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Insurance - insuring for "agreed value"

I suspect this is applicable to the UK only, as I have not heard of "agreed value" elsewhere.

I currently insure my plane, perhaps worth £150k, for an "agreed value" of £195k. It has been that way since new, when it really was 195k

I continue to pay the extra money each year because if I ditch it, but survive, I will be looking to replace it ASAP, and some TB20s advertised are up for totally silly money, like 200k. I suspect they are not actually keen sellers (they certainly won't sell at those prices) but doing it for show (getting divorced, perhaps - a good reason to look "poor") but if I was pressed I might have to go for one of those.

The problem which I hear is that in case of an accident where the plane can, just about, at a real stretch and at a huge cost, be repaired, such insurance gives the insurer an incentive to do just that, no matter how long it takes, whereas if you insured for the real market value they would write it off if the repair cost is say 50% of the MV and just give you the money.

Any experience from anyone?

Administrator
Shoreham EGKA, United Kingdom

There is a "blue book" that the insurers use to determine the value of the aircraft. Make sure your insured value is not below that. If there is reason to have a higher insured value (exceptional condition, special avionics, etc.), then use a higher amount. You have to avoid being below blue book value as that will bite you when you make a claim. Suppose you have another prop strike and the company determines that your plane is worth 30% more than the insured value (by whatever means, you'd have to fight them in court), then they will only pay 70% of the repair bill.

PS: Lots of TB20/21 have shown up on planecheck.com in the last few weeks.

There is a "blue book">

How can i get a copy of this book?

Farm strip in Angus Scotland

Lots of TB20/21 have shown up on planecheck.com in the last few weeks.

Lately I have been contacted for my views on various TB20s by various prospective buyers (as often happens anyway) and I think a lot of owners are suddenly "discovering" SB569.

The 12 year Lyco crankshaft deadline is nearing its expiry for a lot of IO540 owners (not just TB20/21s of course). Many owners never knew about it, and many postponed it till the last minute. Plus (see the other thread) there is a question mark in many minds over when the 12 years starts...

I also know of several TB owners who have given up flying permanently, reportedly because they consider themselves too old to re-do all their pilot paperwork for EASA FCL. One of these, I think, sold up partly because he got sick of KFC225 servo burnouts happening every 20-30hrs.

I have never heard of a "blue book" for the UK. Maybe there is one in Germany?

Administrator
Shoreham EGKA, United Kingdom

I have the 150 insured for an agreed value, which I will lower this year. When I chose that value, the plane had new avionics, new paint and interior, and a zero time engine, but that was a while back, they're not new any more, and the market is also softer.

I was told by an insurance expert a long time back to always over insure your plane if you like it. Should you write it off, they will give you your cheque, less the deductible, and you have to spend your time and sales tax dollar buying the replacement. If insured high, they will be more inclined to fix it (and the insurer spend their paid time and they pay the sales taxes on the work.)

If you have to find, inspect and buy a replacement plane, and then ferry it home, how much of your time will that take? The costs for me to buy and pick up the 182P of my friend's choice two years ago was $6000, or nearly 10% of what we paid for it. You want that cost covered too!

It is very false economy to under insure your plane. Yes, you save a few hundred in premiums, but if it is worth insuring at all, it's too good to under insure. You have a claim, the insurer decides to not fix it, where you thought they would. They write you a cheque, and you do not have enough $$ to but the replacement. They sell off your former plane in parts for about what they paid you out. You lose.

I certainly know people who do not insure for hull. Some take their chances, and some actually self insure. Big fancy Cessna amphibians are a good example. They can extremely expensive or impossible to insure for hull for a lot time floatplane pilot. 20 hours on type, and you probably will not get insurance. Some people just take the chance. One fellow I met, while recovering is wrecked 185 amphibian, told me that he had put away the cost of the hull premium for the 11 years he had owned it, and could now afford to pay cash for an even better one.

I insure for all risks, not only for the hull value of the plane, but to be assured that if I spread it across the countryside, the insurer will clean it up. That can be even more expensive than the hull value itself. A friend crashed his uninsured 180 floatplane. He had to absorb the cost of the lost plane, and pay the $22,000 to helicopter it out of the bush - you can't just leave it there.

So insure the plane for as high as they will agree to. It does not cost that much extra, and is very cheap extra insurance. They will not pay out all those extra costs for you to find and equip the next plane, should you have to....

Home runway, in central Ontario, Canada, Canada

Re the 'blue book', what I see people using is AOPA Vref. Its good and detailed I'm told, but values would be for the US market.

I don't insure the hulls 'in motion' on any of my vehicles. My philosophy has always been pay cash to buy it, consider damage a 'project or part out' situation, and don't buy it at all unless you can easily afford to lose or replace it. That said, both my aircraft combined are worth perhaps $65K, and if they were worth a great deal more I might see things differently! I intentionally bought planes that I think are much undervalued by the market, and can fly one if the other is out of commission. I have a motorcycle that's worth more now than my 'around the patch' aircraft (the motorcycle was bought 20 years ago for 1/4 of its present value)

I know two couples retired from the insurance business in their 50s who now take very nice long vacations in Europe. I kid them that is wasn't me that made it possible :-). The three things in life that have given me a very consistent negative rate of return are insurance, taxes, and depreciation.

PDAR raises a good point about the potential cost of hauling the aircraft out of a field or off a highway somewhere, and I could see that adding up. Something to consider.

I have never heard of a "blue book" for the UK. Maybe there is one in Germany?

To my knowledge, there is no such book in Germany.

RXH
EDML - Landshut, Munich / Bavaria

Certainly, I would never insure anything which I can afford to replace. To argue otherwise is to argue that insurance companies lose money in the long term, which is obviously false.

A very interesting point about salvage or wreck clearance costs. I can imagine salvage/clearance from some Greek island could be very expensive...

I recall some discussions about the US AOPA Vref. Is it accurate? Looking at advertised prices here in the UK, and talking to various people, it's obvious that actual prices paid are much lower. Except if the aircraft is a highly sought after type and in a good condition. How could a published "reference" price reflect the condition?

Administrator
Shoreham EGKA, United Kingdom

I'm led to believe Vref is pretty accurate... but accurate for the US market. I think you enter details about the aircraft for it to calculate current market value.

A guy I knew totaled his nice, restored Tri-Pacer on a strip at Bahia de Los Angeles in Baja California, Mexico. Apparently a tail wind picked up when he was on his take-off roll, so he went off the end and rolled it into a ball with no serious injuries. It'd be big job getting that plane home if there was anything left by the time you got a truck on site. I'm not sure if the anything came home in that particular case.

For years I did not insure the 150 for the reasons Silvaire correctly presents. Then, where I used to keep it, threats of vandalism came. It would cost more to replace a smashed windshield or dented skin, that the additional hull premium. So I applied for hull not in motion. The insurance agent said to me "with your flying time, full coverage is only $100 a year more than hull not in motion. I saw the logic, and insured everything. Apparently the insurers figure that my plane is safer when I'm flying it, than parked at an unsecured airport!

The Bluebook is formally "Aricraft Bluebook Price Digest, by AC-U-KWIK. It also offers "aircraftbluebook.com". It comes out quarterly I think. I can get get the most recently expired one form one of my clients, if someone has a specific inquiry.

Home runway, in central Ontario, Canada, Canada
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