Hull Coverage - do you have too much?

[Ed Cesnalis]

I do. 

By overinsuring your aircraft, you may have created a repair situation that would have been a total loss if the aircraft had been properly insured to value.

[Roger Lee]

You can only insure your aircraft for what you paid for it. You have the option of reducing its value, but that may also be a can of worms your don't want to open.

[Tom Baker]

33 minutes ago, Roger Lee said:

You can only insure your aircraft for what you paid for it. You have the option of reducing its value, but that may also be a can of worms your don't want to open.

That is not true!

[Garrett Gee]

I do agree that over insuring can be bad, but so can under-insuring.  The biggest thing my insurance agent told me is for the love of all things aviation, make sure you insure for what the airplane is worth... Loaded statement, I know. He told me to re-evaluate the value and coverage each year when the renewal comes in. If you did avionics upgrade, it may increase the value, but then again, you may not want to increase the insured value, because as you said, you could potentially find yourself in a situation where the insurance company chooses not to total the aircraft, but rather repair it. Each time my renewal comes due, I plan on talking with my agent to update the coverage. When I purchased the aircraft, we chose to insure it for the purchase value. Next year, I may decrease the insurance coverage depending on the hours flown, depreciation, etc. Can be a fine balancing act. But I may be over complicating it a bit as well, as I have a tendency to do that some times.

[Ed Cesnalis]

My policy define's total as damage at or above 70% of agreed upon value.  The 70% is used by most in good times but in difficult economic times an insurance company may choose to repair at higher than 70% if thy can't get a 30% salvage bid.

If your policy says 70% then its locked in.

[Roger Lee]

On 4/12/2019 at 3:55 PM, Tom Baker said:

That is not true!

Hi Tom,

Years ago I ask 3 insurance companies if I bought a plane for $80K if I could insure it for $100K. They all said no. If you could do this what would prevent all of us from committing insurance fraud by falsely marking up your planes value and then totaling it and making more money than you spent.

[Tom Baker]

1 hour ago, Roger Lee said:

Hi Tom,

Years ago I ask 3 insurance companies if I bought a plane for $80K if I could insure it for $100K. They all said no. If you could do this what would prevent all of us from committing insurance fraud by falsely marking up your planes value and then totaling it and making more money than you spent.

Insuring for more than you paid, and over insuring are 2 different  things. Since I have been in aviation I have bought many airplanes, that have been insured for more than the purchase price, but the actual value has always been more than the insured value. The only airplanes I have ever had that was insured for more than they were worth were bought new. As the values dropped the insured valu didn't drop as fast.

[Ed Cesnalis]

10 minutes ago, Tom Baker said:

As the values dropped the insured valu didn't drop as fast.

I read a suggestion that you adjust the hull coverage value every 6 months to keep it in sync.

[Ed Cesnalis]

At this point, with $80k in hull coverage my plane should get repaired if the damages are less than $56k.

If my hull coverage were lower, say $67.5K then even $45k in damages would be a total loss per the language in my policy.

In my case, total loss vs repair, the difference is going to come down to just a few thousand dollars.  A matter of how sharp the estimator's pencil is.

[FlyingMonkey]

12 hours ago, Roger Lee said:

Hi Tom,

Years ago I ask 3 insurance companies if I bought a plane for $80K if I could insure it for $100K. They all said no. If you could do this what would prevent all of us from committing insurance fraud by falsely marking up your planes value and then totaling it and making more money than you spent.

I bought my CT for $68k, it's been insured for $75k as long as I have owned it.  The value is not the same as what you paid for it.  If you pay $68k for an airplane that is worth $75k according to the insurance company, you can absolutely insure for the higher value.  I've never insured anything where the insurance company asked me what I paid for it.

[Ed Cesnalis]

30 minutes ago, FlyingMonkey said:

I bought my CT for $68k, it's been insured for $75k as long as I have owned it.  The value is not the same as what you paid for it.  If you pay $68k for an airplane that is worth $75k according to the insurance company, you can absolutely insure for the higher value.  I've never insured anything where the insurance company asked me what I paid for it.

You have owned it long enough to walk back the value a bit.  At $75k I might still be looking at repair when I'm far better off financially with a total loss.

[FlyingMonkey]

30 minutes ago, Ed Cesnalis said:

You have owned it long enough to walk back the value a bit.  At $75k I might still be looking at repair when I'm far better off financially with a total loss.

I thought about that.  But in my state there is a significant tax penalty involved when buying a new airplane.  I want my hull value to cover those costs if I have to replace mine.

[Warmi]

1 hour ago, FlyingMonkey said:

I bought my CT for $68k, it's been insured for $75k as long as I have owned it.  The value is not the same as what you paid for it.  If you pay $68k for an airplane that is worth $75k according to the insurance company, you can absolutely insure for the higher value.  I've never insured anything where the insurance company asked me what I paid for it.

That was an excellent deal you got there - 68k for a 6 year old CTSW... that’s what they are asking today for 11 years old CTWSs from around that time ( 2007-2008) ....

[Ed Cesnalis]

33 minutes ago, FlyingMonkey said:

I thought about that.  But in my state there is a significant tax penalty involved when buying a new airplane.  I want my hull value to cover those costs if I have to replace mine.

Same in California, my value declines over time none the less.

[FlyingMonkey]

6 hours ago, Warmi said:

That was an excellent deal you got there - 68k for a 6 year old CTSW... that’s what they are asking today for 11 years old CTWSs from around that time ( 2007-2008) ....

I did get a deal.  But most of the ones I see on Barnstormers now are $59-65k.