Filing an Insurance Claim for an Aircraft after a Loss
Posted: Thursday, November 19, 2009
by Rick Ross
Leading Edge Insurance Agency, Inc.
You have just returned from lunch. It has been a quiet morning. Then your chief pilot approaches and says "we just had a loss". These words strike immediate fear and concern to you -- at least they should. Now what to you do? Hopefully this will be your first experience and you are not sure what to do now.
The usual the "who, what, when and where" is a good starting place. Where did it happen and was anybody injured? These are the first priorities. If there is someone injured, call the authorities to get care at the scene as soon as possible. Then take action to secure the scene. If it is on an airport and blocking any runways, take action for the fire/rescue crew to clear the runway. But before you move anything, this is when you pull out your disposable camera that should be in every pilot's flight bag and/or in the pocket behind the pilot's seat for this occasion. Document the position of the craft, any skid marks, fluid puddles or streaks or other items of interest. Always be sure at least one shot includes the registration number for positive identification of the aircraft or helicopter involved.
There are two very basic types of claims -- a hull loss or a liability loss (or combination of the two). Let's start with the simpler of the two.
Filing an Insurance Claim for a Hull Loss -
Many times it has been said that bent metal is much easier to fix then bent people. For a hull loss the adjuster will need the same information you thought about at the time you first heard -- who was the pilot, where did the loss occur, what is the pilot's perspective of the loss, when did the accident occur. The adjuster assigned by the insurance company is a gatherer of facts and details, not the final decider of the actual loss. They will provide forms for the owner/operator and the pilot to complete.
Once the initial notification is completed comes the more time consuming part. If the wreckage is in a remote location, the adjuster will make arrangements for its retrieval. The more remote the area of the accident, the more the expense of this portion will contribute to the final adjustment. However, this is often covered under major insurance policies. I could not think of a company that does not cover this, but your unique policy verbiage is the final word on the subject.
Be prepared to arrange for as at least three competitive bids for the repair work. Your in-house shop can be included as one, but the adjuster will need at least one other repair quote from independent repair shop for comparison. There is a long standing industry standard that says if the cost to repair is greater than 70% of the insured value, the company may elect to declare the ship a total loss and pay you the agreed value on the policy. This is the important reason to not under-value your helicopter or aircraft in hopes of saving a few dollars in premium. As always, remember the insured value on the policy is your agreed selling price to the insurance company in the event of a loss. The 70% rule is not somewhat flexible. I know in the fixed wing community, if the aircraft is a unique or a classic, they may work with the owner to repair the damage, but will still not pay more that it is insured for to make the repairs.
Filing an Insurance Claim for Liability Loss -
The liability portion of a claim is area of the coverage where the adjuster has the most expertise and will be of the most use to you. The insurance company will defend you in the event of a lawsuit and in most cases the cost of their defense is not a part of the liability limit on your policy (but is in addition to the limits stated). This keeps some restraint on the limits purchased for the actual settlement that won't be gobbled up by attorney fees and court costs. Keep in mind the medical coverage will make an immediate payment to anyone injured without waiting to have a liability suit brought in. The medical limit is typically $3,000 to $10,000. If this is insufficient, then the liability will come into play. As a side note, your employees would not be covered under the medical coverage as that is something specifically covered under a Workers Compensation policy.
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Top-level comments on this article: (2 total)Unfortunately I don't own any aircraft(yet) but should I the future this will come in useful... otherwise a good article.
Hi Rick. Very informative and insightful piece. Thanks for writing and sharing this to us. Best to you. ~Nenita~
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