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Anatomy of an Aircraft Claim (Part 2)

Outlining the steps along a path you trust your company will never need to tread, this month, Stuart Hope addresses the crucial actions involved when an aircraft-related accident is catastrophic.

Stuart Hope   |   9th November 2014
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Stuart Hope Stuart Hope

Stuart Hope is a co-owner of Hope Aviation Insurance. His career as an aviation insurance broker...
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As discussed last month in AvBuyer Magazine, no aircraft owner thinks it will be their aircraft that has an accident. The fact that your flight department has been operated safely without accident or incident for years can give an owner a false sense of security.

Some recent high profile losses, however, confirm that even companies operating with the most professional crews and well-maintained aircraft are not exempt. So best practice dictates that Board members and their aviation professionals recognize the possibility of an aircraft accident and be prepared for the call no one wants to receive.

We’ll start with the same trip scenario as last month, but modify it to highlight some of the different challenges faced by an owner when catastrophic loss occurs.

The Loss

Your company aircraft is starting a long day of business travel with two executives, two prospective investors and its crew of two pilots. On take-off, the aircraft fails to become airborne due to miscalculation of required runway length for its gross weight. The pilots try to abort the take-off but are unable to stop the aircraft on the airport. It runs off the end of the runway and hits a berm, resulting in total destruction and leaving no survivors.

Your first notification of the tragedy comes when a news reporter calls your company receptionist asking if management will comment on its aircraft being involved in a catastrophic accident with multiple fatalities. Many business owners fail to consider one of the largest threats they have today: reputational risk, which is defined as the ”risk of loss resulting from damages to a firm's reputation, in lost revenue; increased operating, capital or regulatory costs; or destruction of shareholder value, consequent to an adverse event”.

Your Response?

Due in large part to the pervasive role of social media, how you respond initially is absolutely critical! To start, let us assume you have already invested the time to create a stout emergency response plan (ERP), kept it an organic working procedure, and tested it annually. Having taken those steps, your company is positioned for the best possible outcome.

Initiating your firm’s emergency response plan is the very first step you should take. Contacting your firm’s aviation insurance broker and/or your insurance company’s claims department and reporting the accident will be very high on the list in the ERP and should be one of the next actions. Your insurance broker should have provided you with an emergency number where the company’s insurance providers can be reached 24/7/365. You will also have your insurance company’s emergency claims number in the ERP. Accidents rarely happen during normal business hours.

Depending on circumstances, the insurance company will arrange to transport their closest representative to the accident site as quickly as possible. Often their rep arrives before the FAA and NTSB. The insurance representative will coordinate with your ERP team and provide an attorney with aviation expertise to assist with the accident investigation, interviews with the press, etc. They will also help arrange for security at the accident site, contact the coroner, plan for repatriation of remains, help recover personal effects and consider possible site remediation due to contamination as dictated by the Environmental Protection Administration (EPA).

Many insurance policies also contain a specific endorsement that provides family assistance after a loss. Such coverage generally is meant to provide emotional care and support for the immediate family of a deceased crewmember or passenger and can include notification of next of kin. Other provisions often include establishing an information distribution center, providing personal counseling, and even assisting with creating a suitable memorial on or near the accident site.

Further Afield

Things get a bit more complicated if the loss is international in nature. Your firm’s insurance company has been down this road before, which is an important fact when tragedy occurs. Through their prior claim interactions, they have established solid contacts at the NTSB, FAA, repair facilities, recovery specialists, aviation adjusters and aviation attorneys literally on a worldwide basis.

Let’s be clear. You have a tremendous amount at stake, as does the insurance company. It will do the very best to assist you and your firm in any way possible. However, it is your company’s reputation, and it is the Board’s responsibility to protect that reputation.

As with the claim discussed last month, the first rule in the event of an accident should always be the same. Take care of the people! If you do that task correctly, along with the execution of the rest of your ERP, you will come out of the accident storm with a difficult situation under control.

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