Hull/Liability Insurance Recommendations

In article , "Dave
Stadt" wrote:

The fact is, most owners of airplanes that cost less than six figures
are NOT wealthy. They're just guys with jobs or small businesses, and
after the plane is crashed, the defense lawyer paid, and the house
(which you can't take) paid for, there's simply nothing left to
collect.

Michael

I don't believe your last statement at all. Certainly not true of the
people I know.

fwiw - most of the airplane owners I know have a net worth less
than 1 million, with most of that being the house.

--
Bob Noel
Seen on Kerry's campaign airplane: "the real deal"
oh yeah baby.

"Dave Butler" wrote in message
...
The webmaster may have made the original error, but I'm with Jim on this
one. The person/company who hired the webmaster failed to do basic quality
control on the web presentation. I'll avoid doing business with companies
for similar reasons. It shows a lack of attention to detail.

Which is sad for you. As an aircraft owner you may have just bypassed the
best aircraft insurance company out there. We've done the research. No
company will insure our fleet of airplanes at affordable prices except AUA.
Some will not insure them at all.

Deb

--
1946 Luscombe 8A (His)
1948 Luscombe 8E (Hers)
1954 Cessna 195B, restoring (Ours)
Jasper, Ga. (JZP)

"Bob Noel" wrote in message
...
In article , "Dave
Stadt" wrote:

The fact is, most owners of airplanes that cost less than six figures
are NOT wealthy. They're just guys with jobs or small businesses, and
after the plane is crashed, the defense lawyer paid, and the house
(which you can't take) paid for, there's simply nothing left to
collect.

Michael

I don't believe your last statement at all. Certainly not true of the
people I know.

fwiw - most of the airplane owners I know have a net worth less
than 1 million, with most of that being the house.

--
Bob Noel
Seen on Kerry's campaign airplane: "the real deal"
oh yeah baby.

Might be a regional thing. A million in assets isn't much at all nowadays.

Newps,

So lets say the pilot has an estate of $1M and the $1M smooth
coverage. Won't the victims just go after both?

Yep.

Not necessarily. The issue is the potential damanges involved. It's
a matter of evaluating risk and insuring it appropriately.

The most common accident is on landing, however, that sort of accident
is the least common to involve fatalities (Nall Report) as compared
with takeoff, cruise/CFIT/weather/loss of control accidents. In a
landing accident with perhaps two passengers, there may be broken
bones or slightly worse. $100,000 available insurance for each person
may or may not be enough depending on the extent of the injuries. The
plaintiff's attorney may decide to accept the $100,000 from your
insurance company, letting it off the hook for the cost of defending
you, and proceed against you if he or she feels you have adequate
assets to make it worth while, and use the $100,000 per person just
received as a war chest to build the case against you. (Yes, that can
be done.) May or may not happen. If the passengers were killed, you
can almost count on going through bankruptcy (assuming you survived)
because the $100,000 isn't going to cut it. The million smooth policy
buys you far more peace of mind. It is enough money that it would get
rid of the injury cases easily and you don't have to worry about it.
In the event of two deaths, it would probably (and we are talking risk
management) be enough to settle those as well and not place your
assets at risk. The fact that you have an additional $million in
assets does not mean someone is going to come after them when there is
adequate insurance to make it attractive enough to resolve the claims
and not make the effort to go after the personal assets, especially
when there is the risk that a jury will not award the kind of money
the plaintiff attorney hopes. And, despite the hype, there are very,
very few gigantic judgments any more. Juries have become much more
conservative, despite the hype from insurance companies and political
candidates.

The bottom line is that a million dollars of insurance is not enough
money to make a person a target any more, and hasn't been for some
years. By the same token, $100,000 sublimits are not adequate
insurance for most people who have the financial wherewithal to own an
airplane, again, that has to be examined on a person by person basis.

The other conclusion is that just because you have a million in assets
and a million smooth policy does not mean a person seeking to sue you
is going to get both. The idea is to protect that million in assets
by putting up a suitable barrier to make it difficult to get anything
at all (the insurance policy provides a defense) and a pool of money
that is adequate to resolve the vast majority of potential suits you
might face as a pilot because you messed up and had caused an accident
(a $ million smooth policy). That sort of defensive plan reduces
one's risk substantially, it will get rid of probably 95% of the types
of claims one can expect, which is all one can hope to do,
realistically. The $100,000 sublimit policy reduces the likelihood
that the majority of potential claims will be kept at arms length and
increases the risk that they will cross the castle wall and get at
your assets. It's an individual decision that, in my opinion, should
not be made flippantly by just asserting that if you have insurance
the bad guys will take all of it. If a pilot has little in the way of
assets, it may be appropriate to carry no liability insurance. The
college kids I work with ask about insurance for their flying. Unless
one is a trust fund baby, there is no reason for them to carry
insurance. However, by the time a person has put together a few
assets during the course of a lifetime and has acquired an airplane,
it's wise to give serious consideration to how best to insure it to
protect oneself and one's family financially in the event the pilot
isn't as good as he thinks he is. From what I've observed over the
years, the $100,000 sublimit policy should be viewed with great
skepticism from the standpoint of providing adequate risk protection.

All the best,
Rick

Michael,
You got good advise back when you got it.

When was that? I guess I'm really amazed how you are able to
determine when I got that advice.

The advise you described is about ten years old (give or take five)
and was the common approach back then.

The aviation insurance market has changed so much in the
last decade that it is not possible to get enough insurance to make
oneself a "target".

A million dollars is a pretty inviting target. On contingency, that's
$300K-$500K in the pockets of the attorney - worth a long shot.

Actually a contingency is one third, after expenses. Once you figure
in the time involved in putting together the suit, unless the damages
are huge and liability is a slam dunk, and the fact that the
plaintiff's attorney has to bankroll the case for two to five years,
it's not enough money to make a person a target. In this day an age,
it simply isn't.

Now, if you have the assets to own an airplane,
you have the assets to be a target.

Maybe that's the case if your airplane is an impulse purchase. For
most people I know, the airplane is the major asset - one they had to
borrow to purchase. I suppose that might be because I'm not an
attorney and don't know too many pilots who are.

With most people I know, once you take the house (if any) and the
airplane out of the picture, there's simply not much there in the way
of assets.

That's why insurance has to be a part of an objectively thought out
risk evaluation for each pilot. For the folks you know, $100,000
sublimits may very well be adequate. In my observation, for most
airplane owners, they are not.

You are correct that a
plaintiff's attorney will not go after a dry hole; the problem is that
sublimits of $100,000, is not enough to stop an attorney from going
after the owner's assets should there be a serious injury or death.

You're not making sense. If the owner is a dry hole (or close to one)
$100K is about all there is. Are you telling me a plaintiff's
attorney will pass up a $100K settlement to roll the dice on a
possible $200K? Now if we're looking at assets in the $1M range,
that's another story. I don't know too many light plane owners in
that range.

The problem is perception. If there damages are large, the
planitiff's attorney will simply take the $100,000 (the insurance
company can settle by paying limits without including the pilot in the
settlement, although that can vary, what your insurance company can do
is in the contract), use it as a war chest and go after the pilot's
assets, if there is reason to believe they are worth pursuing. If the
pilot does not have such assets, the $100,000 sublimit may be
adequate.

The fact that a person owns an airplane is a pretty good indication
that there are assets to be reached in the event of a suit, even if it
is the insurance check that went to the owner to pay for the airplane
after the crash.

That's less than $100K in most cases, and most people have a note so
the bank gets paid first and immediately. Go try to get that money
after the bank has it...

You know, there are those who can easily afford aviation, and there
are those who can only afford it because they make it a priority. I
think your advice may be relevant to the former group, but not the
latter. It's a very rare individual who makes enough money to support
a family, own an airplane, and have anything at all left over for the
lawyers to take.

That is a matter for each individual to evaluate. I've simply
observed that by the time a person with a family is able to own a high
performance airplane, that person has enough in the way of assets that
for him or her to protect the family financially, $100,000 sublimits
are not adequate for the task, it leaves to much at risk. By simply
paying a little more for insurance and getting smooth coverage, the
risk drops. Whether that is appropriate is an individual decision and
should be taken, in my opinion, with due regard for one's family.

Yes, some owners have structured their assets to get
them beyond reach of a lawsuit, or they think they have. They may
have moved them offshore, illegally, and the lawsuit may lead to a
discreet call to the IRS by the plaintiff's attorney that buys the
owner an opportunity to defend an action by the IRS and potentially,
criminal charges.

Or they may have put them into a house, untouchable even in the event
of bankruptcy.

True, but rare, in my observation over the years.

As for plaintiff's attorneys who have a habit of dropping the dime on
those who have illegally moved their assets offshore, they have a bad
history of getting their knees broken. People willing to break the
law are, well, willing to break the law.

given up on getting any higher limits, because they are no longer
available.

Want to clue us in - WHY are they no longer available? Would it be
because insurance companies have figured out that the settlement will
be based on how much coverage there is, rather than how much damage
was actually done? Would it be because they've figured out that the
increased coverage simply makes you too tempting a target?

The aviation insurance companies have only made a profit in about one
or two years of the last ten. Two have gone bankrupt. They have made
the decision to write lower limits and cocentrate on the $100,000
sublimit coverage for pilots because it makes them more money.

They have also simply stopped offering high limits because they lost
money on them. It was, in my opinion, based on observation, a
business decision. The aviation market is tiny, perhaps 250,000
airplanes out there, fewer than there are cars in a decent sized city.
The companies are competing for business in a small market and those
who were not extremely conservative in their underwriting have gone
under. Do you remember the Omni, back in the 1970s? They would write
about anyone flying anything for any coverage. They went under pretty
spectacularly. American Eagle had lower rates than most everyone and
offered some pretty high limits when others wouldn't. They went
under. The remaining companies stopped writing high limits because
they could not charge high enough premiums to make the risk
worthwhile.

Consider it as a simple matter of statitstics - if I'm wrong and the
amount of insurance is not a large factor in making you a target, you
could get $5M smooth simply by paying 5 times the rate for $1M smooth.

The amount of insurance can make you a target, it's just that a
million smooth isn't enough to do so (and that's only my opinion but
it is based on working in this business on a day to day basis). Ten
million might very well make you a target (although you still have to
have an accident for it to matter), and the insurance companies have
taken that option away from us.

It boils down to each pilot objectively analyzing risk and not simply
buying what is the least expensive. I've just seen too many pilots
get burned from doing so.

All the best,
Rick

Actually a contingency is one third, after expenses. Once you figure
in the time involved in putting together the suit, unless the damages
are huge and liability is a slam dunk, and the fact that the
plaintiff's attorney has to bankroll the case for two to five years,
it's not enough money to make a person a target. In this day an age,
it simply isn't.

But, but, but...

That can't be the case. Plaintiff's attorneys are working to help the
injured little guy (and the chilluns). I know cus I saw it on TV.

Actually we may get to the day when the only ones left in our society with
enough assets to be targets are the attorneys.

Howard


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The college kids I work with ask about insurance for their flying.
Unless one is a trust fund baby, there is no reason for them to
carry insurance.


I find that position morally reprehensable.

Jose

--
(for Email, make the obvious changes in my address)

Michael wrote:

The fact is, most owners of airplanes that cost less than six figures
are NOT wealthy.

Most of the ones I know have at least half a million just in retirement accounts. And
when $60k/year is regarded as about the top of the middle class income bracket, I
know *very* few aircraft owners who aren't classified as wealthy, just on income
alone.

George Patterson
If a man gets into a fight 3,000 miles away from home, he *had* to have
been looking for it.

On Mon, 18 Oct 2004 02:29:10 GMT, "G.R. Patterson III"
wrote:



Michael wrote:

The fact is, most owners of airplanes that cost less than six figures
are NOT wealthy.

Most of the ones I know have at least half a million just in retirement accounts. And
when $60k/year is regarded as about the top of the middle class income bracket, I
know *very* few aircraft owners who aren't classified as wealthy, just on income
alone.

On what planet is $60k the top of the middle class?

Don in Silicon Valley

Can any of you learn how to say "snip" and not waste bandwidth with useless
postings of the original post with one or two comments at the end?

jim




Nathan Young
shared these priceless pearls of wisdom:

-
-a million smooth policy would have protected the estate completely.
-
-So lets say the pilot has an estate of $1M and the $1M smooth
-coverage. Won't the victims just go after both?

Jim Weir (A&P/IA, CFI, & other good alphabet soup)
VP Eng RST Pres. Cyberchapter EAA Tech. Counselor
http://www.rst-engr.com