Stuart Hope is a co-owner of Hope Aviation Insurance. His career as an aviation insurance broker... Read More
Aviation Insurance Claims
Some rational expectations at the beginning of the claim can go a long way toward understanding the process of aviation insurance- notes Stuart Hope.
No one thinks they will be involved in an aircraft accident – and the odds are that they won’t be. But then it happens! It could be a bird strike to the leading edge of a wing- a gear collapse on landing- a runway excursion- or worst case - a catastrophic event.
Everyone has heard a horror story involving an insurance claim from someone who was less than satisfied with the way the insurance process was settled. Maybe the claim was even denied. We all pay insurance premiums over the years- and the perceived expectation is that when/if we ever have a claim- it will be totally covered regardless of the circumstances. That’s not quite the way it works. The first thing is admitting to yourself that some claims will NOT be 100% covered- and acknowledging that the claims process will require a good bit of your time.
What to Expect
Once a claim has been reported- an adjustor will be assigned to handle your case. Typically he/she will ask the policy holder to complete a company loss report and document several items including the aircraft registration- airworthiness certificate- and applicable information from the aircraft and/or engine(s) logbooks (including confirmation that required FAA maintenance intervals have been completed). You will also be required to fully document pilot credentials- including logged hours- specific pilot training and/or checkout requirements- and verification of a current FAA flight medical and flight review.
Depending on the amount and severity of the damage- the adjustor may or may not physically inspect the aircraft. Often you will be asked to provide photographs of the damage- including a complete photo of the aircraft to document the FAA registration number. Once the insurance company is reasonably satisfied the claim is covered under the terms of the policy- adjustors typically require estimates to repair the damage. Often more than one estimate is needed- which may be difficult depending on the circumstances of the loss.
While the aircraft owner is ultimately responsible for authorizing any work order- the adjustor will want to review the estimates and discuss the repairs with you before the work is commissioned. Understand that the insurer’s goal is to put you back where you were before the loss—no better- no worse.
For example- if it becomes necessary to disassemble your engine as a result of a prop strike or ingestion of a foreign object- some insurance companies routinely reimburse for the cost to remove- disassemble- inspect and reassemble the engine. Damage resulting from ingesting a foreign object is covered- but routine wear and tear discovered during disassembly and items deemed un-airworthy due to causes unrelated to the ingestion are not allowed as part of the claim.
The insurance company cannot reimburse the cost of repairing or replacing parts unrelated to the accident/incident- therefore those costs become the owner’s responsibility.
When propellers and limited-life components are damaged and repaired or replaced- often they are returned in a “zero-time” condition. Since manufacturers routinely recommend a time limit between overhauls on such items- insurance companies calculate pro-rated depreciation based on a flat-rate overhaul cost of the propeller or component part had it not been damaged. (For example- a $1-000 component damaged at “mid-time” would result in a $500 reimbursement from the insurance company.)
Occasionally during the repair process non-accident work is commissioned- in which equipment is upgraded or appearance enhanced. In these cases- obviously only the repairs associated with the damage will be reimbursed by the insurance company.
For example- a damaged component may require repainting to match its appearance prior to the claim- but the accident/incident does not warrant painting the entire aircraft. If a complete refinishing is desired- the cost will be pro-rated.
Not the Enemy
Be sure to communicate with the adjustor throughout the process. He/she has a job to do and (contrary to popular belief) is not primed to deny coverage. I have worked with some excellent adjustors over the years; the best are truly diplomats. Some claims inevitably will be sticky- but if the situation is explained properly upfront- all parties normally will understand and accept the settlement.
Also engage your aviation insurance broker- who should act as your advocate throughout the process. Remember: Communication is Key!