WINTER 2006

My local FBO is demanding that I obtain a Waiver of Subrogation and Additional Insured status in order to Hangar with them. Should I sign this?
Absolutely not until your insurance broker has advised you.

Many FBO are now looking to waive as much liability as possible. In some cases this understandable, but in most it is unacceptable. Typically those FBOs that ask for the moon in terms of waivers and hold harmless agreements have shaved money off of their annual insurance Tab by agreeing to a very large deductible or self insured retention. This is a business decision for the FBO manager but should no trickle down to you as a PC12 owner when a substantial hangar keeper’s loss occurs. Further you might find that they are trying to waive everything including products and completed operations which would affect the outcome of a misfueling or latent maintenance defect that they are responsible for.

Example, you arrive at your local FBO where your PC-12 has just been pulled out and the line attendant drags your winglet underneath another PC-12 and severs your winglet. This happened recently. With a waiver and hold harmless signed you are out of luck to recover, however had you not signed the waiver you would could require the FBO to take care of your travel plans with a substitute aircraft or charter, repair the damage and discuss diminution of value. Option 2 you could look to your insurance carrier to take care of the damaged winglet expense, and on some polices provide extra expense coverage, then file a separate diminution claim as your primary hull coverage does not address diminution.

In most cases the FBO will step in with their insurance and take care of things properly, just be reasonable with the settlement and think about the 24/7 365 services most good FBOs provide us, bearing in mind their deductible and how the loss might affect their annual bottom line and your future hangar rent rates. Caveat!! Most insurers require notice of any contractual agreement that you might enter into and approval, signing such a contract can prejudice coverage.

Our policy provides Extra Expense, why do we have this coverage, what is the cost?
Extra Expense coverage is typically included at no additional charge on some carriers (company) extended coverage physical damage broad form and is usually only offered to Industrial Aid account (professionally flown not for hire). Typical extra expense coverage wording provides reimbursement for additional operating expenses when a scheduled aircraft sustains covered physical damage, the insurer may reimburse a Named Insured for expenses arisingout of:

1. A temporary substitute aircraft, except any:

• expense incurred after completion of repairs to the scheduled aircraft which sustained physical damage or after such repairs could have been completed but for work being done which is not necessary to the repair; or,
• expense incurred more than five (5) days after the company has tendered payment for a total loss or in any event more than sixty (60) days after physical damage was sustained.

rental of temporary replacement component part(s), provided

• the component part(s) which sustained physical damage is repairable, and
• the temporary replacement component part(s) is not the subject of an existing aircraft component lease or exchange agreement of in the Named Insured’s possession as a spare engine or spare part.

trip interruption excess for food, travel and lodging of crew members and passengers, but only those reasonable expenses required to continue ob from the place where physical damage to the scheduled aircraft was sustained to either the intended destination of the original point of departure.

2. Expenses incurred as a result of physical damage sustained during the policy period shall be deemed to have been incurred during the policy period. The Company’s obligation to reimburse the Named Insured is limited to the lesser of:

• that portion of the necessary and reasonable expenses incurred by the Named Insured which exceed those which the Named Insured would have insured had there been no physical damage to the scheduled aircraft; or,
• the Extra Expense Payment Limits set for in Item 3 of the Declarations.

The actual reimbursement for aircraft expense is the difference between direct operating cost and the substitute aircraft cost. You will note in the wording an absence of coverage dollar amounts; it is your broker’s job to negotiate levels that would suite your particular needs.

We have had a call for St. Nicholas to fly our PC-12 on Dec 24 and 25 for two days, how do I get him covered?
Based on numerous request of this nature I regret to advise you that he will have to submit a complete pilot history and evidence of simulator training. Noting a colorful MVR report and several moving incidents involving live stock and libations, I doubt that he will be approved until he at least considers a 3 in 24 training cycle and dries out.

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FALL 2005

Why is the Lender on my PC12 requiring a Breach of Warranty (BOW)?
Usually an aircraft lending institution wants some assurance that it will be paid its loan amount if a hull claim is denied because the insured violated certain policy requirements such as approved uses or approved pilots.

An obvious example of such a violation would a loss arising when a non-approved pilot is operating the aircraft. Each aviation insurance policy stipulates the type of pilot who is qualified to fly an aircraft. This may accomplished specifically naming the approved pilot, by giving someone the authority to approve pilots on behalf of the insurance company, by a blanket set of pilot criteria called an "open pilot clause", or any combination of these.

If it is discovered after an accident that a pilot not approved by the policy was operating the aircraft when the loss occurred, coverage could be prejudiced. If the policy carried a Lien holders Interest Endorsement ("Breach of Warranty" BOW”), in favor of the financial institution, the insurance company would pay the lienholder up to the outstanding lien amount but not more. Caveat Lienholders Interest Coverage is not an automatic coverage. It must be specifically requested, but is usually added by the underwriter at little or no extra premium charge.

Remember insurance company is not in the habit of setting up coverage guidelines and freely giving them away. The violation of a policy requirement which results in the subsequent payment under a Lienholders Interest Endorsement can set up one of the few situations in insurance where an insurance company could subrogate against its own insured for reimbursement of the amount paid to the lienholder. In other words, the company would pay the bank and then look to the insured for reimbursement of the amount paid. Lienholders Interest coverage favors only the lienholder, not the insured. I actually had a client years ago who talked is local bank into waiving the BOW requirement and settling for a Loss payable against my advise. You guessed it the owner had a loss by allowing an unauthorized pilot fly the aircraft (An F86 Saber Jet) in an airshow. On his first maneuver this unauthorized pilot looped the Saber off the deck and pulled hard at the runway but did not make it!! I viewed the spectacle on CNN with disbelief. The next day I had to break the bad news on coverage to both the bank and the owner. Both acknowledged the warranted pilot breach and the subsequent claim was denied by the underwriters, the bank in turned sought immediate payment from the aircraft owner.

If my PC12 is damaged is Diminution of Value Covered?
Diminution of Value is not normally realized until the aircraft is sold; the retail value of an aircraft that has never been damaged is typically higher than one with prior damage history. Obviously, the smaller the damage and the better the repair facility, the less the negative effect will be on the value of the aircraft. The hull portion of your aircraft policy will not compensate you for the loss due to damage depreciation. However if someone else damages your aircraft due to their negligence, they would be expected to compensate you for your entire loss. If they were insured, their insurance company would be responsible to pay for the repairs of your aircraft as well as losses such as loss of use and depreciated value of your aircraft resulting from damage history.

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SUMMER 2005

I am a resident of Georgia with my aircraft registered in Delaware. My passengers are residents of Florida, how does this effect my coverage?
Usually an aircraft lending institution wants some assurance that it will be paid its loan amount if a hull claim is denied because the insured violated certain policy requirements such as approved uses or approved pilots.

Coverage is not necessarily governed by which state you live in or register your aircraft in, but Lex Loci (not a super villain in comic book series ) or the Law of the location will. All Aviation insurance contracts recognize the local jurisdiction of loss. This is typically embedded in the actual contract and is not endorsed unless you have an excess and surplus lines placement written through a foreign underwriter such as Lloyds. How would this apply in the event of loss?

Knowing this could never happen to a POPA member let's assume your are a Georgia resident and individual owner of a PC12 insured by a US based insurer maintaining hull and liability insurance, further your aircraft is free and clear of any liens. On a routine trip from Atlanta to Key West Florida with some friends and family you experience low ceilings and fog. After several hold waits and a missed approach or two ,you finally shoot an approach to below minimums and have and accident just south of the Georgia state line while executing a non precision approach into Fernandina Florida resulting in the total loss of the aircraft and severe bodily injury to several guest passengers ,your wife suffers a broken back. Post NTSB findings cite improper pre flight planning which resulted in the owner operator pilot maintaining controlled flight into terrain while trying to avoid fuel exhaustion.

Good news, all of your certificates and training are up to date, within seven days of the loss you are paid in full for the hull loss minus your in motion deductible. All passengers including your wife look to their personal medical coverage to take care of their medical bills and begin to recover. Although close friends several of the passengers sue for pain and suffering resulting from the accident, the courts find you negligent, your insurer settles within the policy limit. Now comes your wife, she sues you for pain and suffering. Although as a resident of Georgia you both enjoy interposal immunity the loss occurred in Florida which has no interspousal immunity your insurer has to settle with her or face trail, a settlement is reached which barley comes in under your total policy limit remaining.

Is damage to my engine covered as a result of ingesting something?
Engine ingestion is a covered item in most contracts unless endorsed otherwise. Typically ingestion coverage carries a deductible which follows your in motion deductible. Some contracts carry no deductibles for any loss.

There are two types of ingestion losses, domestic and foreign. Foreign ingestion losses usually result from birds, ice, sand or gravel or othe foreign objects such as nuts and bolts sucked but on take off or landing in reverse with the inertial separator off. These types of losses are usually discovered during a hot section inspection or at overhaul. Turbine blade impact damage can be ascertained as to what caused the loss through metallurgical analysis, every ingested object has a peculiar signature. Erosion is typically considered normal wear and tear and would not be paid as a FOD claim. Domestic FOD is not a covered item and is easy to ascertain, usually this occurs when an engine component such as a turbine blade fails in the first stages of the turbine then travels downstream and damages other components such as hot section turbine blades, housing , burner cans, liners and vanes. Usually this type of damage is picked up the engine manufacturer. Also consider that any airframe component that is ingested such as baffling screws would be considered foreign not domestic.

Is my propeller covered?
Yes, your propeller is covered damage resulting from impact with a foreign object or bending as a result of impact. Erosion is not covered. An applicable deductible will apply.

Will my insurance cover windshield cracks?
Yes, if it is determined that there is an actual impact to the windshield. Again this can be determined through special analysis. Bird strikes, hails and stone impacts are easily determined. Stress cracks and delamination are not covered and are considered airframe wear and tear or fatigue by the underwiters. An applicable deductible will apply. For example in flight hail windshield damage would be subject to an in motion deductible whereas hail damage on the ground would be subject to a not in motion deductible.

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SPRING 2005

Until two years ago, I crewed an HS125/700 with a friend, not for hire, but to stay current in fixed-wing jets. Our mutual business interests made this a “match made in heaven.” Many of the trips included entertaining our clients at hunting and fishing lodges all over the western hemisphere; not bad duty if you can get it. At the time of this incident we were both type-rated on the -700 and had completed annual simulator training at Simuflite. We were owner/operators, not full-time professional pilots, but we trained and flew as if we were. My 53-year old friend possessed over 5000 hours total time as PIC, 300 hours in type and held a current 3rd class medical and was, without question, one of the most professional pilots with whom I have ever had the privilege to fly with. Both of us had backgrounds as charter pilots before launching separate very successful private enterprises, and we had flown King Airs, Citations and Hawkers for many years. Neither of us was “green.” We were also very conscientious about our annual simulator training, and practiced what the instructors there taught us: very strict operational procedures and a “sterile cockpit” once up we lined up. We also rotated through the left seat on each leg no matter no matter the length to maintain PIC and SIC proficiency.

I started the day of this story in the left seat on an uneventful trip from Falcon Field, Georgia to Camden, South Carolina. Our early morning departure ended with a non-precision approach to minimums. My friend and his passengers were off the plane like a shot and dashed off to their meeting. I elected to hang around the airport and meet one of my clients for lunch. Several hours later and as planned I got the call to prepare the aircraft for an immediate departure. When my friend and passengers arrived, the APU was running, the TOLD card was complete and the interior was fairly comfortable.

When he arrived at the aircraft for departure, my friend ask me if I would mind flying left seat back home as PIC. He said he had finished a grueling meeting and was a little tired. This should have been a red flag! He had never opted right seat on any trip for the past 15 years. I did not think anything about it. We got underway up front after securing and briefing the passengers for departure.

All pre-takeoff checks went smoothly as we taxied out. At the end of the runway, I gave a standard PIC takeoff briefing—airspeed alive, 80-knot cross-check, abort items. He did not say a word, only nodded. We rolled onto the 4000-foot runway for takeoff to FFC looking at 200-foot overcast. Our destination weather was forecast to be about the same. Once power was set, I released brakes steered the tiller; everything was going normally. Rolling down the wet runway my friend missed the airspeed alive and 80-knot cross check. Yet another red flag! I sensed something was wrong, and asked, "How about 80kts?" By this time, I was at V1 plus and heading for Vr. It was too late to abort, so I instinctively rotated the aircraft for takeoff. No positive rate calls out after take off from my friend. I am on the gauges, climbing into a 200-foot solid overcast, had called for the gear up, and had received no response from the right side! It was then I noticed my SIC is somewhat slumped over in his shoulder harness, with a “thousand-yard stare” in his eyes. He says softly, "Boy, am I tired today!" I'm thinking silently to myself that this should be a sterile cockpit. What is wrong with this guy? Then, quickly back to reality. “Fly the plane,” I thought. I reached over and pulled the gear handle up, and raised the flaps. We entered the cloud base at 220 knots, runway heading and climbing to our assigned intermediate level off of 5000 feet. At this point I was single pilot in a Hawker 700, at night, in weather, and with my good friend and SIC in a questionable state of mind. Worse yet, he might be in much worse condition than either of us had known or declared. The rest of the flight back to FFC was basically solo, single pilot. I did not declare an emergency, but took over all ATC communications. It was back to basics—aviate, navigate, communicate. Weather was going to be a factor on arrival at FFC with moderate rain showers all the way. I elected to stay low at FL170 to cut the work load of climbing and descending and just ride it out. I continually asked my SIC if he was ok, to which he replied, “Just a little tired I guess.” I suggested he don the O2 mask hoping this would help him clear his head, but he would have no part of it. The back course approach to runway 32 at FFC was uneventful. He even managed to get the gear down for me, but he still had that “thousand-yard stare.” After landing, my friend just sat there up front, I assisted the passengers onto an awaiting company bus, and then quickly went back to the cockpit. I ask my friend if he wanted me to drive him home, or maybe to the hospital. He replied that he was just real tired and probably just needed some rest. I could not let that last comment just brush over me. As forcefully as I could I told him we could not have anything else like that happening. Although it was his airplane, I would not fly with him, as his friend and, lastly as his insurance Broker until he had some rest and visit to the flight Doc. Strangely, he agreed and drove off. It happened so quickly, we did not even have our traditional end-of the-flight beer as we had done for over 15 years! That was his last flight in the Hawker.

I later found out on the day my friend developed that “thousand-mile stare,” he had really suffered a “mini” stroke. A week later, during that doctor’s visit he promised he would do for me, he called to let me know that he was being rushed into the operating room for emergency heart surgery at Georgia Baptist Hospital - four 80-percent blockages!

Learning all of this was a real wake up call for me. His slowly declining health and changes in demeanor should have alerted me that something was not right. The signs were there and obvious yet, so subtle, even to a close personal friend. Just last week, I had a client call in with a similar incident where a crewmember in his early 40s started having accelerated short term memory loss just before a flight. During an emergency room visit, he had a violent seizure. A CAT scan revealed an aneurism and a tumor in his brain. If the flight had gone off on time, my client's crew would have been in the same position that I experienced, but the outcome can only be speculated.

Think about it! We don’t get “crewmember incapacitation” training on every trip back through recurrent training. Yet, there it is! It could happen to any of us, any time. Please do not read into this that I am not in favor of PC-12 SP Opps. I hope to merely challenge each POPA member into thinking about a real physical, and be honest with yourself as to your own condition when you climb up front.

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