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DID YOU KNOW insurance companies use your application as a contract for the policy?

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LRingeisen

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When a new policy is bound, it is important to complete the application as accurately as possible. By signing it, you are certifying that all of the information is true and correct. If you notice something incorrect on the application, it is important to contact your broker right away. Since every aviation policy has to be manually renewed, gathering updated information is important (updated hours, major traffic violations such as DUIs, etc.). If you decide to stay with the same company, it?s possible that the insurance company will not require a new application; however, it is your responsibility to make sure the information is updated. Depending on the company, an application can be held on file for a couple of years; however, if you change companies at the renewal, a new application will need to be completed.

Incorrect information given on an application can result in a claim being denied and just another reminder?

Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or, conceals, for the purpose of misleading, information concerning any fact material thereto, commits a fraudulent act, which is a crime, and subjects such person to criminal and civil penalties.
 
Let's say you are filling out the application but your logbooks are at the hangar, so you estimate your hours in the last year and your total time. For argument's sake let's say you could be off by +/- 10-15 hrs.

Are you saying that could result in denial of a claim?
 
Let's say you are filling out the application but your logbooks are at the hangar, so you estimate your hours in the last year and your total time. For argument's sake let's say you could be off by +/- 10-15 hrs.

Are you saying that could result in denial of a claim?

That would depend on the situation. For example, if you have 0 make and model time but you said you have 10, that would be an issue. On the other hand, if you have 800 but said you have 810, it's not going to make a difference.

The key is to make sure you are meeting the minimum number of hours required by your insurance company. Provided that you have met the minimum, estimating your time is fine.

The main reason for updating your hours as a higher time pilot would be to take advantage of possible lower rates.
 
question

"...That would depend on the situation. For example, if you have 0 make and model time but you said you have 10, that would be an issue..."

I'm curious as to how you check the validity of the estimated times as you are not required to maintain a logbook except pertaining to ratings being sought...

Just a question in reference to the "...depends on the situation..." part of the statement...
 
Of course they can use any discrepancy as basis for denial, intentional or not, as that then voids your policy contract. Whether they choose to is up to them and the reputation they want to have.

I'm sure aircraft policies have the same language about how you "must cooperate and provide any information requested" for a claim. So the second you balk at an invasive analysis of every aspect and record of your flying, oop... claim denied.

I also think it's unlikely this warning comes out of the blue, something happened to prompt it.

ETA: Washington State residents, we have some pretty policy holder friendly laws, it's probably worth it to understand your rights. Turns out insurers break the law quite often, seemingly as a matter of policy in some cases.
 
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The posts that we make on the forum are made to be educational/informational. Sometimes, something prompts us to discuss a certain topic (tighter underwriting guidelines/increasing premiums), but most of the time, we are trying to find a subject that will interest Vans aircraft owners. We want to provide as much information that we can so that everyone has a better understanding of how aviation insurance works.

Aviation claims are the same as your home or auto except most companies try not to deny claims because it is a much smaller market. If you are doing something illegal or if you purposely lied on the application, the claim can be declined.

The discussion about the hours was geared more toward low time or transitional pilots. If you have a claim, it's possible that the insurance company request your logbook. We request updated information from our insureds at renewal by sending them an application or reminding them that it is their responsibility to update us with any information needed.
 
Educational

Yes that all makes sense...however...the point of my question is how is the validity of the application checked when a logbook is NOT required except pertaining to ratings sought.

Example: Private Pilot with Instrument. No intention of going further so no further logbook is required. 5 years later, a claim is filed and the insurance company requests the logbook...which will show experience up to the instrument rating and no more.

It becomes a case of the pilot's word versus the insurance company...any bets if the claim is denied?

Sorry, a bit pessimistic about insurance claims as I am familiar with a denied claim do to one small sentence in a very long policy...that cost the policy holder a C-172RG...
 
Couldn't you use some other way to show flight time to an insurer (aircraft hours, fuel receipts, flightaware records, etc.)?
 
Like...

I guess when it comes right down to it, having a logbook showing specific time in the insured type is the ONLY way to avoid the insurance company from denying the claim based on experience...

The other ways suggested are no more valid than just saying, ? I have xx hours in this type.? Anyone could have flown the Hobbs time, the flight aware record etc.

Again, just bad experience with insurance claims. Seems like you pay, pay, pay and then when it?s their turn, they don?t want to...
 
It seems to me that 2 sheets of paper with your endorsements showing currency, flight review and hours written on one of them somewhere could be a logbook. I do not think there is anything requiring your log to be bound in shiny covering and going back to day one of your flying.
 
Yes that all makes sense...however...the point of my question is how is the validity of the application checked when a logbook is NOT required except pertaining to ratings sought.
Strictly speaking, you also need to keep records of Flight Reviews, 3 landings/takeoffs every 90 days (if you carry passengers), Instrument time or IPCs (if you fly under IFR), etc.

But insurance is, as Katie said, a contract. If you claim something factual (hours, for example) you had better be prepared to back it up somehow, regardless of what the FAA says are its requirements.
 
Strictly speaking, you also need to keep records of Flight Reviews, 3 landings/takeoffs every 90 days (if you carry passengers), Instrument time or IPCs (if you fly under IFR), etc.

But insurance is, as Katie said, a contract. If you claim something factual (hours, for example) you had better be prepared to back it up somehow, regardless of what the FAA says are its requirements.

In addition to the above, I always log all my time because:

A: I want to

B: My flight experience may get me an insurance decrease on a future application.

C: If I ever need to talk to an adjuster, I would like that conversation to go smoothly.
 
Exactly

The way it looks is that the insurance company is judge, jury, and executioner.

For example, a hypothetical pilot has 20,000+ hours and hasn't kept a logbook in years. All currency requirements are valid. This pilot lists 10 hours of RV-10 time on his application. An accident occurs and a claim is filed. The insurance company denies the claim based on the inability to prove the 10 hours, yet the pilot is not required to document those hours...

Bob T said, "...But insurance is, as Katie said, a contract. If you claim something factual (hours, for example) you had better be prepared to back it up somehow, regardless of what the FAA says are its requirements..."

So how do we do that? Logbooks are really not valid proof because there are plenty of folks that still log Parker P51 time, so how is that different than just claiming you have the time?
 
The issue of whether the FAA requires you to log your time is irrelevant to the insurance discussion. If you choose to enter into a contract with an insurer, and the contract requires some semblance of proof of your time, then a logbook seems the easiest way to satisfy the requirement. Perhaps fuel receipts and other such things could help as well, but wouldn't it just be easier to log your time? Sure you don't HAVE to, but you don't HAVE to buy insurance, either. Plus, if you use an EFB like foreflight with gps, it will log your flights automatically. I basically just hit "approve" after each flight and it is added to my logbook. Plus this has the advantage of being backed up by a complete track log, much much harder to falsify.

Chris
 
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For example, a hypothetical pilot has 20,000+ hours and hasn't kept a logbook in years. All currency requirements are valid. This pilot lists 10 hours of RV-10 time on his application. An accident occurs and a claim is filed.
Prove it. This doesn't have to be proved in the sense that you need witnesses and fuel receipts and... and... It just needs to be proved to the satisfaction of the Insurance Company.

The insurance company denies the claim based on the inability to prove the 10 hours, yet the pilot is not required to document those hours...
The FAA doesn't require the pilot to maintain a personal log to document the hours. But the Insurance Company needs documentation of the hours. An easy way is to document them in the way most people document them, in a logbook. Also, don't the hours in the airplane itself need to be logged? That log could be copied and submitted as proof, too.
 
I know a guy (not me). Who totaled his airplane. He had insurance. When the adjuster got to work, he requested log book pages with the owners required CFI checkout. He kept a computer logbook and told the adjuster that his logged time was not required by the FAA.

Payout was on hold until the adjuster was done. IE proof of the needed time in type / CFI checkout.

CFI eventually drafted an email to the adjuster.

Insurance payed out.

When I give or get a new checkout / completion of rating / flight review, I draft a word document and type out what we did. Time of training. We both sign and each get a copy. Save for later if we "need it".
 
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Did You Know insurance companies use your application as a contract for the policy

I don't want to start any arguments here but I think there a couple of things that need to be said about insurance and logbooks. First, pilots are required to log certain flights! Doesn't matter if you will never seek another rating or not. Currency to carry passengers, IFR currency, flight review, must be logged. Granted it doesn't have to be in a black bound book with "Logbook" printed in fancy letters on the front. But it has to be in some form of permanent record that can be produced if the FAA requests it. Also if you are flying a tail wheel, high performance, or other specialized aircraft that requires an endorsement before you solo it, you need to have proof of that endorsement. That is not an on going requirement, but you need to prove you have it.

Second, an insurance company has to have some basis for deciding (1) if they want to insure a pilot and aircraft, (2) under what conditions, and (3) what they will charge for the insurance policy. The way that is done is the broker ask a bunch of questions when getting the information for a quote, and then after the risk is bound, they send an application where the insured confirms that information and signs it to verify it is correct.

Also there is no such thing as an "all loss" policy. No policy covers everything. And if the insured falsifies the information that the policy is based upon, the insurance company has every right, and I can argue a duty (to its honest policyholders) to deny the claim.

The best way to handle your aircraft insurance is to find a good broker who specializes in aviation insurance. Then tell that broker everything about how you operate the aircraft. Who flies it. What you use it for. Where you fly it. Do you fly it in airshows, waivered airspace. It is like going to the doctor for a physical. You have to take off your clothes so he can conduct a good physical. Well you need to do an aviation use undressing so that your broker will know all the facts about how and what you use the airplane for. Then with complete knowledge your broker can get quotes from all the companies that insure your airplane and your use, and provide the quotes to you with a recommendation on which one is best. With that approach, you will probably never be involved in a claim with a coverage question. And if you are, you will have the documentation to provide the insurance company.

One more point to be complete. All aviation insurers except for Avemco use brokers. So if you want to cover all the bases, after talking to your insurance broker, call Avemco and give them the same information for a quote from them.

There is no need to talk to several brokers. They will represent the same insurers and the second one will have difficulty getting a quote.
 
point

"...When the adjuster got to work, he requested log book pages with the owners required CFI checkout..."

What required CFI checkout? Was this something mandated by the insurance company?
 
With that approach, you will probably never be involved in a claim with a coverage question. And if you are, you will have the documentation to provide the insurance company.

Good advice. But don't be surprised when your insurance company denies a claim obviously covered under your policy, it's what they do unfortunately.

I'd suggest you should get a copy of the policy document to read and (attempt) to fully understand prior to purchasing. Really if you can afford it you should go through it with a coverage attorney so they can help you interpret the intentionally convoluted policy phrasing.
 
Good advice. But don't be surprised when your insurance company denies a claim obviously covered under your policy, it's what they do unfortunately.

I'd suggest you should get a copy of the policy document to read and (attempt) to fully understand prior to purchasing. Really if you can afford it you should go through it with a coverage attorney so they can help you interpret the intentionally convoluted policy phrasing.


Yep, you get it.

...and read EVERY sentence. as I posted earlier, the cost of one sentence was the price of a C-172RG...
 
phrase

In this case it was a catastrophic engine failure. You would think that is one of the reason WHY you carry insurance but no...there was one sentence in legalese, that was buried deep in the policy, that basically said, "catastrophic engine failures are not covered". Of course, in legalese, it doesn't come right out and say that. Unfortunately for us, it was in there, and it was a simple issue for the insurance company to say, "too bad, so sad, bye, bye".

So, we ate a $57,000 aircraft. We were able to part some of it for around $10k but it was pretty much totaled.

You might think it's an isolated event but my parent's house burned due to a ford expedition's faulty pressure switch. Remember the lawsuits? That's beside the point though, it was like pulling teeth to get paid. In fact, it took a lawyer to get things moving. Apparently, the insurance company didn't want to pay out the $160k but the lawyer said the lawsuit that he would file was going to cost them substantially more...

Point is, the insurance company is in business to make money. Claims cost money...

Read every line of your policy and make darn sure you understand what is covered and what is not...and as previously posted, if you do not understand something in the policy, ask questions or enlist an attorney to translate the legalese...
 
there was one sentence in legalese, that was buried deep in the policy, that basically said, "catastrophic engine failures are not covered". Of course, in legalese, it doesn't come right out and say that.

Words matter. What *exactly* did it say?

And what was the cause of said "catastrophic engine failure"? Manufacturing defect? Maintenance error? Construction flaw? Poor care and feeding? Could easily be a factor in their decision, depending on what the contract said.

More details, please. Help us all understand what to look for, precisely, in an insurance agreement which might be problematic.
 
For example, a hypothetical pilot has 20,000+ hours and hasn't kept a logbook in years. All currency requirements are valid. This pilot lists 10 hours of RV-10 time on his application. An accident occurs and a claim is filed. The insurance company denies the claim based on the inability to prove the 10 hours, yet the pilot is not required to document those hours...

I'm not sure I agree with that. You get a quote for insurance on your 10 and the ins co requires 10 hours of flight time to get that insurance. You then sign an agreement stating that you meet the requirements. It doesn't seem out of line for the ins co to ask you to prove it at some time (not a logbook entry per se; I am sure an affidavit from the CFI or other pilot would be adequate), regardless of the FAA requirements. You knew it was a requirement and should have known it may need to be validated some day. No different with your taxes. You have no obligation to document most of your enties, but if you can't prove them when the tax man comes calling to verify, you lose. That is pretty standard when you sign a document attesting to facts not documented.

I suspect the companies are not overly strict on the form of proof, as any logbook entry, except one signed by a CFI, is no more a reliable statement of fact than an affidavit signed by the pilot along with a rental receipt. If they are looking for prook of things like BFRs or check outs, it seems reasonable to request a logbook, as that is the standard way of a CFI signing off on that activity. Though I suspect any paper that states the fact, along with the CFI signature, would be adequate.

Larry
 
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Words matter. What *exactly* did it say?

And what was the cause of said "catastrophic engine failure"? Manufacturing defect? Maintenance error? Construction flaw? Poor care and feeding? Could easily be a factor in their decision, depending on what the contract said.

More details, please. Help us all understand what to look for, precisely, in an insurance agreement which might be problematic.


Yes, words DO matter...however, this issue occurred around 2007 and I do not have the *exact* verbiage they used on hand.

I can tell you that the policy was a Flight School policy, insuring two C-172s, a C-172RG, and a C-421. The aircraft were properly maintained and "fed"...as they have to be for a flight school operation.

The "said cause" of the failure was a plug on the front case of the engine. The hole is there for manufacturing reasons, then plugged. That plug is never meant to be removed but for some reason (unknown) it failed. That led to total oil loss and catastrophic failure. In fact, it was a textbook failure with oil spraying all over the windshield making it impossible to see. The 110 hour PP landed the dead stick aircraft in a logging clearcut area, destroying the aircraft, but he and his passenger walked away with minor bruises.

The FAA requested the engine for examination...and that was the last we heard about it.

Nothing else really matters, though, except that it was excluded in the policy...and we did not catch it.

So, again, make darn sure you know what is in your policy, and ask questions if you don't understand something...
 
Insurance

Bottom line.....
From experience, you got insurance because
There was a chance that you were going to have
A incident, claim, etc. your insurance provider
Bet against you having a claim that would exceed
Your premiums for period of time.
There job to share holders is to return a profit.
Denying the claim or a portion there of is usually
The first response. After the FLD ( first letter of denial)
Next call (calls?) is to a attorney.
Then 99% of time your claim can move forward.
Being in court is the LAST thing a insurance company
Wants.
 
Well, without the actual words, this is merely a rumor. Most policies, as I understand it, exclude engine breakdown or failure. Mine specifically says

This policy does not apply:...
(f) Under Coverages F, G and H, to physical damage
(ii) caused by and confined to:
(1) wear and tear,
(2) deterioration, or
(3) mechanical or electrical breakdown, failure
or malfunction.

Note the "confined to" part. If the engine fails, they won't pay for that. If the engine fails and the plane gets damaged in any subsequent emergency landing, the damage is paid for.

So yes, you have to read your whole policy and understand it, obviously. I was hoping you could provide more than an anecdotal story with the actual wording that people here should be on the lookout for in their own policies.
 
Denying the claim or a portion there of is usually
The first response. After the FLD ( first letter of denial)
Next call (calls?) is to a attorney.
Then 99% of time your claim can move forward.
Being in court is the LAST thing a insurance company
Wants.

This is not true, and a blatant smearing of the entire industry. In my dealings with aviation insurance companies, both as a board member for a large flight club, a renter, and an owner, and having been through a handful of claims, including my own, in all of those roles, ranging from relatively minor damage to complete aircraft loss, they have *never* behaved that way. Some were the fault of the pilot, some the fault of a mechanic, some the fault of someone else entirely, some an inherent design flaw.

Each time, the people I/we dealt with were professional, courteous, made decisions based on facts, and paid the claim promptly and without any hassle.

As they've all told me or others involved..."this is what insurance is for."
 
I'm not sure I agree with that. You get a quote for insurance on your 10 and the ins co requires 10 hours of flight time to get that insurance. You then sign an agreement stating that you meet the requirements. It doesn't seem out of line for the ins co to ask you to prove it at some time (not a logbook entry per se; I am sure an affidavit from the CFI or other pilot would be adequate), regardless of the FAA requirements. You knew it was a requirement and should have known it may need to be validated some day. No different with your taxes. You have no obligation to document most of your enties, but if you can't prove them when the tax man comes calling to verify, you lose. That is pretty standard when you sign a document attesting to facts not documented.

I suspect the companies are not overly strict on the form of proof, as any logbook entry, except one signed by a CFI, is no more a reliable statement of fact than an affidavit signed by the pilot along with a rental receipt. If they are looking for prook of things like BFRs or check outs, it seems reasonable to request a logbook, as that is the standard way of a CFI signing off on that activity. Though I suspect any paper that states the fact, along with the CFI signature, would be adequate.

Larry

If verification is required that needs to be stated up front as a condition of the policy contract, and it may very well be in the language, you'd have to check.

But signing a statement that you meet the requirements is attesting to that fact, and if no other verification is asked for then you've satisfied the requirement (provided you're stating a fact). Given no requirement to the contrary the onus is on them to prove you've lied and they would therefore be justified in not enforcing the policy because you breached the contract.

I'm not sure I understand the tax point as you are required to keep documentation of many different write-offs, but that's a completely separate topic...
 
Rumor?

"...Well, without the actual words, this is merely a rumor..."

Rumor my a$$...

When is the last time you lost $47,000 on a rumor?

Thanks for being such a great Monday Morning Quarterback...
 
Well...after watching this thread run off the rails the good folks at Gallagher may be inclined to keep their suggestions to themselves from now own and we will lose a good resource.

This thread is done and closed.
 
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