Self insured, are you?

[pdshetler]

"Unfortunately, trikes fall into the category of a bad investment with most underwriting companies along with powered parachutes and the like. Just because the FAA deems it airworthy and the pilot capable does not mean it is a good risk."

I am not saying insurance companies should be forced make bad investments. I am saying they haven't even bothered to research the risk. The data is there to make risk assessments and calculate rates if they would bother. FAA airworthiness and FAA licenses don't guarantee anything, but they do mean something. My frustration is that I can buy insurance for literally anything else I could possibly own -- except my trike. You could be the crappiest driver with accidents and tickets on your record driving a 30 year old heap that wasn't roadworthy when it was NEW and someone will at least offer liability insurance. You can get liability insurance for your jetski or your snowmobile or your 4-wheeler with no training, no license and no annual inspections required.

EAA's reference is worth a great deal to the underwriting insurance agencies. Yes EAA COULD require that to receive that reference the insurance companies would have to offer insurance to all recognized categories of experimental aircraft. Denial of insurance should be defensible in individual cases, but not for whole categories of member's aircraft. Again, if they did this, it might be that their rates would be too high for some of us to afford but we can't even have that discussion. EAA could certainly push the discussion since availability of insurance is critical to the whole LSA industry just as it is to GA.

[Skystrider]

Lowflybye - Thank you for continueing to take the time to explain some of the difficult aspects of insuring aircraft. I know that I have added to my understanding of the issues reading your well presented postings.

[once&futr_alaskaflyer]

Last time I checked the underwriters for neither AOPA nor EAA insurance would write an aircraft based in Alaska. Really makes you appreciate the dues you pay, huh?

If that has changed someone let me know. Probably won't be competitive, but at least I'll feel better.

[lowflybye]

"

EAA's reference is worth a great deal to the underwriting insurance agencies. Yes EAA COULD require that to receive that reference the insurance companies would have to offer insurance to all recognized categories of experimental aircraft. Denial of insurance should be defensible in individual cases, but not for whole categories of member's aircraft. Again, if they did this, it might be that their rates would be too high for some of us to afford but we can't even have that discussion. EAA could certainly push the discussion since availability of insurance is critical to the whole LSA industry just as it is to GA.

Who told you the EAA refernce is worth a lot to an insurance agency? Why did you believe it? When it comes down to it, which policy are you going to buy...the cheaper policy or the one EAA recomends? Many times the "EAA program" is not the cheapest option. Try insuring a J-3 Cub in the "EAA program" with Global that is based on a strip less than 2,000 feet...not going to happen, but AIG, Phoenix, and Starr will do it regardless of EAA membership.

The EAA reference is not worth much to the underwriter other than publicity and most of you thought that either the EAA or Falcon was the underwriter and never thought about Global. An EAA reference is worth a great deal to the agency who markets the "program" but only as an advertisement and nothing more. Why is an EAA reference worth anything more to an undewriter company? Does EAA know you personally? Do they really know anything about you at all? Do they offer any form of formal safety / training programs to improve losses? Do they research your pilot or loss history? The answer is no...you can be a member by a simple phone call and $45. AOPA at least has multiple "online" safety quizes that you can take...which can be a joke. I am not saying that these organizations do not have a place or purpose in aviation (I am a member of both) but they are more for advocacy and comraderie. Compare that to the American Bonanza Society which has the Bonanza Pilot Proficiency Program (BPPP) or the Cessna Pilots Association which has many various training programs. These are specific programs with a written curriculum and goals to meet before receiving a training certificate. These programs are worth more to an underwriter then a "club" membership.

Without getting into deep discussion, suffice it to say that one of the many reasons that aircraft owners of certain types such as trikes and many of the new LSA aircraft cannot find insurance has to do with the fact that often the manufacturer is from another country and/or the manufacturer does not carry "manufacturers liability insurance". This means that in the event of a manufacturing or design problem that causes accidents, there is no avenue for the insurance company to recover their loss.

[lowflybye]

Last time I checked the underwriters for neither AOPA nor EAA insurance would write an aircraft based in Alaska. Really makes you appreciate the dues you pay, huh?

If that has changed someone let me know. Probably won't be competitive, but at least I'll feel better.

There are only 2 companies that write Alaska risks on a routine basis and that is Avemco and London Aviation...USAIG has done it on a few occasions as well. Avemco is a direct writer which means that they do not use agents ergo AOPA and EAA (Falcon agency) cannot access them. London is an underwriter based in Seattle and will not release quotes on Alaska based risks to agencies located out of the Northwest corner of the US due to the nature of the risks associated with flying in Alaska. Because of this most agencies do not bother with obtaining a license to represent Alaska risks...we must be licensed in each state that we do business and pay for the license annually. This is the reason that neither AOPA nor EAA (Falcon) will offer quotes on risks based in Alaska.

I spent 4 years in AK and London will not grant me quotes for Alaska based business becouse I now reside in TN. They want someone who knows the territory, conditions, and risks well.

[hotrod150]

....... the auto insurance scam. They sell you a policy that shows a value of purchased price, you leave the agents office feeling all warm and fuzzy, you total the vehicle, they pay blue book, you eat the difference.......

I have had total claims paid twice for cars- once when a drunk driver hit me head-on & wiped out my pickup, the other time when my rig was stolen. Both times I felt like I took a screwing on the amount of the settlement. But I have never had a "stated value" insurance policy for a car -- my home and my airplanes yss, but not cars. If my airplane ever gets totalled out I will expect settlement for the insured value. I talked to someone once who said he had to settle for less, which I don't understand. Any insights on this, Lowflybye?

Eric

[TexasNick]

Didn't read all the posts in this thread, but wanted to share what I pay.

I bought a J3 cub when I was in my late 20s in September 2009. I had maybe 10hrs or so in the airplane and was a brand new student pilot with no other flight hours.

Lets see...old taildragger...student pilot....sport pilot....private runway only 2000ft...grass....I was expecting a mighty high quote on insurance.

Here's what I got: $1400 "smooth". This also included the Cub hull insured for 25k.

I used EAA and Falcon Insurance in Texas. They also let you pay in installments if you can't afford it at the moment.

Peace of mind is WORTH IT.

[lowflybye]

Lets see...old taildragger...student pilot....sport pilot....private runway only 2000ft...grass....I was expecting a mighty high quote on insurance.

Here's what I got: $1400 "smooth". This also included the Cub hull insured for 25k.

The price is not too surprising, but I would have to see the smooth limit to believe it. Global does not give out smooth limits very easily and I have never seen it offered to a student pilot. Not saying that crazier things have not happened.

[lowflybye]

I talked to someone once who said he had to settle for less, which I don't understand. Any insights on this, Lowflybye?

Eric

No idea...without knowing the full story it is hard to say. Did they "total" the airplane and then sell the salvage back to the owner? Was there a lienholder that received a portion of the settlement? Was there a gear deductible? Some companies will add a gear deductible of $10k for RG aircraft.

Most often there is a lot more to the story than what we hear as it gets changed slightly be each person that tells it. Usually when we get to the original source we find a simple answer to the question.

[TexasNick]

Lets see...old taildragger...student pilot....sport pilot....private runway only 2000ft...grass....I was expecting a mighty high quote on insurance.

Here's what I got: $1400 "smooth". This also included the Cub hull insured for 25k.

The price is not too surprising, but I would have to see the smooth limit to believe it. Global does not give out smooth limits very easily and I have never seen it offered to a student pilot. Not saying that crazier things have not happened.

From Falcon via email: The liability is $1MIL Combined single limit subject to $100K per passenger. So, the only part that is limited in your liability coverage is the passenger. Anyone outside of the aircraft who is injured and you are liable would come from your $1MIL. Hope this helps clarify.

Falcon said that passengers that fly with you are taking a known risk on themselves, so the liability is not as crucial. I made a mistake on my earlier quote. It was not 1400, rather, 1349.

[Stol]

I talked to someone once who said he had to settle for less, which I don't understand. Any insights on this, Lowflybye?

Eric

No idea...without knowing the full story it is hard to say. Did they "total" the airplane and then sell the salvage back to the owner? Was there a lienholder that received a portion of the settlement? Was there a gear deductible? Some companies will add a gear deductible of $10k for RG aircraft.

Most often there is a lot more to the story than what we hear as it gets changed slightly be each person that tells it. Usually when we get to the original source we find a simple answer to the question.

Pretty clever how you configured the quote to make it look like I said that....

[lowflybye]

Pretty clever how you configured the quote to make it look like I said that....

Actually it was not a clever configuration..it was a dumb@$$ mistake...when deleting out the excess parts of the quote I did not go back far enough to delete your name as the reference.

I have fixed it so no one will mistake the fact that you "fully understand the complete dynamics of insurance and purposely state things to enact a response to see if the respondants can stay consistant."

[lowflybye]

From Falcon via email: The liability is $1MIL Combined single limit subject to $100K per passenger. So, the only part that is limited in your liability coverage is the passenger. Anyone outside of the aircraft who is injured and you are liable would come from your $1MIL. Hope this helps clarify.

Falcon said that passengers that fly with you are taking a known risk on themselves, so the liability is not as crucial. I made a mistake on my earlier quote. It was not 1400, rather, 1349.

What they have told you is correct...but it is not a smooth limit as it has a $100,000 sub-limit for the passengers. You have standard policy limits. A smooth limit would mean that you have $1 Million with no passenger limitations. This coverage is harder to get and cost a bit more money.

[flightlogic]

Great discussion here for all members, regardless of personal choices on the topic. Thanks to all who typed at length to add to our knowledge.
One thing I haven't seen much discussed. Over the years, instead of a biennial check ride, I always added some new rating. Takes a while, but in the end it really pays back most of the cost. My insurance is quite low now... combination of no accidents and lots of ratings. And, you can make a few bucks on the side giving IPC's or Biennials etc. Thanks guys, good topic!

[courierguy]

Pretty clever how you configured the quote to make it look like I said that....

Actually it was not a clever configuration..it was a dumb@$$ mistake...when deleting out the excess parts of the quote I did not go back far enough to delete your name as the reference.

I have fixed it so no one will mistake the fact that you "fully understand the complete dynamics of insurance and purposely state things to enact a response to see if the respondants can stay consistant."

I think it was pretty clever of lowflybye to pretend to make a dumb mistake so STOLs quote would be reconfigured, ahhh, I'm getting confused! You both have good points though. This discussion has encouraged me to look into liability however. Do they ask what type of airport you operate out of? I'm screwed already then, we'll see if they buy 400' (at most), maybe they don't ask about whether or not it's flat??

As for hull, if I break it I'll fix it, another nice thing about a homebuilt.

If I REALLY break it, I'll buy another, with some of the many thousands I've saved since 1988 and having no hull insurance EVER. That's my insurance plan. For you guys with the high dollar birds bought with bank money.....a whole different ballgame obviously.

[Zzz]

Pretty clever how you configured the quote to make it look like I said that....

Are you implying that your BBcode has been perfect over your 300+ posts?

I think most here are above "reconfiguring" a quote in lieu of arguing the argument. Luckily Hotrod150 signs his name, and your name isn't Eric.

[pdshetler]

"An EAA reference is worth a great deal to the agency who markets the "program" but only as an advertisement..." Well YEAH - that's the kind of reference I was talking about. Perhaps endorsement would be a better word. So let me re-word: to receive an endorsement from the EAA, an insurance company should have to offer coverage for all FAA-recognized experimental categories. I hope that LowFlyBye does not imagine his "explanations" are 'reasons' -- they are industry excuses. A short, Alaskan runway is not a 'reason' to deny insurance, it is an excuse not to sit down, do the research, crunch the numbers and give a quote. The fact that someone flies a powered parachute or a trike or a home-built is not a 'reason' to deny a policy, it is an excuse. I strongly suspect that the real reason aviation insurance companies won't offer even liability for these situations is that the numbers are small enough that they figure they can only make a reasonable profit instead of the huge profits they are accustomed to. So it will require whatever economic leverage advocacy organizations like EAA can muster to get them to expand into these markets.

[lowflybye]

"An EAA reference is worth a great deal to the agency who markets the "program" but only as an advertisement..." Well YEAH - that's the kind of reference I was talking about. Perhaps endorsement would be a better word. So let me re-word: to receive an endorsement from the EAA, an insurance company should have to offer coverage for all FAA-recognized experimental categories.

You don't seem to understand...the agency does not set the rates or determine what risks will / will not be written...that is the underwriting company...the ones with their money on the line. As I previously stated, most people do not even know the name of the underwriting company so what good is the EAA endorsement? No endorsement from any organization whatsoever will ever move an underwriting company to offer insurance to "all FAA-recognized experimental catagories." Have you even thought about how broad that is? I have seen many aircraft out there that I would not want to be in the same airspace with, let alone fly.

If an underwriter did offer coverage for your particular aircraft, how much would you think is fair? Would $500 per year be fair for liability coverage? How many policies would a company have to write at $500 per year just to recover from 1 liability claim that hits the $1,000,000 limit? The answer is 200,000 policies...or 20,000 policies for 10 years...there are not that many trikes flying in the world, let alone the US. Before you start thinking that a $1 million liability claim would not happen don't forget that lawsuits are covered under liability and the cost to the company to defend them comes over and above the policy limit.

I hope that LowFlyBye does not imagine his "explanations" are 'reasons' -- they are industry excuses. A short, Alaskan runway is not a 'reason' to deny insurance, it is an excuse not to sit down, do the research, crunch the numbers and give a quote. The fact that someone flies a powered parachute or a trike or a home-built is not a 'reason' to deny a policy, it is an excuse. I strongly suspect that the real reason aviation insurance companies won't offer even liability for these situations is that the numbers are small enough that they figure they can only make a reasonable profit instead of the huge profits they are accustomed to.

I don't imagine anything...I am just trying to explain the often misunderstood aviation insurance market to you...like it or not...don't keep shooting the messenger Call it a reason, or an excuse...call it a crappy system if you wish, but the fact still remains that there are guidelines that the underwriting companies decide to follow when offering coverage on each risk or deciding not to offer a quote. Since the underwriting company is the one placing it's money on the line they get to determine how and when they will do so. You do not have to accept their offer if you don't like it...you can always risk your own money and self insure. If they don't want to take the risk then they do not have to, and they do not even have to provide a reason why. No person or organization has the authority to make them do so. It is a business...they are in it to make money...and they can decide how and when to best use their resources to be as successful as possible. No different than you or I...we call it capitalism.

How would you react if someone told you when, where, and how much money you would be required to risk regardless of the historical loss information you have?

If you so strongly believe your suspicions to be true, then by all means sit down and do the research, crunch the numbers, and start an underwriting company for all experimental categories. If your suspicions are correct then you should have no problem making a "reasonable profit" for yourself. Please be sure and check back in with us and let us know how well you are doing so that we can congratulate you on accomplishing what others have failed to do. Who knows, you may be correct and achieve the American dream in a niche the others have chosen not to persue.

[Zzz]

Anyone who rides motorcycles knows that liability coverage for a registered street bike is cheap-- it's the full coverage for loss that gets expensive. This is because a motorcycle is lightweight and can't kill people in cars very easily. A trike is a very (ultra?) light aircraft. The potential for destruction resulting from a trike crash is probably lower than any other aircraft. Why then would liability insurance be so difficult to secure? Is it the passenger coverage? That's usually capped at $XXX,000 right?

Certified aircraft in the eyes of an insurance company is a risk management known value. Statistics exist. Maintenance standards are regulated. The pilot becomes the variable. If it is possible to retain liability insurance on some homebuilt aircraft, I'm unclear why it's so difficult on the lightest and most innocuous of the bunch.

[lowflybye]

A trike is a very (ultra?) light aircraft. The potential for destruction resulting from a trike crash is probably lower than any other aircraft. Why then would liability insurance be so difficult to secure? Is it the passenger coverage? That's usually capped at $XXX,000 right?

Certified aircraft in the eyes of an insurance company is a risk management known value. Statistics exist. Maintenance standards are regulated. The pilot becomes the variable. If it is possible to retain liability insurance on some homebuilt aircraft, I'm unclear why it's so difficult on the lightest and most innocuous of the bunch.

Simply put, it's all about making / maximizing profits. They cannot charge enough to make it worthwhile. It only takes one loss to wipe out the reserves for the bunch. Even at a $100,000 passenger limitation the $500 premium that I used as an example earlier is not sufficient to cover the expected losses of the group...and the number of trikes available to constitute a group are relatively small. It is the lawsuits that really put a hurt on the insurance companies...a $100,000 passanger bodily injury claim usually has a lawsuit attached to it along with some hull loss as well. It all adds up fast.

With regards to why some and not the others...if a company can make a profit writing Vans aircraft (for instance)...and there are a lot of them to spread the risk...but can only break even on the trikes or even lose money on them in some years then where is the benefit to writing the trikes. It takes time and resources to underwrite the additional market that they could spend expanding the markets that are profitable.

While it is also true that the losses are spread among all the insureds at a given company...how would it make you feel to know your company was losing money on a given aircraft type yet continuing to write them while increasing the rates across the board to compensate?

Trikes are not the only types of aircraft that have this issue...try owning a "Thunder Mustang", powered parachute, or many other aircraft that have hit the market without any form of history behind it. Underwriters are very gun shy to take a risk on most anything that is different, new, or unknown.

Usually markets can be found to insure these risks but they are not the "normal markets". I would venture a guess that there is a market for trikes, powered parachutes and the like although I do not know who it is with. In order to exhibit and fly demos at Sun-N-Fun or Oshkosh, proof of insurance must be provided and there are always trikes flying over the parking lot non-stop...just a thought, but you might want to check with the manufacturers to find out where they recommend.