Insurance payout and 'totaling'

[Michael Horowitz]

You insure your a/c . You have an accident and the insurance company
says that if the estimate is between 60-70% of the insured value, they
declare it totaled.
Why is the cut-off point 30-40% lower than the insured value?

[Ben Jackson]

In article >,
Michael Horowitz > wrote:
>You insure your a/c . You have an accident and the insurance company
>says that if the estimate is between 60-70% of the insured value, they
>declare it totaled.
>Why is the cut-off point 30-40% lower than the insured value?

Because when they total the aircraft they get it and sell it for salvage.
Their total cost is $policy_value-$salvage. As soon as $repair exceeds
that, it's cheaper to total. Consider how much of an aircraft's value is
in the engine, avionics, etc and how much spare parts go for and you can
see that in a lot of accidents there will be a significant salvage value.

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

[Newps]

"Michael Horowitz" > wrote in message
...
> You insure your a/c . You have an accident and the insurance company
> says that if the estimate is between 60-70% of the insured value, they
> declare it totaled.
> Why is the cut-off point 30-40% lower than the insured value?


Because you can't polish a turd.

[Michael Horowitz]

"Newps" > wrote:
>
>Because you can't polish a turd.


You lost me on that one - Mike

[Michael Horowitz]

(Ben Jackson) wrote:

>In article >,
>Michael Horowitz > wrote:
>>You insure your a/c . You have an accident and the insurance company
>>says that if the estimate is between 60-70% of the insured value, they
>>declare it totaled.
>>Why is the cut-off point 30-40% lower than the insured value?
>
>Because when they total the aircraft they get it and sell it for salvage.
>Their total cost is $policy_value-$salvage. As soon as $repair exceeds
>that, it's cheaper to total. Consider how much of an aircraft's value is
>in the engine, avionics, etc and how much spare parts go for and you can
>see that in a lot of accidents there will be a significant salvage value.


Oh, it's a way of cutting their losses. When they pay out for a less
than totaled a/c, they loose 100%, but if they total the a/c, they at
least get 30-40% back. Thanks

[G.R. Patterson III]

Michael Horowitz wrote:
>
> You insure your a/c . You have an accident and the insurance company
> says that if the estimate is between 60-70% of the insured value, they
> declare it totaled.
> Why is the cut-off point 30-40% lower than the insured value?

In addition to the salvage value Ben mentions, they typically assume that additional
problems will be found during the repair process, and that the repairs will
consequently cost more than the original estimate.

George Patterson
None of us is as dumb as all of us.

[VideoGuy]

"Michael Horowitz" > wrote in message
> Oh, it's a way of cutting their losses. When they pay out for a less
> than totaled a/c, they loose 100%, but if they total the a/c, they at
> least get 30-40% back. Thanks

Think you may find they get more than that. It's pretty much the same with
the auto insurance industry. I personally know of situations where the
insurance company totaled the car; paid the insured (MINUS the deductible,
of course) and parted the car out, and actually retreived close to 85% of
the payout. The insured is ALWAYS the one who takes the big hit, either by
the insurance company totaling "short" or by big premium increases, or both.
If you think you can win with insurance, you're living in a fools paradox.

Best bet is whole life insurance, bought early in life. Of course, the only
way to collect is... <sigh>

GWK

[Bob Fry]

"Newps" > writes:

> Because you can't polish a turd.

Nor can you polish a stupid Usenet reply.

[VideoGuy]

"Ricky Robbins" > wrote in message
...
> On Fri, 28 May 2004 18:13:24 -0500, "VideoGuy" <gkasten at brick dot
> net> wrote:
>
> >Best bet is whole life insurance, bought early in life. Of course, the
only
> >way to collect is... <sigh>
>
> Whole life? I don't think so.
>
> Ricky

Well.... Maybe I should have just said "life" insurance. Better?

GWK

[Bela P. Havasreti]

On Fri, 28 May 2004 20:58:24 GMT, "G.R. Patterson III"
> wrote:

>
>
>Michael Horowitz wrote:
>>
>> You insure your a/c . You have an accident and the insurance company
>> says that if the estimate is between 60-70% of the insured value, they
>> declare it totaled.
>> Why is the cut-off point 30-40% lower than the insured value?
>
>In addition to the salvage value Ben mentions, they typically assume that additional
>problems will be found during the repair process, and that the repairs will
>consequently cost more than the original estimate.
>
>George Patterson
> None of us is as dumb as all of us.

There are also "overhead" costs associated with recovering the
aircraft (insurance usually picks up the bill), storage fees until
disposition is determined and until the NTSB does their thing, etc.

So when you prang your bird (and you're insured), money
starts getting paid (again, usually by the insurance company)
from the get-go.

Bela P. Havasreti

[Ricky Robbins]

On Fri, 28 May 2004 18:13:24 -0500, "VideoGuy" <gkasten at brick dot
net> wrote:

>Best bet is whole life insurance, bought early in life. Of course, the only
>way to collect is... <sigh>

Whole life? I don't think so.

Ricky

[Steve Foley]

I believe the best bet is no insurance.

Think about it. The insurance company exists to make money. They collect
more in premiums than they pay out. I believe that over the long run, you
will pay more in premiums than you will collect.

I stopped paying collision on my auto the day I got the title. I don't carry
hull insurance on my plane.

I Only insure against a loss that will change my lifestyle. (liability,
home, health)

"VideoGuy" <gkasten at brick dot net> wrote in message
...

> Best bet is whole life insurance, bought early in life. Of course, the
only
> way to collect is... <sigh>

[Judah]

"VideoGuy" <gkasten at brick dot net> wrote in
:

> Best bet is whole life insurance, bought early in life. Of course, the
> only way to collect is... <sigh>

Next thing you know, insurance companies will start declaring a total loss
on life insurance policies if you sustain 60-70% of injuries. Then they can
make back the difference in salvage value...

How much does a cadaver minus a few fresh vital organs go for these days
anyway?

[G.R. Patterson III]

Steve Foley wrote:
>
> I believe the best bet is no insurance.
>
> Think about it. The insurance company exists to make money. They collect
> more in premiums than they pay out.

Not usually. They usually take the premiums and invest them in things like the stock
market. That's where they really make their money. That's also why premiums skyrocket
when the market goes down.

George Patterson
None of us is as dumb as all of us.

[EDR]

In article >,
Steve Foley > wrote:

> Think about it. The insurance company exists to make money. They collect
> more in premiums than they pay out. I believe that over the long run, you
> will pay more in premiums than you will collect.

The insurance company makes the most money by investing the premium
money. When the stock market is doing badly, insurance rates go up.
When the market is doing well, the rates go down.

[Richard Kaplan]

"Ben Jackson" > wrote in message
news:44Ltc.12956$n_6.5876@attbi_s53...

> Their total cost is $policy_value-$salvage. As soon as $repair exceeds
> that, it's cheaper to total. Consider how much of an aircraft's value is

This is why you should be careful to never insure your airplane for a hull
value less than something with which you would be happy in the case of a
declared total loss.

Imagine if your airplane is worth $100,000 and you insure it for $75,000 and
then suffer a $10,000 loss. They could total your airplane, pay you
$75,000, fix the airplane, and sell it for $100,000. In the process you
lose $25,000 plus your premiums; they gain $15,000 plus your premiums.


--------------------
Richard Kaplan, CFII

www.flyimc.com

[Dave Stadt]

"VideoGuy" <gkasten at brick dot net> wrote in message
...
>
> "Ricky Robbins" > wrote in message
> ...
> > On Fri, 28 May 2004 18:13:24 -0500, "VideoGuy" <gkasten at brick dot
> > net> wrote:
> >
> > >Best bet is whole life insurance, bought early in life. Of course, the
> only
> > >way to collect is... <sigh>
> >
> > Whole life? I don't think so.
> >
> > Ricky
>
> Well.... Maybe I should have just said "life" insurance. Better?
>
> GWK


No. It is one of the worst investments ever invented.

[EDR]

In article >, Dave
Stadt > wrote:

> > Well.... Maybe I should have just said "life" insurance. Better?

> No. It is one of the worst investments ever invented.

Unless you are the person selling the policy. :-))

[Robert M. Gary]

"Richard Kaplan" > wrote in message >...
> "Ben Jackson" > wrote in message
> news:44Ltc.12956$n_6.5876@attbi_s53...
>
> > Their total cost is $policy_value-$salvage. As soon as $repair exceeds
> > that, it's cheaper to total. Consider how much of an aircraft's value is
>
> This is why you should be careful to never insure your airplane for a hull
> value less than something with which you would be happy in the case of a
> declared total loss.
>
> Imagine if your airplane is worth $100,000 and you insure it for $75,000 and
> then suffer a $10,000 loss. They could total your airplane, pay you
> $75,000, fix the airplane, and sell it for $100,000. In the process you
> lose $25,000 plus your premiums; they gain $15,000 plus your premiums.

On the other hand, don't over insure it. The Mooney Service Center in
Stockton had a new Eagle in the hanger that had lost an engine and
glided back to the airport. The pilot overran the runway and bent the
wings between some trees. He wanted the insurance co to declare it a
total lose and write him a check but because the total coverage he had
on it was so high (higher than the insurance co wanted to pay) they
actually paid Mooney to put new wings on it (probably close to
$100,000 in itself) and repair all the gear, belly and flaps. Now he
has the same plane back but would rather have gotten the insurance
money and bought something else.

-Robert

[Dan Luke]

"Robert M. Gary" wrote:
> Now he has the same plane back

Except now it has major damage history and is worth substantially less
than it was before, even if the repairs were perfect. Ouch.
--
Dan
C172RG at BFM

[Robert M. Gary]

"Dan Luke" > wrote in message >...
> "Robert M. Gary" wrote:
> > Now he has the same plane back
>
> Except now it has major damage history and is worth substantially less
> than it was before, even if the repairs were perfect. Ouch.

I might be misremembering this but I think this was one of the Mooneys
that developed a tendency to roll inverted when stalled too. I guess
you can't get those new wings on as nicely as the factory.

-Robert