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10-05-2010, 10:25 AM
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Join Date: Feb 2008
Location: Taylorsville, GA
Posts: 748
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Insurance Perspective
It?s probably no secret here, but I am an aviation insurance broker. While I have a handful of RV insurance accounts ? namely my family members, friends, and a few others I?ve collected over the years ? my bread and butter are accounts of a significantly larger nature. Corp flight departments, FBOs, maintenance shops, etc. Because of my professional interest in aviation insurance and my personal avocation of flying RVs (and other little airplanes), I typically monitor and contribute my $0.02 to the ?Insurance? topics discussed here.
I?ve noticed over the years that there sometimes creeps in a theme of ?insurance companies should lower their premiums for RVs. We are safer than the norm and the airplanes are better than the norm, etc... When will some insurer finally recognize this huge profit potential and give us a break??
Allow me to give some perspective, allowed by my view of the big picture that those outside the insurance business aren?t privy to.
I am currently working with a claim. The aircraft in question is an airliner being used as a corporate jet. Several months ago the airplane suffered MAJOR engine damage on both engines due to significant ingestion of FOD. The policy is written with a major aviation insurer ? one that is also one of the more common underwriters for RV policies. The annual premium on this policy is about $150,000 ? 100 times an average RV policy. This premium is actually historically VERY low, for this type of risk, due to the current soft market.
At the end of the claims process this insurer will have paid out about $11,000,000 for repair of the 2 engines, plus an estimated $2,000,000 in airframe damage and a host of expenses related to the claim.
The promised perspective ? If we estimate 4,500 insured RVs nationwide, each paying an average premium of $1,500 ? that?s $6.75 million in premium paid by ?us? RVers each year. That premium is spread over five or six different insurers, with two or three having most of them. The total premium of every RV in the country is half what this one insurer is paying out on this one claim on one airplane ? where nobody was even injured.
My point is that any of the insurers offering RV policies could decide tomorrow that they don?t want ANY of them ? and they wouldn?t even miss them. We occupy a VERY small little niche of the marketplace. It is very important for us to keep our noses clean and not give the insurers we have ANY reason to suspect that RVs might not be worth the trouble. Three or four high profile losses in a year could really make the difference for an insurer. The loss of a single market could easily double the premiums we pay. It?s that important. Fly Safe!
__________________
Jeff Rhodes - Taylorsville, GA
RV-9, 7 - going fast
BC-12D - going slow
jrhodes@v1salesmgt.com
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10-05-2010, 11:23 AM
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Join Date: Dec 2006
Location: Coventry. England
Posts: 614
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Perspective
Hi
I doubt that your explanation will do anything to make RV pilots any happier about their insurance costs. I for one have no interest in what you charge for insuring a Bizjet......... nor what you have to pay out in respect of a claim on that Bizjet. Simply put the premium for the Biz jet should reflect the risks it reflects.
Similarly the premium on an Rv should reflect the risk that it and its prospective pilots represent. If an RV is safer/easier to repair than another type the premium should reflect it.
I have just renewed the insurance on my RV 9. Quotes for similar cover were ?2700, 1750 AND 1260 from three different insurers. Were the providers of the first quote repairing a bizjet which is nothing to dowith me or were they just trying to rip me off, I could ask the same about the second quote.
Bearing in mind that I have been flying for 20 years with no accidents, in fact none of the members of our group have any accidents, in what amounts to over 60 years of flying.
Personally I would return to the days when we did not have to insure as I was happy to carry the risk.
I wonder how many people have actually benifited from us having to insure other than insurance companies creaming in the premiuims.
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10-05-2010, 11:43 AM
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Join Date: May 2005
Location: Canby, Oregon
Posts: 1,786
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Humm...
My RV9A insured for $1700. My cars insured for $1000 per year.
Value of my insured cars is about $15000 and only one of them carries full coverage. My plane is worth about $80,000.
Yes, I want lower rates, but my current rate doesn't look out of line.
Kent
__________________
Kent Byerley
RV9A N94KJ - IO320, CS, tipup
AFS 3500, TT AP, FLYING....
Canby, Or
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10-05-2010, 11:46 AM
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Join Date: Jan 2006
Posts: 307
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Insurance perspective
I think you should reconsider your perspective. The risks associated with an aircraft claim is essentially the same for all aircraft. The aircraft is but one small aspect of a potential claim. Lives involved both in the aircraft or on the ground make the majority of the risk. Think Tort lawyer. A nasty pitbull dog with fangs the size of a killer whale latching on to your back side.
The author?s point is that our pitifully small premiums are a rounding error on the balance sheet of the insurance companies and thus we are at their mercy, whether we like it or not. He points out we should self police, to ensure we are being as safe as we can. Your lack of claims, though admirable, does reflect in your premium but only to the extent of the hull value as the personal risk NEVER changes. Lets not forget an insurance company is a business and therefore in to make a profit and provide a service, THAT WE NEED, to fly. Compare your insurance premium to your home, its about the same rate but your home does not travel at 150KTS and land on an elementary school or nursing home roof and injuring people.
For the record I have to hold my right hand with my left to endorse my check each year, however I have buddies that have submitted claims and they were glad to have insurance.
Viva la Insurance Company.
So I can fly.
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10-05-2010, 12:10 PM
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Join Date: May 2005
Location: Santa Barbara, CA
Posts: 1,324
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Policy
WAM, I think you are missing Jeff's point. By comparing the premium paid by one bizjet operator to the entire fleet of RVs, he is illustrating how little influence we hobbyists have. This is a little like the Avgas discussion, when you are consuming less than 1% of the "product," you have to remember that you don't have much of a vote. Frustrating as it may be, it is the way the system works, and frankly I don't want experimental aviation to ever be "mainstream." As to the "never had an accident" argument, very few of us have had to collect on a policy. But overall the accident statistics are not good when compared to certified aircraft. The lesson that I took away from Jeff's post was that the insurance carriers could, with very little relative loss of revenue, abandon the homebuilt market.
John Clark ATP, CFI
FAA FAAST Team Member
EAA Flight Advisor
RV8 N18U "Sunshine"
KSBA
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10-05-2010, 12:10 PM
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Join Date: Jan 2006
Location: New Smyrna Beach, FL
Posts: 1,339
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Quote:
Originally Posted by WAM120RV
Personally I would return to the days when we did not have to insure as I was happy to carry the risk.
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Self insuring for all or part of the hull value is one thing, self insuring for the liability could be costly, indeed!
That being said, I don't think there is any requirement to insure your airplane in the US. May be different in the UK.
I appreciate Jeff's post and his perspective.
__________________
David Maib
RV-10 N380DM
New Smyrna Beach, FL
VAF Paid 1/21/2020
"In '69 I was 21, and I called the road my own"
Jackson Browne
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10-05-2010, 12:14 PM
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Join Date: Jan 2005
Location: San Mateo, CA
Posts: 1,419
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Hi Jeff,
Thank you for the post! Can I ask you an RV insurance question? Do you know of an insurer that offers more than $100K of passenger liability? My insurance AIG through NationAir is $1M liability _but_ (and its a bit but) limited to $100K per passenger.
I suspect if someone died that $100K of liability would disappear like that. Thus making me nervous/careful about taking passengers at all.
Kevin
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10-05-2010, 12:32 PM
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Join Date: Oct 2005
Location: 08A
Posts: 9,500
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Quote:
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The lesson that I took away from Jeff's post was that the insurance carriers could, with very little relative loss of revenue, abandon the homebuilt market.
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.....as AVEMCO did.
__________________
Dan Horton
RV-8 SS
Barrett IO-390
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10-06-2010, 07:17 AM
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Join Date: Jul 2007
Location: Madison, Wisconsin
Posts: 778
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Quote:
Originally Posted by JDRhodes
My point is that any of the insurers offering RV policies could decide tomorrow that they don?t want ANY of them ? and they wouldn?t even miss them. We occupy a VERY small little niche of the marketplace. It is very important for us to keep our noses clean and not give the insurers we have ANY reason to suspect that RVs might not be worth the trouble. Three or four high profile losses in a year could really make the difference for an insurer. The loss of a single market could easily double the premiums we pay. It?s that important. Fly Safe!
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Jeff,
Your point is well taken that we are a tiny part of the market. Turning this around, why do these companies bother with insuring RVs at all? Obviously they think there is something in it for them. Do the reinsurers look at each individual policy, or do they just take on all the policies of Avemco or whoever? (in other words who is ultimately deciding which kinds of aircraft to insure?)
Personally I think our rates are pretty reasonable, considering the word Experimental is attached to the airplane in 2" letters. On the other hand the process of generating quotes seems rather opaque, perhaps intentionally so? Its nice to have someone like yourself take the time to explain things.
__________________
Alan Carroll
RV-8 N12AC
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10-06-2010, 07:57 AM
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Join Date: Jul 2007
Location: Delta, CO/Atlin, BC
Posts: 2,391
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Jeff,
Follow-on from Kevin's question. I occasionally use my airplane to get places for the university (state). I have recently been told that I can not do this (officially) unless I have $2M worth of liability (within the state) and $5M liability out of state. Is there anyone out there who offers such coverage? My current insurer indicated to me not, but perhaps you have a different answer? I'm up for renewal in Dec, so would be happy to switch if I can find the coverage I need.
greg
__________________
Greg Arehart
RV-9B (Big tires) Tipup @AJZ or CYSQ
N 7965A
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