance broker that for a typical aircraft
> owner, the cost of getting an instrument rating (in your own plane) will
be
> returned in less than 3 years by reduced insurance premiums. Has anybody
> seen their premiums go down after getting their IFR rating?
>
> -Elliott Drucker

To return the cost if an instrument rating in 3 years the insurance company
would have to pay me about $1,000 a year. Not going to happen.

[Richard Kaplan]

"Javier Henderson" > wrote in message
...

> writes:

> But that figure might be different for other airplanes (say, hi
> perf complex, or more expensive, etc).

From what I have observed with many students/owners, insurance reductions
for any type of ratings or recurrent training are usually negligible.

What happens instead is that for certain combinations of airplane and pilot
experience, the insurers simply refuse to write the policies at all unless
the pilots get an instrument rating or undergo recurrent training.

As the insurance market tightens, one effect is that insurers have also
begun requiring recurrent training on more and more airplanes. This does
not mean that these pilots get a discount for their recurrent training; the
training simply becomes a condition of insurance.



--
Richard Kaplan, CFII

www.flyimc.com

[Richard Kaplan]

"Michael" > wrote in message
om...

> Well, sort of. I think what you're saying is correct if you're
> dealing with one given company. On the other hand, added
> ratings/experience/recurrent training may qualify you with another
> company that has substantially lower rates.

Yes, I agree with that.

--
Richard Kaplan, CFII

www.flyimc.com

[[email protected]]

On 11-Jul-2003, "Dave Stadt" > wrote:

> To return the cost if an instrument rating in 3 years the insurance
> company
> would have to pay me about $1,000 a year. Not going to happen.


Well, I do know that when my partners got their IR (both in the same year)
the tab for insurance the following year went down by about $800. And this
was a few years ago, before the current craziness in the insurance biz.

The cost of getting the rating IN ONE'S OWN AIRPLANE may be a bit more than
$2400, but not that much more. I figure on around 45 hours of training, of
which 35 involves the use of a paid instructor. (The other 10 being
practice with a licensed safety pilot who is not being paid).

45 hours @ $40/hr marginal cost for airplane* = $1800
35 hours @ $40/hr for instructor = 1400

TOTAL = $3200

*Marginal cost is the cost for "additional" hours of use, and thus does not
include any fixed expenses. Basically, it's the hourly cost of fuel and
oil, plus reserve for overhaul. $40 is what I figure is about right for a
C-172 or similar airplane.

This suggests that a few years ago the payback in reduced insurance premiums
was around 4 years. In the current insurance situation, it is therefore
quite believable that payback could be quicker.

It also suggests that if you are not instrument rated you might ask your
broker how much you could save if you were. (Note that significant savings
will often require changing insurance carriers.) That just might provide
the impetus for you to finally get to work on your instrument ticket.

[Newps]

wrote:

> This suggests that a few years ago the payback in reduced insurance premiums
> was around 4 years. In the current insurance situation, it is therefore
> quite believable that payback could be quicker.

What current situation? The insurance on my 182 keeps getting cheaper.
I called my broker and asked him what the difference was between an
instrument and non instrument rated pilot with my 900 hours in my plane.
No difference. Not only did the premium go down $170 this year, I
changed from USAIG to Global, they rasied the hull value from $65K to
$70K without me asking them to do it. My insurance has gone down in
each of the six years I have insured it for. If this insurance
situation gets much worse I may have to buy another plane.

[Richard Kaplan]

"Newps" > wrote in message
et...

> What current situation? The insurance on my 182 keeps getting cheaper.
> I called my broker and asked him what the difference was between an

You may be very lucky to own one of the few airplane types where there are
sufficient numbers in the fleet to generate competition in the industry.
For that matter, a C182 has an excellent safety record as well.

For those of us who own rarer airplanes -- regardless of whether they are
smaller or lager than a C182 -- obtaining reasonably priced insurance has
reached a critical situation.

--
Richard Kaplan, CFII

www.flyimc.com

[Dave Stadt]

> wrote in message
...
>
> On 11-Jul-2003, "Dave Stadt" > wrote:
>
> > To return the cost if an instrument rating in 3 years the insurance
> > company
> > would have to pay me about $1,000 a year. Not going to happen.
>
>
> Well, I do know that when my partners got their IR (both in the same year)
> the tab for insurance the following year went down by about $800. And
this
> was a few years ago, before the current craziness in the insurance biz.
>
> The cost of getting the rating IN ONE'S OWN AIRPLANE may be a bit more
than
> $2400, but not that much more. I figure on around 45 hours of training,
of
> which 35 involves the use of a paid instructor. (The other 10 being
> practice with a licensed safety pilot who is not being paid).
>
> 45 hours @ $40/hr marginal cost for airplane* = $1800
> 35 hours @ $40/hr for instructor = 1400
>
> TOTAL = $3200
>
> *Marginal cost is the cost for "additional" hours of use, and thus does
not
> include any fixed expenses. Basically, it's the hourly cost of fuel and
> oil, plus reserve for overhaul. $40 is what I figure is about right for a
> C-172 or similar airplane.
>
> This suggests that a few years ago the payback in reduced insurance
premiums
> was around 4 years. In the current insurance situation, it is therefore
> quite believable that payback could be quicker.
>
> It also suggests that if you are not instrument rated you might ask your
> broker how much you could save if you were. (Note that significant
savings
> will often require changing insurance carriers.) That just might provide
> the impetus for you to finally get to work on your instrument ticket.

You make a few wrong assumptions. First, not all planes are capable of
being instrument trainers. I myself would not want an IFR capable airplane.
Second, you mention some craziness and insurance situation alluding to
increasing premiums. My premiums have not gone up in years. For my
airplane and the flying I do an instrument rating would be less than
useless. I don't believe an instrument rating is guaranteed to lower
premiums no matter how many times you change carriers.

[[email protected]]

On 12-Jul-2003, "Dave Stadt" > wrote:

> You make a few wrong assumptions. First, not all planes are capable of
> being instrument trainers. I myself would not want an IFR capable
> airplane.
> Second, you mention some craziness and insurance situation alluding to
> increasing premiums. My premiums have not gone up in years. For my
> airplane and the flying I do an instrument rating would be less than
> useless. I don't believe an instrument rating is guaranteed to lower
> premiums no matter how many times you change carriers.


Obviously, my analysis assumes that you start with an IFR-capable airplane
that you use at least occasionally for travel. If your flying is just for
fun in a VFR-only airplane, the discussion doesn't apply.

-Elliott Drucker

[Ron Rapp]

On Sat, 12 Jul 2003 19:55:59 GMT, Newps > wrote:

>> This suggests that a few years ago the payback in reduced insurance premiums
>> was around 4 years. In the current insurance situation, it is therefore
>> quite believable that payback could be quicker.
>
>What current situation? The insurance on my 182 keeps getting cheaper.
> I called my broker and asked him what the difference was between an
>instrument and non instrument rated pilot with my 900 hours in my plane.
> No difference. Not only did the premium go down $170 this year, I
>changed from USAIG to Global, they rasied the hull value from $65K to
>$70K without me asking them to do it. My insurance has gone down in
>each of the six years I have insured it for. If this insurance
>situation gets much worse I may have to buy another plane.

I think Richard was right, the 182 is a rare circumstance. We're
lucky.

The guys who own the next step up, the 210 series, or a twin or
retractable, are going to have faced substantial increases over the
past few years. And even asking what the rates are for commercial
usage are likely to induce high expenses (medical ones, that is!).

OTOH, there are exceptions. I looked at an RV-6 and the insurance
rate was slightly less than for my 182. However, that quote wasn't as
good as it first seems when you consider the lower hull value on the
experimental, and the fact that it included sublimits (something my
current policy does not have).

--Ron

[Newps]

Ron Rapp wrote:

> On Sat, 12 Jul 2003 19:55:59 GMT, Newps > wrote:
>
>
>>>This suggests that a few years ago the payback in reduced insurance premiums
>>>was around 4 years. In the current insurance situation, it is therefore
>>>quite believable that payback could be quicker.
>>
>>What current situation? The insurance on my 182 keeps getting cheaper.
>> I called my broker and asked him what the difference was between an
>>instrument and non instrument rated pilot with my 900 hours in my plane.
>> No difference. Not only did the premium go down $170 this year, I
>>changed from USAIG to Global, they rasied the hull value from $65K to
>>$70K without me asking them to do it. My insurance has gone down in
>>each of the six years I have insured it for. If this insurance
>>situation gets much worse I may have to buy another plane.
>
>
> I think Richard was right, the 182 is a rare circumstance. We're
> lucky.

I wouldn't call it rare. Every 152, 172, 180, 182, 185, all FG
cherokees, all the Beech FG types like Musketeers would also be the
same. Several guys here with Bonanzas, no problem there either. Twins
I can understand, that will always be a problem.

[Michael]

"Dave Stadt" > wrote
> I don't believe the 182 is a rare circumstance. I have heard of far more
> policies that have RTS or gone down than have gone up.

Mine went up - by one dollar a year. This is in a retract twin. On
the other hand, I'm seeing people paying THREE TIMES what I pay, for
the same coverage in the same airplane. I think the insurers are just
getting better at figuring out who the bad risks are.

Michael