Peekay wrote....
Again this is where your description is not correct. An engine that's attached to the aircraft is part of the aircraft's hull insurance "Agreed Value" and is not deducted from economic repair calculations, even if the cause of the accident/incident is mechanical failure of the engine.
I think you may be misinterpreting the mechanical "breakdown or failure" exclusions that's common in policies. The usual wording for this exclusion is "due and confined to (mechanical or other failure)".
The "confined to" part is important. If an engine fails on taxi and the engine simply shuts down -- this is considered a mechanical issue "confined to" the engine and is not covered by insurance.
But if the same engine fails on taxi and burns down the entire plane -- this is not a confined mechanical issue and insurance will provide full "Agreed Value" coverage.
On turbine aircraft there is usually a similar exclusion for engine hot starts. If you screw up a start and heat damage the engine, vanilla insurance of course won't cover it.
I will try and say it again! If this aircraft is going to be repaired, the calculations will exclude the engine as the engine is likely to be excluded by policy conditions, due to it having suffered a mechanical breakdown! If the resultant damage caused to the aircraft means the costs to repair the aircraft to exceed 60-70%, it will deemed a write off and the claim paid at the Agreed Value.
For example (purely as a projection);
Fuselage repair estimate (parts and labour) - US$10 million
Parking, temporarary hangar etc - US$1 million
Ferry flight back to LHR - US$ 100,000
New pylon and associated wiring - US$2 million
Wing repairs - US$2 million
Total estimated repairs US$15.1 million
Therefore economic to repair at just over 50% of aircraft's agreed value (say value of US$30 million)
Where does the engine come into this? Who is going to pay for the engine to be repaired/ overhauled? Answer please?
However if the above figures added up to say US$25 million, then the claim would be paid as a write off at the Agreed Value (say US$30 million).
If, as you say, the engine costs are covered in this particluar event, it is already clearly a write off as you can add anything up to US$10 million to the above repair number. I say it again, IF THIS AIRCRAFT IS REPAIRED AND FOR THE PURPOSES OF CALCULATING WHETHER IT IS ECONOMIC TO REPAIR, THE ENGINE REPAIR COSTS WILL NOT BE PAID FOR BY INSURERS AS IT HAS SUFFERED A MECHANICAL BREAKDOWN! THE RESULTANT (AIRFRAME) DAMAGE IS COVERED!