More on High Performance Insurance

Don't forget that a large part of the insurance is for the hull, and that
the rate for liability is relatively constant. You can decrease your premium
by minimizing the amount of hull insurance to the level that you can afford
to lose in case of a mishap.

On Sat, 13 Dec 2003 01:54:15 GMT, "Viperdoc"
wrote:

Don't forget that a large part of the insurance is for the hull, and that
the rate for liability is relatively constant. You can decrease your premium
by minimizing the amount of hull insurance to the level that you can afford
to lose in case of a mishap.


I was under the impression that if your insured value is too low, it
is in the interest of the insurance company to declare a fixable plane
a total lose, give you the insured value, fix it up and sell it for
market value. The excess liability went from $2500 to $5000, so
everything doubled, not just the hull, and some pilots were unable to
get smooth. Recently a new company entered the Cirrus market which
seems to be lowering the rates.

Viperdoc wrote:

Don't forget that a large part of the insurance is for the hull, and that
the rate for liability is relatively constant. You can decrease your premium
by minimizing the amount of hull insurance to the level that you can afford
to lose in case of a mishap.

So, you insure the plane for half what it's worth. Then some clown runs into
the aileron with the lawnmower and does $1,000 damage. The insurance company
totals the aircraft, puts $1,000 into repairs, and resells it for a nice profit.

Enjoy your settlement.

George Patterson
Great discoveries are not announced with "Eureka!". What's usually said is
"Hummmmm... That's interesting...."

On Fri, 12 Dec 2003 21:45:26 -0500, "G.R. Patterson III"
wrote:


So, you insure the plane for half what it's worth. Then some clown runs into
the aileron with the lawnmower and does $1,000 damage. The insurance company
totals the aircraft, puts $1,000 into repairs, and resells it for a nice profit.

Enjoy your settlement.

Although under insuring the plane gives you a built in deductible. If
you only insure the plane for 1/2 of its value you wouldn't file a
claim until the cost of repair exceeded 1/2 the value of the plane so
your example would not happen.

On Sat, 13 Dec 2003 02:49:39 GMT, ArtP
wrote:

On Fri, 12 Dec 2003 21:45:26 -0500, "G.R. Patterson III"
wrote:


So, you insure the plane for half what it's worth. Then some clown runs into
the aileron with the lawnmower and does $1,000 damage. The insurance company
totals the aircraft, puts $1,000 into repairs, and resells it for a nice profit.

Enjoy your settlement.

Although under insuring the plane gives you a built in deductible. If
you only insure the plane for 1/2 of its value you wouldn't file a
claim until the cost of repair exceeded 1/2 the value of the plane so
your example would not happen.

I think George was being a bit facetious with the lawn mower and
$1000, but it wouldn't take a lot of structural damage to reach half
the value of the hull. That means if your plane is worth 300,000,
you insure it for $150,000 and the damage is close to that, they can
total the plane, give you a check for $150,000, repair the plane and
sell it for $300,000. Pretty good profit for them and loss for you.

As to your example of not filing a claim until the cost exceeded half
the value, it would only guarantee the insurance company would total
it out and you'd be out half the value of the plane.

Never be under insured. It's as bad, or even worst than over insured
which is just wasted money. Under insured can be downright expensive.

Roger Halstead (K8RI & ARRL life member)
(N833R, S# CD-2 Worlds oldest Debonair?)
www.rogerhalstead.com
Return address modified due to dumb virus checkers

Roger Halstead writes:

So, you insure the plane for half what it's worth. Then some clown runs into
the aileron with the lawnmower and does $1,000 damage. The insurance company
totals the aircraft, puts $1,000 into repairs, and resells it for a nice profit.

Although under insuring the plane gives you a built in deductible. If
you only insure the plane for 1/2 of its value you wouldn't file a
claim until the cost of repair exceeded 1/2 the value of the plane so
your example would not happen.

I think George was being a bit facetious with the lawn mower and
$1000, but it wouldn't take a lot of structural damage to reach half
the value of the hull.

[...]

As to your example of not filing a claim until the cost exceeded half
the value, it would only guarantee the insurance company would total
it out and you'd be out half the value of the plane.

Never be under insured. It's as bad, or even worst than over insured
which is just wasted money. Under insured can be downright expensive.

Both coverages have their uses though. We have some people (like me)
who insure their hulls for replacement cost. Others don't insure them
at all (using aircraft insurance, at least).

Underinsuring can be a middle ground. If saving some premium cost is
worth the risk of having to eat, for example, up to half the cost of
the plane if there's a problem, then it might make sense.

--kyler

Roger Halstead wrote:

I think George was being a bit facetious with the lawn mower and
$1000, but it wouldn't take a lot of structural damage to reach half
the value of the hull.

Not exactly. Somebody hit my left flap with something like that, and that's what
the damage was. In my case, the FBO covered the deductible and insurance took
care of the rest. As ArtP points out, if I had been carrying only half value
hull insurance, it would not have been smart to present a claim, so I would've
been out $950.

The rest of your post is right on, of course.

George Patterson
Great discoveries are not announced with "Eureka!". What's usually said is
"Hummmmm... That's interesting...."

On Sat, 13 Dec 2003 10:48:59 -0500, "G.R. Patterson III"
wrote:



Roger Halstead wrote:

I think George was being a bit facetious with the lawn mower and
$1000, but it wouldn't take a lot of structural damage to reach half
the value of the hull.

Not exactly. Somebody hit my left flap with something like that, and that's what
the damage was. In my case, the FBO covered the deductible and insurance took
care of the rest. As ArtP points out, if I had been carrying only half value
hull insurance, it would not have been smart to present a claim, so I would've
been out $950.

I keep forgetting planes vary over a very wide value, even the ones we
fly for fun.

Roger Halstead (K8RI & ARRL life member)
(N833R, S# CD-2 Worlds oldest Debonair?)
www.rogerhalstead.com
Return address modified due to dumb virus checkers

The rest of your post is right on, of course.

George Patterson
Great discoveries are not announced with "Eureka!". What's usually said is
"Hummmmm... That's interesting...."

"Roger Halstead" wrote

I think George was being a bit facetious with the lawn mower and
$1000, but it wouldn't take a lot of structural damage to reach half
the value of the hull. That means if your plane is worth 300,000,
you insure it for $150,000 and the damage is close to that, they can
total the plane, give you a check for $150,000, repair the plane and
sell it for $300,000. Pretty good profit for them and loss for you.

As to your example of not filing a claim until the cost exceeded half
the value, it would only guarantee the insurance company would total
it out and you'd be out half the value of the plane.

Never be under insured. It's as bad, or even worst than over insured
which is just wasted money. Under insured can be downright expensive.

Roger, you are correct in that over insuring is just a waste of money.
However the rest of your analysis is flawed.

In your example above, the 300K aircraft sustains 150K of damage.
In that case, whether the owner submits a claim or not, he is out
150K. If he doesn't submit a claim, he would spend 150K to fix the
airplane with no help from the insurance company. If he did submit
a claim, most likely the insurance company would total the aircraft
and give the owner a check for 150K (the insured hull value). So
for the owner to be able buy another equivalent aircraft he would
have to find another 150K somewhere. The insurance company doesn't
loose anything in this situation, but it doesn't make any profit either
as you have claimed. If it fixes the airplane the insurance company
can sell it for $300K, but it pays 150K to the insured and 150K to
the mechanics so it is a wash.

So the insured pilot is out 150K, but the original poster wasn't
suggesting the pilot do this unless he could afford that loss.

If the damage were more than 150K then the pilot is better off
submitting a claim, but he is still out 150K.

Now if the damage is less that 150K, then the pilot increases his
loss by submitting a claim and the insurance company could show
a profit by totaling the airplane, and this profit increases as
the damage gets less. If the claim is small enough, most insurance
companies would pay for the repair despite the potentially large
profit from totaling the airplane. Perhaps this is to protect
their reputation by avoiding questionable ethics, however it
would be foolish to count on that with so much at risk. For that
reason, declaring a hull value of half the airplane's value is not
such a good deal, because you are not getting a lot of value from
the insurance relative to its cost. (You wouldn't be able to submit
a claim in more than half of all accidents since they would cause
less than 150K in damage). Also you could be caught making the wrong
decision about whether to submit a claim because you miss-estimated
the damage. By the time you know, it might be too late to change
your mind. You would get a better deal if you could just
declare a large deductible. Most insurer's formulas would have
the premium declining dramatically with increasing deductible.
(I've done that with one of my cars). However I don't think many
aircraft insurers allow you to choose the deductible, so usually
only an all or nothing decision is practical regarding hull insurance.

~Paul

On Sun, 14 Dec 2003 01:18:15 GMT, "Paul Mennen"
wrote:

"Roger Halstead" wrote

I think George was being a bit facetious with the lawn mower and
$1000, but it wouldn't take a lot of structural damage to reach half
the value of the hull. That means if your plane is worth 300,000,
you insure it for $150,000 and the damage is close to that, they can
total the plane, give you a check for $150,000, repair the plane and
sell it for $300,000. Pretty good profit for them and loss for you.

As to your example of not filing a claim until the cost exceeded half
the value, it would only guarantee the insurance company would total
it out and you'd be out half the value of the plane.

Never be under insured. It's as bad, or even worst than over insured
which is just wasted money. Under insured can be downright expensive.

Roger, you are correct in that over insuring is just a waste of money.
However the rest of your analysis is flawed.

Ur right.

Roger Halstead (K8RI & ARRL life member)
(N833R, S# CD-2 Worlds oldest Debonair?)
www.rogerhalstead.com
Return address modified due to dumb virus checkers