Mods led to insurance denial...be careful!

Captain Avgas · #1 05-10-2009, 05:20 AM

The following court case will be of interest to any RV builders who plan on "tinkering" or otherwise modifying their aircraft systems after the C of A is issued.

http://www.ellison-fluid-systems.com...t_decision.htm

The case pertains to a Long EZ but will be relevant to all RV builders. In the relevant case the insurance company (Avemco) denied any indemnity under the aircraft insurance policy following a crash. This had ramifications for the pilot/owner, not only resulting from damage to the aircraft but also resulting from a third party claim for damage to property on the ground.

The pilot/owner lost the court case AND a subsequent appeal. It would be a fair assumption that if legal costs for the case and the appeal were awarded against the pilot/owner then these costs might have greatly exceeded the value of his aircraft.

My apologies if this case has been previously raised on VansAirforce.

Mel · #2 05-10-2009, 05:57 AM

It is important to note here that the insurance denial was not because of the modification but because the aircraft did not hold a valid airworthiness certificate.
You MUST follow your operating limitations. The op lims stated that after any mod, you must notify the FSDO. The owner did not. At that point his airworthiness certificate became invalid. Even though he changed the aircraft back to the original configuration, that did not reinstate the A/W.

N395V · #3 05-10-2009, 06:18 AM

It is quite interesting how the court focused on "need to notify the FAA" and totally ignored the fact that at the time of the crash the fuel system was in it's "as designed" configuration.

Thats like saying because he jaywalked as a youth he is not entitled to insurance coverage.

This case makes a good case for not making logbook entries and clearly demonstrates a lack of understanding of aircraft and their systems by non builders/pilots.

DanH · #4 05-10-2009, 06:20 AM

This case has been around a while. To paraphrase Mel, it really boiled down to a failure to do the paperwork. Truth is, nobody really cares about the actual mods, assuming they're not outright crazy and likely to be a danger to the public. We're experimental.

I once changed to an entirely different PSRU, certainly a major modification. Notified the local FSDO per the OpLim and got back a letter that said, in essence, "Approved, do the Phase1/Phase 2 thing, and BTW, you need not contact us again; any subsequent modification is also approved under the same conditions."

Painless.

tadsargent · #5 05-10-2009, 06:30 AM

AVEMCO had better attorneys. The owner admitted too much.
Tad

pierre smith · #6 05-10-2009, 06:32 AM

A guy's airplane was ramp-checked during its annual inspection at my buddy's Aviation repair station and the FAA guy said he's gonna write him up for displaying the registration over the airworthiness certificate in the transparent display pouch!!!

Yeah, nitpicky, buuuut, my buddy said that he'd correct that right now and "Save you a bunch of paperwork, Sir" and furthermore, tell the owner of the infraction and how to display these documents correctly in the future. He bought that but it just goes to show you.

Regards,

Geico266 · #7 05-10-2009, 06:39 AM

Quote:

Originally Posted by tadsargent

AVEMCO had better attorneys. The owner admitted too much.
Tad

Seems to me anyone with an experimental aircraft that has AVEMCO insurance should be looking for another carrier. They may have been a couple of bucks cheaper, but how cheap is it now to have an insurance carrier that does not want to insurer the simplest of mods?

Vote with your feet, I did.

TomVal · #8 05-10-2009, 07:29 AM

Quote:

Originally Posted by Geico266

Seems to me anyone with an experimental aircraft that has AVEMCO insurance should be looking for another carrier. They may have been a couple of bucks cheaper, but how cheap is it now to have an insurance carrier that does not want to insurer the simplest of mods?

Vote with your feet, I did.

Up until now, I have been a long time Avemco policy holder. When I just recently called them for a quote on my RV-8, they were more than twice as high as the quote that I received from NationAir. I got the feeling that they did not really want to underwrite RV insurance. Have any of you experienced the same???

N941WR · #9 05-10-2009, 08:39 AM

Some years back there was a similar case but involved a guy who changed from a FP to CS prop.

His accident had nothing to do with the prop but the insurance company used it as an excuse to keep from paying.

mikegraycmg · #10 05-10-2009, 09:06 AM

This is not the result you can expect from every Court. Texas, for instance appears to follow a different rule (I qualify this slightly because I haven't researched this point recently). In Texas, and in many other states, the rule appears to be that the violation of the certificate must have been a cause of the crash for the policy exclusion to be effective. This is just top of the head stuff, and is not intended to be a thorough analysis.
PUCKETT v. U.S. FIRE INSURANCE CO., 678 S.W.2d 936 (Tex.)