We’d bet that with aircraft values going up significantly over the past two years you’ve checked the listings often. We always want to know what our airplane is worth. But have you translated that curiosity into action and spoken to your insurance broker?
Tom Johnson, agency president of the Assured Partners Phoenix office, said that in this crazy market, owners are at risk of under-insuring, and if the insured value of your airplane is too low, it can trigger the total loss provision too early. “What might have been an otherwise minor problem will cause it to be totaled,” he said.
Unfortunately, underwriters aren’t entirely helpful in this area. They use Bluebook for values and Johnson said that just doesn’t work. First, there’s lag. Value guides are historical in nature, and there can be many months between a reported sale and its inclusion into the pricing data. With normal inflation values will naturally rise. And in this market that has grown at a rapid pace, the guide simply can’t keep up.
As owners know, every airplane is unique. Pricing data is averaged, and a Twin Commander that sold with high-time engines and an older panel for $500,000 is not the same as one with new engines and new paint and interior. Now that airplane is worth $1 million or more, but Johnson said the underwriters will only go 50 percent above Bluebook. This presents even more issues when the airplane is financed.
Sales information or assessed value won’t help much, he said. Instead, sending photos of the paint, interior, and panel, and the engine numbers should help your broker make his case with the underwriter. There may also be some choice in terms of balancing insured value and premiums. Johnson said it’s not uncommon to get the underwriter up a bit on the insured value, but at a premium that’s not worth it to the owner. You may end up flying a bit underinsured, and accept the risk. “I think of it as if the plane were going to disappear and the insurance company wrote me a check for that amount, would I be happy or would I be fuming?” It’s a personal choice.
The good news is that it’s not a given that the underwriter will total the airplane if you’re underinsured. “The carriers aren’t in the business of stealing airplanes,” Johnson said. In fact, if it’s a close call the company could leave the decision to the owner, or they could negotiate the payout.
