We can’t say that we’ve seen it all, but we have seen a lot and we have been through the insurance claims process many times before. Let us help guide you through the process and get you back in the air.
The claims process can have its fair share of hazards. Below are some of the more common mistakes the insured may encounter:
- Over insuring your aircraft: At some point you will not want your aircraft repaired – damaged beyond your comfort level. There have been many owners that were required to restore an aircraft that they preferred to be a “Constructive Total Loss” (CTL). It is a good rule of thumb to insure your aircraft at a value equal to the market value of your equipment.
- Under insuring your aircraft: It can be quite frustrating when the insured discovers the aircraft will be a CTL when your expectation was repair. When the owner modifies or upgrades his/her aircraft a visit with the insured’s broker should be done to verify correct coverage limits.
- Not paying attention to dates: An insurance company can deny coverage if your medical was expired or biennial review was not current. Another area would be the aircraft maintenance program not being followed on the airframe/propeller/engine – open A.D.s, expired ELT batteries, etc. This might seem minor, but the insured is in violation of the policy and your insurance claim could be denied.
- Not reading or understanding your insurance policy: There are many details in the policy that can affect a claim. As the insured you must understand your policy and be aware of its limitations. The least expensive premium may have items not acceptable to the insured. It’s better to find this out now rather then when you’re trying to process a claim.
- Thinking the insurance adjuster chooses the repair facility: It is the adjuster’s responsibility to select a facility that is qualified and submits a thorough estimate. But it is the insured’s decision as to which facility will repair the damaged aircraft. Ultimately the best situation is when both the insured and the adjuster mutually agree on the same facility.
AIG Aviation, Inc.
Allianz Aviation Managers
AVEMCO Insurance Company
Charles Taylor Aviation
Global Aerospace, Inc.
London Aviation Underwriters, Inc.
National Hangar Insurance Program (NHIP)
Phoenix Aviation Managers, Inc.
United States Aircraft Insurance Group (USAIG)
U.S. Specialty Insurance Company (USSIC)
W. Brown & Associates Insurance Services
- Contact broker and report the event.
- Broker should contact insurance company and start the claims process.
- Insurance company will assign an adjuster to process insured’s claim. This can be an outside firm that specializes in aviation claims like Kern & Wooley, CTC Services, or Aviation LS.
- Adjuster can perform an on-site inspection of the aircraft if he/she feels it is warranted.
- Assigned adjuster should contact insured for information related to the claim such as:
- Location of loss.
- Explanation of event.
- Review of aircraft records for validation of airworthiness.
- Request of pilot’s information (medical, biennial) if in-motion loss.
- Adjuster should contact a repair facility/facilities to obtain an estimate to restore the aircraft.
- Insured may also contact a facility of their choice to obtain an estimate.
- The adjuster should evaluate all viable repair estimates to determine the best solution.
- The recommended facility is communicated to the insured; often times it is the owner’s preference.
- The owner ultimately decides on which facility will repair his/her aircraft.
Note: If there is a higher cost between the recommended facility and the insured’s choice, the difference in cost will be made up by the insured.
- The insured must authorize the repair facility directly to commence repairs on insured’s aircraft.
- The financial liability of the repair is the insured’s responsibility. The insurance company will pay the insured for the repairs, less deductibles and betterment, after receipt of a signed “Final Proof of Loss.”
- The insurance company will issue payment to the insured for the value based on the “Final Proof of Loss.” This check can have all parties named on the policy including additional insured and the repair facility.
- Betterment: This term relates to the aircraft being restored into a better condition than prior to the damage event. An example would be replacing an 1800 TTSN/TTSOH propeller that has a 2000 hour TBO with a new or zero time propeller. A calculated percentage is subtracted from the average cost to overhaul the same propeller. In this case 1800/2000 or 90% of the overhaul cost of the original propeller would be deducted from the insurance claim.
- Constructive Total Loss (CTL): Most of the time, this is where the cost of repair plus the aircraft salvage value exceeds the insured’s policy limits. In the aviation industry there is no exact method or formula used and this value is determined by both the insured’s policy and the adjuster. There have been cases where an aircraft is repaired up to the policy value.
- Final Proof of Loss: When all repairs are completed the repair facility should submit a copy to the adjuster for review. Once the review is completed the adjuster will send a document detailing the coverage for the incident to the insured. This document will show deductibles, non-related items, and betterment deductions from the final repair invoice. The insured must process this document for funds to be released.
- Subrogation: This term is used if the insurance company will try to mitigate its loss from another party. For example: The insured’s aircraft was damaged by another party. The insured’s hull insurance would pay to restore the aircraft then pursue the responsible party or their insurance carrier directly to recover damages.