WINTER 2007

Occasionally I fly to a non public airport to visit friends who live on private airports, am I covered?
In most cases I would say yes you are covered. Check your policy exclusions to make sure. Every PC12 operator should note while filling out an application for insurance there is a question about unimproved airfields. If you routinely fly to an unimproved strip or private airport, answer yes and explain. The underwriters may want to know more about these operations and may apply a higher deductible. It is always best to divulge all activities you intend to conduct in your aircraft. Your aviation insurance specialist can guide you through the process.

My insurance cost has gone down over 40% in the last two years, how much of a reduction can I expect on my renewal?
You might look back a several similar rate question response I have made in the last 36 months, all predicting present market conditions. Pre and post 911 we saw quantum leaps in aviation insurance rates. Obviously losses as well as lost financial capacity kept rates marching upward through out the late 90’s and into 2000, 911 and beyond. Another key factor in my personal opinion were scandalous unfair unethical business practices conducted by many alphabet houses namely AON, Marsh, and Willis all large agencies who have since settled with the NY Attorney Generals office on charges of price fixing and receiving contingency commissions to block and selectively place business with favored companies. These practices alone assured these firms of easy placements and large profits while bleeding policyholders. See my website www.lancetoland.com for news on these inappropriate business practices that were investigated, fined and settled out of court with millions of your premium dollars!!!

With a number of new players entering the aviation insurance arena existing underwriters will struggle to maintain market share. This additional capacity and competiveness in the market has driven rates down which is good for all PC12 operators, but cannot continue. Other factor such as a declining dollar against other foreign currencies allows foreign aviation reinsurers to absorb losses. As new markets begin to experience losses on books of business that were built on poor underwriting we will begin to see a definite shift to rate stabilization and more stringent underwriting. These soft rates should continue for the next 12 to 24 months, then we will see a gradual firmness build on insurance cost on both hull and liability. Hopefully rates will not rise as quickly as the have declined.

During an inspection several bullet holes were discovered in my PC12 airframe, is this covered by my physical damage insurance?
Do not laugh; this has happened more than once. From a coverage standpoint there are definite issues here. If you are traveling in some not so friendly parts of the globe you might make sure you carry worldwide territorial limits to include war risk physical damage coverage. Bullet holes would most likely be treated as a war risk peril by your underwriter and adjusted accordingly. War Risk coverage is defined by over 21 perils to include civil commotion, riot, and insurrection. These same perils would apply to damage discovered while operating domestically and would probably be covered as a civil commotion, vandalism or malicious mischief claim, each embedded in a war risk endorsement. Think strongly about not purchasing war risk coverage as these small holes could cost you big time…

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Fall 2007

I am considering leasing my PC-12 to a Commercial Operator…
There are a number of considerations to take into account once you have decided to let your aircraft out to a commercial operator. Not all of them relate to procuring an insurance policy. Researching the potential operator is a start. Look into services such as Argus and Wyvern, who specialize in keeping tabs on Part 135 Operators, as well as their track records regarding crews, maintenance and overall safety.

Insurance is a more challenging issue. You'll need to weigh leaving the relative safety of ordinary liability and assume strict liability measures through the operator. There is little, if any way, to shield yourself from this change except to insure your aircraft for the highest legal liability limits you can attain through your insurance broker, or the operators fleet insurance program.

I like to see the owner control the insurance as the policy holder. This means keeping your current insurance policy intact with endorsements amending the use from Pleasure and Business to including Part 135 Operations as well as recognizing the 135 operator as an additional insured. A better use change is, "any operation of the named insured." However, many insurers will hold tight reign on such broad wording, and these arrangements can test the limits of both the insurer's and the operator's patience if your broker is not responsive to certificate needs, as well as continuous changes made throughout the year.

Many owners elect to place coverage through the Part 135 Operator's Fleet Policy. This seems like a simple solution, but requires the same attention of maintaining an individual policy. Never rely on just a certificate of insurance from the operator. Demand a copy of the entire policy, and have it reviewed by your insurance broker. You must know who, what, and how much you are insured for. And, for added good measure, have the policy reviewed by an aviation attorney. Together these professionals can advise you of your rights and privileges under the insuring agreement.

One coverage caveat to be aware of - Due to the increase of new operators eager to sign themselves up as a Manager/135 Operator, many rely on, "as approved" wording for pilot approval as a means to fly their PC-12 aircraft with higher limits through fleet insurance arrangements. Many of these owners have difficulty securing insurance liability with their limited pilot experience, and as a result looked to a manager for an insurance solution. Had there been a loss, the underwriters would have reasonable grounds to deny coverage based on material differences in underwriting information at the time of binding.

Underwriters expect 135 Operators to have full-time professional pilots. Not low time private pilots building time. Without correspondence from the underwriters recognizing you as an owner/pilot, do not rely on this type of arrangement for cover. Or you might find yourself in a very serious situation in the event of a catastrophic loss.

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