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  #1  
Old 11-07-2018, 07:23 AM
LRingeisen LRingeisen is offline
 
Join Date: Mar 2016
Location: Chesterfield, MO
Posts: 52
Default How much should I insure my aircraft for?

This question can be a little tricky. The best way to determine the hull value is to consider what you would pay for an aircraft similar to yours in its current state. There can be serious consequences if the aircraft is not insured at a proper value. Some examples are listed below:

Underinsuring: Letís say your aircraft is worth $100,000 and you insure it for $60,000. Then you have a prop-strike and some other damage totaling $50,000. This would be a completely repairable situation, however the insurance company would rather total out the aircraft, pay you the $60,000 check, and then sell your aircraft. There is a chance that you could purchase your aircraft back from the insurance company with the intention of repairing it yourself however that wouldnít leave you with enough claim money to make the necessary repairs. (And most insurance companies do not guarantee the first right of refusal)

Over insuring: Now letís say your aircraft is worth $100,000 and you insure it for $150,000. Then you have a prop-strike and have significant other damage totaling $90,000. Although you would think your aircraft is totaled and have no desire to fix the pile of scrap, itís in the insurance companies best interest to write you check for $90,000 to fix it. Because that is more cost effective than paying you the $150,000 check. This particular scenario could also make it much harder to sell the aircraft down the road.

Insurance is meant to put you back financially where you were before the incident happened without bettering yourself. We cannot decide an amount for you so take a look at what some similar models are selling for to give you a good idea of your aircraftís worth.
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Leah Ringeisen, Shanna Linton, & Katie Escalante

Gallagher Aviation
877-475-5860
Arthur J. Gallagher Risk Management Services, Inc.
(Formerly NationAir Aviation Insurance)
www.ajg.com/lightaircraft / www.ajg.com
Opinions and advice provided by Arthur J. Gallagher & Co. is not intended to be, and should not be construed to be, legal advice. Please direct any request for legal advice to your attorney.
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  #2  
Old 11-07-2018, 11:08 AM
sglynn's Avatar
sglynn sglynn is offline
 
Join Date: Mar 2008
Location: Anacortes, WA
Posts: 665
Default Insurance Amount

Gallagher does my insurance for my RV-7A. It is almost time to switch to flying. Here is how I calculate the amount. I'm replying because I see RV prices vary widely. I hope others will let us know what they think their RVs are worth.

Airframe (Tail, Wing, Fuselage, Finish) = $50K
Engine = $25K
Avionics = $25k (Dynon suite)
Paint & Interior = $0

Total $100k. This is below true hard costs.

I couldn't buy all the components again for this price, but I doubt I could sell it for more than this. Could I? True hard costs is closer to $125k. Should I ensure for that much?
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Steve Lynn
RV-7A
95% Complete
Ready for first start
Anacortes, WA
www.mykitlog.com/sglynn
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  #3  
Old 11-07-2018, 11:54 AM
LRingeisen LRingeisen is offline
 
Join Date: Mar 2016
Location: Chesterfield, MO
Posts: 52
Default

You want to insure it for how much it would cost you to replace it. If a fire burned down the aircraft and you had to go out an purchase another aircraft just like yours, how much would it cost you? Insurance is meant to indemnify you against loss. You shouldn't come out better or worse after a loss.
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Leah Ringeisen, Shanna Linton, & Katie Escalante

Gallagher Aviation
877-475-5860
Arthur J. Gallagher Risk Management Services, Inc.
(Formerly NationAir Aviation Insurance)
www.ajg.com/lightaircraft / www.ajg.com
Opinions and advice provided by Arthur J. Gallagher & Co. is not intended to be, and should not be construed to be, legal advice. Please direct any request for legal advice to your attorney.
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  #4  
Old 11-07-2018, 12:06 PM
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rolivi rolivi is offline
 
Join Date: Feb 2015
Location: Fort Worth
Posts: 477
Default

I've set my hull value at $75k.

Understand that there is a correlation between hull value and premium.

Also, when the hull is based on stated value there is a limit they should write. Higher hull could need an appraisal.

Could my plane sell for 75K on any given Sunday? I'll never know. Can I replace her for 75k? Doubtful, but I have not intentions to find out.
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Rob
RV-6A (Purchased)
2018 Dues Paid

Last edited by rolivi : 11-07-2018 at 12:09 PM. Reason: clarification
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  #5  
Old 11-07-2018, 12:33 PM
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airguy airguy is offline
 
Join Date: Oct 2006
Location: Garden City, Tx
Posts: 4,321
Default

Leah - what percentage of insured value is the cutoff point where you will write the check for the hull value and just total the airplane?
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Greg Niehues - VAF 2018 dues paid
Garden City, TX
N16GN flying! http://websites.expercraft.com/airguy/
Built an off-plan 9A with too much fuel and too much HP. Should drop dead any minute now.
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  #6  
Old 11-07-2018, 12:51 PM
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RV7A Flyer RV7A Flyer is offline
 
Join Date: Jul 2013
Location: US
Posts: 1,648
Default

Quote:
Originally Posted by airguy View Post
Leah - what percentage of insured value is the cutoff point where you will write the check for the hull value and just total the airplane?
My insurance policy says 70% of hull value.
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  #7  
Old 11-07-2018, 12:54 PM
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flyboy1963 flyboy1963 is offline
 
Join Date: Oct 2008
Location: Lake Country, B.C. Canada
Posts: 2,354
Default one little detail oft overlooked

My insurer simply says insure for 'replacement cost'.

Having recently sold and then purchased another aircraft, let me say that were this a result of a 'loss' I would surely want to count the following;
- the several airline trips and hotel rooms needed to look at replacement aircraft,
- the pre-buy inspection that results in a 'no joy' decision.....
then the final purchase, escrow, inspection, ferry pilot;
-airfare, hourly rate, food, lodging.....
- to get it home, hangarage, fuel and related hard costs.

Then after the dust settles, TAX on the purchase, which can vary from almost nothing, haha???...don't laugh.....perhaps 10 or 20 thousand dollars additional ( RV-10 or -14 with a nice panel, bought for $175k, plus 10% tax....if you're lucky)

if you are willing to eat all that, then of course, reduce your premium by a few hundred bucks, and choose a lower value....it's all about your tolerance level.
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Perry Y.
RV-9a - SOLD!....
kinda missing it!
Lake Country, BC

....paid up til Nov. 2018
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  #8  
Old 11-08-2018, 11:37 AM
LRingeisen LRingeisen is offline
 
Join Date: Mar 2016
Location: Chesterfield, MO
Posts: 52
Default

Quote:
Originally Posted by airguy View Post
Leah - what percentage of insured value is the cutoff point where you will write the check for the hull value and just total the airplane?
We wanted to check with Tom, our claims advisor. He's our go-to guy for any questions that are claim related and he has a lot of experience dealing with all of our companies. Below is his response.

"It varies by insurance company. All claims are handled on a case by case basis so I canít give an across the board answer on at what point the aircraft will be repaired vs when it will be totaled. Most insurance companies consider it totaled when the estimated repairs reach between 70-75% of the hull value. This percentage roughly represents the sum of the repair cost and the estimated salvage value. Still it depends on the situation and insurance company. "
__________________
Leah Ringeisen, Shanna Linton, & Katie Escalante

Gallagher Aviation
877-475-5860
Arthur J. Gallagher Risk Management Services, Inc.
(Formerly NationAir Aviation Insurance)
www.ajg.com/lightaircraft / www.ajg.com
Opinions and advice provided by Arthur J. Gallagher & Co. is not intended to be, and should not be construed to be, legal advice. Please direct any request for legal advice to your attorney.
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  #9  
Old 11-08-2018, 11:45 AM
LRingeisen LRingeisen is offline
 
Join Date: Mar 2016
Location: Chesterfield, MO
Posts: 52
Default

Quote:
Originally Posted by flyboy1963 View Post
My insurer simply says insure for 'replacement cost'.

Having recently sold and then purchased another aircraft, let me say that were this a result of a 'loss' I would surely want to count the following;
- the several airline trips and hotel rooms needed to look at replacement aircraft,
- the pre-buy inspection that results in a 'no joy' decision.....
then the final purchase, escrow, inspection, ferry pilot;
-airfare, hourly rate, food, lodging.....
- to get it home, hangarage, fuel and related hard costs.

Then after the dust settles, TAX on the purchase, which can vary from almost nothing, haha???...don't laugh.....perhaps 10 or 20 thousand dollars additional ( RV-10 or -14 with a nice panel, bought for $175k, plus 10% tax....if you're lucky)

if you are willing to eat all that, then of course, reduce your premium by a few hundred bucks, and choose a lower value....it's all about your tolerance level.
Again, in order to answer questions as accurately as possible, sometimes we have to ask others on our team for help . Our claims advisor, Tom, is the best person to answer any claim related question, so we asked him for help. His response is below.

"These are valid considerations when estimating the true cost of the airplane sitting in front of you. However, there are some points to remember. As the owner, it is your choice to determine the hull value. The insurance companies will question insured values significantly more or less than book. Over or under insuring each has its own drawbacks. There is a tendency to think of claims only in terms of total loss. Claims that result in substantial damage become problems when the insured value is too high or too low. Over-insuring raises the threshold of the minimum amount of repair cost to consider it a total loss. In other words, it is cheaper for the insurance company to fix it. Under-insuring puts the insurance company in the position that totaling the aircraft is cheaper than the a medium amount of repairs. Either situation is really wasting your insurance dollars."
__________________
Leah Ringeisen, Shanna Linton, & Katie Escalante

Gallagher Aviation
877-475-5860
Arthur J. Gallagher Risk Management Services, Inc.
(Formerly NationAir Aviation Insurance)
www.ajg.com/lightaircraft / www.ajg.com
Opinions and advice provided by Arthur J. Gallagher & Co. is not intended to be, and should not be construed to be, legal advice. Please direct any request for legal advice to your attorney.
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  #10  
Old 11-08-2018, 12:12 PM
lr172 lr172 is offline
 
Join Date: Oct 2013
Location: Schaumburg, IL
Posts: 3,280
Default

Quote:
Originally Posted by LRingeisen View Post
We wanted to check with Tom, our claims advisor. He's our go-to guy for any questions that are claim related and he has a lot of experience dealing with all of our companies. Below is his response.

"It varies by insurance company. All claims are handled on a case by case basis so I can’t give an across the board answer on at what point the aircraft will be repaired vs when it will be totaled. Most insurance companies consider it totaled when the estimated repairs reach between 70-75% of the hull value. This percentage roughly represents the sum of the repair cost and the estimated salvage value. Still it depends on the situation and insurance company. "
By no means an expert here, but I would expect my carrier to take the net of the coverage total minus the estimated salvage value after the incident and compare that to the repair estimate, then chose the lower option, after factoring in the risk associated with the estimated amounts not being accurate. If not otherwise obligated by terms of the policy, I would be surprised if they didn't follow this model, as it reduces cost/maximizes profits (which they are typically incented to achieve by their board). When they send an assessor out, I would expect him to be estimating both the repair cost and the salvage value, in it's current state, to feed their decision.

Larry
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RV-6A / IO-320, Flying as of 8/2015
RV-10 in progress

Last edited by lr172 : 11-08-2018 at 12:24 PM.
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