GA and Insurance
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Cheers BabyBear. I did think that I might have read Phil Space's post wrong but I wasn't certain.
Also just for the sake of flippancy; if you take someone to their grave, would this mean that the flight was an air transport flight and that the pilot would be subject to prosecution from the CAA?
On a more serious note, regarding the bad weather scenario. If the weather was forecast to be within the pilot's minima, and develops during the flight so that it is beyond the pilot's ability to cope. Would the insurer's pay out in the event of accident?
Also just for the sake of flippancy; if you take someone to their grave, would this mean that the flight was an air transport flight and that the pilot would be subject to prosecution from the CAA?
On a more serious note, regarding the bad weather scenario. If the weather was forecast to be within the pilot's minima, and develops during the flight so that it is beyond the pilot's ability to cope. Would the insurer's pay out in the event of accident?
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If you drive with an expired MOT or less than minimum tyre tread (illegal of course and subject to a small administrative penalty) it does not totally void your third party liability cover.
And 3rd party motor insurance really is badly needed because 3rd party damage is very common.
I don't see anybody caring much about public policy in GA, which is why the insurers are not forced to maintain the 3rd party cover even on totally illegal flights, but given the 3rd party risk is negligible, why was insurance made mandatory in the first place??
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Franchise Deductibles and Crown Imdemnity
I did think this might be worth opening a separate thread for, but decided against it because maybe it does fit in with this thread regarding what an insurer will pay out for, etc. However, I digress.
On a recent insurance quote, I have been offered a 'franchise deductible' which costs an extra such-and-such on top of the premium, but no real explanation regarding what the franchise deductible actually is.
What is a franchise deductible and would it be recommended to opt-in or to opt-out?
The quote also mentions 'crown indemnity' in the third party liability bit, which I presume means that I would be insured to fly onto British Government aerodromes. Is that suppostion correct?
I was planning on asking these questions with the insurer before accepting the policy, but since the gang's all here...
On a recent insurance quote, I have been offered a 'franchise deductible' which costs an extra such-and-such on top of the premium, but no real explanation regarding what the franchise deductible actually is.
What is a franchise deductible and would it be recommended to opt-in or to opt-out?
The quote also mentions 'crown indemnity' in the third party liability bit, which I presume means that I would be insured to fly onto British Government aerodromes. Is that suppostion correct?
I was planning on asking these questions with the insurer before accepting the policy, but since the gang's all here...
Last edited by The Heff; 14th Oct 2009 at 19:39. Reason: Forgot something
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While your family (AIUI) is not responsible for your debts, having your fraction of the estate wiped out often is a major problem for the family (replace half the equity in the house, all the savings that are in joint name are diminished by half, the business may need to be sold at short notice), etc.
It does seem to point to structuring your affairs to minimise 'your' asset base. The insurance risk is an even more compelling reason for joint owners to hold the aircraft in a company/trust structure.
It does seem to point to structuring your affairs to minimise 'your' asset base. The insurance risk is an even more compelling reason for joint owners to hold the aircraft in a company/trust structure.
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What is a franchise deductible
With an excess you have to pay the amount of the excess when a claim occurs. With a franchise you have to pay the amount of the franchise unless the claim exceeds the amount of the franchise when the claim is paid in full.
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If anybody else was flying the plane, I would absolutely without doubt have the plane in a Ltd co.
But if I was the only pilot, I cannot see how this would work for 3rd party damage arising from a crash.
One can structure the family assets to protect the family from one's personal bankrupcy (whether one survives the bankrupcy or not
) . This is very simple: transfer all you can to your wife, or to a trustee. Then you have to wait for 7 years before doing anything risky.
But if I was the only pilot, I cannot see how this would work for 3rd party damage arising from a crash.
One can structure the family assets to protect the family from one's personal bankrupcy (whether one survives the bankrupcy or not
) . This is very simple: transfer all you can to your wife, or to a trustee. Then you have to wait for 7 years before doing anything risky.
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Having lost the lot 10 years ago in a divorce, my comment about the wife was tongue in cheek
Yes - if there was a way to protect one's assets from personal bankrupcy, while still totally controlling and enjoying them, half the world would be doing it It is a holy grail many have searched for.
Years ago, I heard of ways involving offshore trusts. The problem with an English trust is that after you have put the assets in, you can't just shut down the trust and have them back out again. But with some offshore trusts this is actually possible. I am sure the super wealthy have it all sussed.
The Ltd Co device still works for asset protection, as it has done for 200-odd (?) years, and without its protection few people with a brain would bother to start businesses of any significance. But in a situation where the proprietor is made personally liable through his presence (in this case as a PIC) it offers no protection I know of.
Yes - if there was a way to protect one's assets from personal bankrupcy, while still totally controlling and enjoying them, half the world would be doing it
It is a holy grail many have searched for.Years ago, I heard of ways involving offshore trusts. The problem with an English trust is that after you have put the assets in, you can't just shut down the trust and have them back out again. But with some offshore trusts this is actually possible. I am sure the super wealthy have it all sussed.
The Ltd Co device still works for asset protection, as it has done for 200-odd (?) years, and without its protection few people with a brain would bother to start businesses of any significance. But in a situation where the proprietor is made personally liable through his presence (in this case as a PIC) it offers no protection I know of.
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The position in the motoring world is different. The common law insurance position was the same but under section 148 of the Road Traffic Act any provisions which purport to void the policy because of:
"
(a)the age or physical or mental condition of persons driving the vehicle,
(b)the condition of the vehicle,
(c)the number of persons that the vehicle carries,
(d)the weight or physical characteristics of the goods that the vehicle carries,
(e)the time at which or the areas within which the vehicle is used,
(f)the horsepower or cylinder capacity or value of the vehicle,
(g)the carrying on the vehicle of any particular apparatus, or
(h)the carrying on the vehicle of any particular means of identification other than any means of identification required to be carried by or under [F1 the Vehicle Excise and Registration Act 1994]."
is void, but only in relation to those liabilites which are the subject of compulsory insurance, i.e. third party liabilities. The provision does not prevent the insurer avoiding a claim from the insured himself, eg for loss of the vehicle. Now that we have compulsory third party aviation insurance I would be interested to know whether a similar provision applies - I have not read the regulations.
"
(a)the age or physical or mental condition of persons driving the vehicle,
(b)the condition of the vehicle,
(c)the number of persons that the vehicle carries,
(d)the weight or physical characteristics of the goods that the vehicle carries,
(e)the time at which or the areas within which the vehicle is used,
(f)the horsepower or cylinder capacity or value of the vehicle,
(g)the carrying on the vehicle of any particular apparatus, or
(h)the carrying on the vehicle of any particular means of identification other than any means of identification required to be carried by or under [F1 the Vehicle Excise and Registration Act 1994]."
is void, but only in relation to those liabilites which are the subject of compulsory insurance, i.e. third party liabilities. The provision does not prevent the insurer avoiding a claim from the insured himself, eg for loss of the vehicle. Now that we have compulsory third party aviation insurance I would be interested to know whether a similar provision applies - I have not read the regulations.
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Very interesting, if a little worrying, thread here.
In a group synidcate situation, who is deemed the "owner" exactly in terms of who would be the target of a 3rd party claim against the owner if one of group pilot's flew unlicensed into a 3rd party house (or whatever) in an aircraft which was deemed to be unairworthy (due to, for example, a technicality discovered by a loss adjuster)?
Would other owners be exposed to any claims if the insurer was able to avoid paying out?
In a group synidcate situation, who is deemed the "owner" exactly in terms of who would be the target of a 3rd party claim against the owner if one of group pilot's flew unlicensed into a 3rd party house (or whatever) in an aircraft which was deemed to be unairworthy (due to, for example, a technicality discovered by a loss adjuster)?
Would other owners be exposed to any claims if the insurer was able to avoid paying out?
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I have no specialist knowledge in aircraft insurance, but I have been flying since 1984. In that time I have never had an incident which involved insurance, but I have been aware of many incidents involving other people. Even in cases involving £40k of cost to the insurance, with obvious get out options, the insurance has always paid up. I would not bet on this happening if / when I bend my aircraft, but it is hard to reconcile my experience with the comments on this thread. Perhaps if the amount was several million the insurance would be more likely to walk away, but it is the hull value that is most likely to be the issue.
If you assembled a team of legal experts and set them the task of finding a mistake in the maintenance records of your average spam can then I would expect them to win every time. Do the same on a permit machine and it would be harder to prove, but the result would probably be the same. I guess the question is, how much pain will an insurance company take before going to the trouble of finding an excuse not to pay? Any aviation insurance co that made a habit of walking away would very quickly loose its customer base.
Rod1
If you assembled a team of legal experts and set them the task of finding a mistake in the maintenance records of your average spam can then I would expect them to win every time. Do the same on a permit machine and it would be harder to prove, but the result would probably be the same. I guess the question is, how much pain will an insurance company take before going to the trouble of finding an excuse not to pay? Any aviation insurance co that made a habit of walking away would very quickly loose its customer base.
Rod1
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Now that we have compulsory third party aviation insurance I would be interested to know whether a similar provision applies - I have not read the regulations.
Also, don't forget that any third party injury in a motor vehicle accident will always be compensated, if necessary through the Motor Insurers Bureau. There is no equivalent to the MIB in aviation.
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FL being able to quote two examples where there were relatively minor issues, not related to the accidents at hand, and insurance declined to pay is of some concern. It is inconsistent with a general 'view' that insurance companies are 'reasonable' in the application of the conditions precedent. I at the moment have no idea if this 'view' is wishful thinking or general practice.
However, it seems worth being extra dilligent to make sure there is no intrinsic illegality at takeoff (all docs are valid and correct and W&B is in limit) as these are easy to get right and easy to detect if you have failed to get it right. Of course we should all be doing this anyhow.
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Rod1
IMO its NOT the hull value which is the issue.
Yes it would be painful to damage or wreck your aircraft and loose that value through insurance not paying up, but the BIG worry is some third party claim going into £millions where you and your family loose everything of value you own and are effectively ruined.
Even if you dont survive your family and dependants would be the ones that suffer in your absence.
Remember too its third party claims where the Lawyers make big bucks.
While I appreciate that insurance companies do play ball in relatively small claims even when the pilot appears to have been a complete To**er I am not that confident that the same would occur in £million plus claims.
In third party claims lawyers go to where they see the honey pot being so if your an impoverished pilot living in a caravan with no dependants you probably dont have much to worry about.
On the other end of the scale if your a Graham Hill get ready for months and years of legal battles while your lifes work is removed from in front of your eyes. That is presuming you still have them after the crash.
I really feel that regulations are needed to insure third party claims are met on a No Fault basis or as a minimum that the insurance companies have to prove without reasonable doubt that the reason they are declining payment is the reason for the crash.
Pace
IMO its NOT the hull value which is the issue.
Yes it would be painful to damage or wreck your aircraft and loose that value through insurance not paying up, but the BIG worry is some third party claim going into £millions where you and your family loose everything of value you own and are effectively ruined.
Even if you dont survive your family and dependants would be the ones that suffer in your absence.
Remember too its third party claims where the Lawyers make big bucks.
While I appreciate that insurance companies do play ball in relatively small claims even when the pilot appears to have been a complete To**er I am not that confident that the same would occur in £million plus claims.
In third party claims lawyers go to where they see the honey pot being so if your an impoverished pilot living in a caravan with no dependants you probably dont have much to worry about.
On the other end of the scale if your a Graham Hill get ready for months and years of legal battles while your lifes work is removed from in front of your eyes. That is presuming you still have them after the crash.
I really feel that regulations are needed to insure third party claims are met on a No Fault basis or as a minimum that the insurance companies have to prove without reasonable doubt that the reason they are declining payment is the reason for the crash.
Pace
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I would like to believe that should the aircraft be issued with a CofA, should the pilot be correctly licensed, and should the aircraft have been airworthy on take off (i.e. not over mauw) then should the unthinkable happen then we can be grateful that we are insured up to hull value and x million in 3rd party liability?
Is that too naive?
How deep do they dig? What if they found a piece of paper missing from the logbook from 20 years ago, would that be a grounds not to pay out? What if the take off procedure required 1 stage of flaps, yet the flap switch was found in the UP position, would that be grounds not to pay out?
In past dealins with insurane companies (not in aviation) I have normally found them fair - My old "pitch fibre" drains (a 60's fad) collapsed a few years ago and we were worried that as it was "wear and tear" we'd have to pay for the lot to be fixed. But my insurance company stated that as we couldn't have been reasonably expected to know that these types of drains were liable to collapsing (I didn't ven know there was such a thing as Pitch Fibre drains) then they would class it as accidental damage and it only cost me fifty quid (as opposed to a share of a decent aeroplane!).....
Is that too naive?
How deep do they dig? What if they found a piece of paper missing from the logbook from 20 years ago, would that be a grounds not to pay out? What if the take off procedure required 1 stage of flaps, yet the flap switch was found in the UP position, would that be grounds not to pay out?
In past dealins with insurane companies (not in aviation) I have normally found them fair - My old "pitch fibre" drains (a 60's fad) collapsed a few years ago and we were worried that as it was "wear and tear" we'd have to pay for the lot to be fixed. But my insurance company stated that as we couldn't have been reasonably expected to know that these types of drains were liable to collapsing (I didn't ven know there was such a thing as Pitch Fibre drains) then they would class it as accidental damage and it only cost me fifty quid (as opposed to a share of a decent aeroplane!).....
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Englishall
Surely what you are saying and hoping for gives more reason for regulation. what you are infact saying is there is NO uniformity between insurance companies some maybe "orfully Noice", others not so. All dependant on some guy in an office " do we pay? dont we pay? he seems such a nice fellow maybe we will?
but there again that other claim by Jack up the road? cannot stand the guy! We wont pay his". 
There appears to be a gaping hole in aviation insurance and that really needs to be plugged and clarified.
Pace
Surely what you are saying and hoping for gives more reason for regulation. what you are infact saying is there is NO uniformity between insurance companies some maybe "orfully Noice", others not so. All dependant on some guy in an office " do we pay? dont we pay? he seems such a nice fellow maybe we will?
but there again that other claim by Jack up the road? cannot stand the guy! We wont pay his". There appears to be a gaping hole in aviation insurance and that really needs to be plugged and clarified.
Pace
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"Years ago, I heard of ways involving offshore trusts. The problem with an English trust is that after you have put the assets in, you can't just shut down the trust and have them back out again. But with some offshore trusts this is actually possible. I am sure the super wealthy have it all sussed."
I have an ofshore trust that all my profit and some of my assets go into. Although it is a big leap of faith tranfering 7 fig. sums into an offshore account that you have no connection to!! I did try looking into self insuring using the trust as an asset but the risks are just to high, I pay my insurance premiums with gritted teeth but it is the only way to go.
Also once the trust is set up, you only borrow from it (your own money) so over years you build up a multi million debt, (to yourself) which dissapears when you kick the bucket!
My life assurance company recently asked me to provide details of my flying activities in the next year inc. how many times i am going to fly abroad, where and when and how many hours!! this sounds like a get out for them if i kill myself and i have popped to letoque once to many times!!
I have an ofshore trust that all my profit and some of my assets go into. Although it is a big leap of faith tranfering 7 fig. sums into an offshore account that you have no connection to!! I did try looking into self insuring using the trust as an asset but the risks are just to high, I pay my insurance premiums with gritted teeth but it is the only way to go.
Also once the trust is set up, you only borrow from it (your own money) so over years you build up a multi million debt, (to yourself) which dissapears when you kick the bucket!
My life assurance company recently asked me to provide details of my flying activities in the next year inc. how many times i am going to fly abroad, where and when and how many hours!! this sounds like a get out for them if i kill myself and i have popped to letoque once to many times!!