That's exactly what happened to a buddy of mine. He had his Cessna 210 insured for $50K (the amount of his loan). When a freak wind storm flipped it, they paid my friend $50K so fast it made his head spin. That was easily a $120K airplane at the time. Although it sounds like a bad accident, the damage was relatively minor. No skin crinkles at all.

I don't fault the insurance company though. He made the deal with them, trying to get by on the cheap. It just happened to jump up and bite him bigtime.

Lesson learned is to buy as much hull insurance as you can afford to receive if they total it.
 
Mike S said:
So, do you mean the salvage value of $75k in the above example, so the insurance co. could settle for $50, and sell off for salvage for $75, thus putting $25k in pocket??? Instead of paying the repair tag of $5,000??

They would net $30k in this deal.

Not a pretty thought:mad:
Click to expand...

Exactly!!!

With one minor adjustment... their net would be $20K as they will have to spend $5K to fix it first in order to sell it for its valued at $75K

Of course it is all possible that I along with those who believe this is the process have got it all wrong and they would pay for the repair up to $50K (in this example) which of course would certainly be fair and just.
 
Last edited:
Guys -
This is ABSOLUTLY a risk in under-insuring an airplane on an Agreed Value basis. It's a mistake that I talk to people about everyday.

Most of the time the example is not as extreme as the numbers being cited above. But yes - when you insure for 1/2 of the real market value of an airplane, you have agreed to sell the insurance company the airplane for that amount - with the sale trigger being a hull claim. The policy reads that the insurer will pay the cost to repair OR the "Insured (Agreed) Value" of the airplane - their choice. :eek:

Under-insuring is a TERRIBLE way to save a little premium.
 
JDRhodes said:
Guys -
This is ABSOLUTLY a risk in under-insuring an airplane on an Agreed Value basis. It's a mistake that I talk to people about everyday.

Most of the time the example is not as extreme as the numbers being cited above. But yes - when you insure for 1/2 of the real market value of an airplane, you have agreed to sell the insurance company the airplane for that amount - with the sale trigger being a hull claim. The policy reads that the insurer will pay the cost to repair OR the "Insured (Agreed) Value" of the airplane - their choice. :eek:

Under-insuring is a TERRIBLE way to save a little premium.
Click to expand...

Jeff, thanks for taking the time to educate us.

I, for one, need to do a bit of studying prior to my renewal date.

Good info, glad this came up.
 
Bad the other way too...

Just for the discussion, let's look at the other end of the spectrum - OVER insuring. This happens sometimes, especially in a declining value market like we've been in.

The market value of the airplane is $75K and you have it insured for $100K. The wind storm comes along and thrashes the airplane, doing extensive damage - estimated repair cost of 70K (wings, engine/prop, bent fuselage). Insured to value, they'd cut you a check the next day for $75K less a $100 deductible and you'd go airplane shopping the day after that. Instead, they can't total it because it would cost them $100K and they make you spend the next 2 1/2 years building virtually a totally new airplane that has extensive damage history in its records and you pay extra premium all along for the priviledge.

Insure to VALUE, and re-evaluate what that value is before each renewal.
 
Hull values aside, in this particular (SnF) case, ground-not-in-motion coverage would have sufficed for those of us who generally prefer carrying liability only, correct? And is it true that higher hull values for GNIM coverage doesn't do much to the premium?
 
Last edited:
JDRhodes said:
Just for the discussion, let's look at the other end of the spectrum - OVER insuring. This happens sometimes, especially in a declining value market like we've been in.

The market value of the airplane is $75K and you have it insured for $100K. The wind storm comes along and thrashes the airplane, doing extensive damage - estimated repair cost of 70K (wings, engine/prop, bent fuselage). Insured to value, they'd cut you a check the next day for $75K less a $100 deductible and you'd go airplane shopping the day after that. Instead, they can't total it because it would cost them $100K and they make you spend the next 2 1/2 years building virtually a totally new airplane that has extensive damage history in its records and you pay extra premium all along for the priviledge.

Insure to VALUE, and re-evaluate what that value is before each renewal.
Click to expand...

In this case, could you not remove everything that can be reused, sell the rest for scrap, and then build a new airplane? I'm thinking of the planes with 20-25K in the panel, plus upholstery and other parts that aren't damaged.
 
rubber314chicken said:
In this case, could you not remove everything that can be reused, sell the rest for scrap, and then build a new airplane? I'm thinking of the planes with 20-25K in the panel, plus upholstery and other parts that aren't damaged.
Click to expand...

This is certainly the route I would probably go depending on damage/amount recovered.

Based on the discussion here, I may need to re-evaluate my policy. My hull coverage now is based on the amount I have spent, less labor but I full well know that I will not be able to get my money back if I was going to sell. Does that mean I am over insured? Don't know!

Anyway, thanks to all, specially Jeff for chiming in and educating us in this regard.
 
alpinelakespilot2000 said:
Hull values aside, in this particular (SnF) case, ground-not-in-motion coverage would have sufficed for those of us who generally prefer carrying liability only, correct? And is it true that higher hull values for GNIM coverage doesn't do much to the premium?
Click to expand...

Correct and true. I've had GNIM for a decade, primarily because our airport sits in the middle of our local tornado alley (strong cell 1/2 mile south of the runway one hour ago....). I have hull coverage per current market value of the plane, in other words, what it would cost to replace it with a plane of equal value (sentimental value not included.... ;) )
 
Last edited:
You must log in or register to reply here.