Hill Aviation Insurance Services

Topics:
Reducing cover to ground risks only due to lack of use
Crop damage claims
Crown Indemnity Insurance
Compulsory liability insurance for gliders and powered aircraft
Insurance and age
B.G.A. accident reports – a regulatory requirement
Forming a syndicate
The claims process
The release form

Reducing cover to ground risks only due to lack of use

Part of the decision making process when deciding whether to accept a quotation for annual flying risks insurance is whether the aircraft is likely to fly often enough to merit the outlay. Factors like getting less flying over winter or being grounded while the aircraft is serviced, including any large maintenance jobs you've been putting off, can be taken into consideration easily enough ahead of time and these are included in the insurers' calculations when they produce their annual premiums.

Longer periods of unseasonal bad weather which keep it grounded can be frustrating and make the cover seem expensive, prompting some to consider reducing cover to ground risks only. It's easy to imagine, however, a situation where the weather is better than expected whereupon the same insurance would cover, at no extra charge, as much extra flying as can be squeezed in.

It is for these reasons that insurer's will very rarely allow a rebate of premium if an aircraft is able to fly less than expected or is grounded over the winter or while having a C of A or maintenance work done. With some justification their view is that aircraft are expected to spend some of the year down for maintenance and though flying weather can not be planned for in advance good and bad years can be expected to even out over time.

Having said that, if it is known in advance that the aircraft is going to be grounded for an unusually long period (say, 6 months or more), especially when this falls during 'the season', and it can be shown that it would usually be expected to do significantly more flying over that part of the year, they may be more accommodating.

Crop damage claims

Arriving at short notice in a field, especially a poorly chosen field may result in damage to crops as well as your aircraft and the extent of such damage is not always obvious to the untrained eye. Typically there will be a few incidents a year when some of the crop in a field is lost or needs respraying which takes more labour, more chemicals or the further rental of specialised equipment etc.

In such cases the farmer may have a perfectly reasonable claim for the costs he would not have incurred had you not landed where you did. If the farmer wishes to claim against you he will need to provide details to support his claim. Examples would include: what the exact variety of crop is, its value per tonne, the expected yield, the area of crop rendered unfit for sale, costs incurred through hours of labour and vehicle/equipment hire etc. All this allows the farmer's financial loss to be quantified which is essential for a crop damage claim to progress. Please note that nobody can claim for having suffered inconvenience as this can not be quantified.

Crown Indemnity Insurance

This tends to be included on most aviation policies as standard and is a requirement for operation from certain airfields but what is it?

Crown indemnity insurance offers protection for the Crown under your policy in the event that they are sued in relation to an accident involving your aircraft.

Powered aircraft are usually required to have £7,500,000 of Crown indemnity cover while in most cases gliders and motorgliders need only have cover up to the normal liability limits of their policy. If you operate from an MOD site which requires a higher limit, contact your broker for a quotation for the higher amount.

Compulsory liability insurance for gliders and powered aircraft

In May 2005 European regulation was introduced making it mandatory for all aircraft to meet minimum levels of liability insurance, something which was not compulsory in all areas of general aviation to that point.

The precise amount of cover required is dependent upon two factors: how many people the aircraft can carry and the 'Maximum Take-Off Mass' (MTOM) of the aircraft. This is the maximum gross weight of the aircraft in any configuration. All two seat gliders and motorgliders still require the B.G.A.'s mandatory limit of £2,000,000 combined liability cover and single-seaters with MTOM 499kgs or less still only require £1,000,000. However, single-seaters of 500kgs or higher currently require approximately £1,300,000 cover to comply with the European regulation. As this amount varies with the exchange rates we allow for any fluctuations in the requirement over time by offering £1,500,000 for those aircraft affected.

Example: Discus BT

Discus BT:	MTOM 450kgs
Discus B:	MTOM 525kgs

Following discussions with the B.G.A. when the regulation was introduced, we feel that £1,500,000 is the minimum level of cover we can offer to comply with the legal requirements for the operation of this particular aircraft type. As we understand the regulation, insurance must be in place that will cover the aircraft to be flown in any configuration possible without needing it altered by an authorised engineer (e.g. with or without any wingtips, with or without ballast, with or without the turbo etc. as applicable). As 'turbo' engines can, within airworthiness regulations, be removed by the owner (effectively making it a Discus B) we believe we need to cater for the Discus B's MTOM to ensure that you can not inadvertently fly in breach of the law.

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This mandatory increase in cover on some gliders and motorgliders has obviously meant increased exposure for the Insurers (an increase of 50% in applicable cases) and where liability limits have had to be extended to cater for the new regulations a small increase in premium has necessarily been applied.

Insurance and age

Many pilots have been finding it harder to obtain glider and powered aircraft insurance that will cover them to continue flying as they get older. This has understandably caused some distress to those pilots affected. The insurers' concern is simply that as any given pilot grows older the chances of them having a medical emergency in flight increases. The relevance of a pilot's medical has been discussed at length elsewhere but other key points are often overlooked in the debate.

1) Insurers do not decide who is permitted to fly. The BGA/CAA set the rules which decide who is permitted to fly. This is an important point. Each insurer decides only who they would be happy to insure and under what terms.

2) Insurance companies are free to provide quotes (or not) subject to premiums and other terms that they feel makes a risk acceptable. If they feel a risk is too great they will be quite happy to let someone else take it. They are not obliged to insure certain people or aircraft - indeed they are not obliged to insure aircraft at all.

3) Pilots are not obliged to accept an insurance company's quotation. If an insurer's quote does not fulfil your requirements, whatever the reason, ask your broker for advice about obtaining an alternative. The problem at the moment, especially in glider insurance, is the small number of alternative companies to approach for quotations. This fact in itself shows how unprofitable and therefore how unattractive leisure aviation is to insurance companies.

There is no government agency set up to provide insurance at cheap prices to any pilot who wants it. Insurance companies will only choose to risk their capital on our sports if they feel it is worth their time to do so. The age of the pilot is just one factor involved in their decision whether to offer a quote and if so under what terms.

Most of us would agree that, in general, 100 years of age is too old to be flying and 50 years is perfectly fine. The only practicable approach for insurers is to draw a line somewhere in between. Where would you draw yours?

B.G.A. accident reports – a regulatory requirement

Don't forget! It is a requirement of the British Gliding Association to fill in and submit a B.G.A. accident report in relation to any incident where a glider is damaged, even if the damage is apparently very minor. This would include incidents such as wheel-up landings where the only damage is a broken or scratched undercarriage door. The only exception is trailing accidents away from an airfield but even in these cases it is still likely to be material to your insurance and should be reported. Discovery of an undeclared incident during assessment of an insurance claim could even lead to your claim being denied.

The information collated from B.G.A. accident reports is presented anonymously in Sailplane & Gliding magazine as a learning tool for other pilots and is used to produce accident statistics for gliders and motorgliders from which national strategies for training and safety procedures are developed. The responsibility is yours.

Forming a syndicate

It sometimes seems that the only thing to get considered when looking for a syndicate partner is how much further they will help your own money stretch. But syndicate troubles can really spoil the ownership of an aircraft so here are some things to consider.

Are your partners easily contactable? Will they be around (or even in the country) if you need to discuss insurance needs, arrange payments or sign a release form after a claim?
Who would pay the excess in the event of a claim?
Are you prepared to have higher premiums to include partners with much less experience than you?
What is their accident record?

Aircraft are usually a very serious financial investment and choosing who is to take a share of the responsibility of flying and maintaining the aircraft, paying associated costs and signing any documents necessary to keep it running is important. We suggest you lay everyone's responsibilities down in a formal document to be agreed and signed by everyone on day one. That way everyone knows exactly what they are committing to.

The claims process

The majority of claims only involve damage to the insured glider. Here is a typical chronology of the claims process in such a case, from the point it is first reported to us to the point that the claim is settled.

Within a day or so of the accident the Insured notifies us by phone with details of the incident and any injuries or damage sustained
We inform the insurer and provide them with full paperwork for the policy and any amendments made during the year
In the meantime, insured takes glider to repairer of choice for estimate (may be dependent upon repairer's familiarity with glider, their proximity to the incident or home airfield or simply how busy their workshop is)
Insurer appoints loss adjustor to handle the claim on their behalf
Loss adjustor contacts Insured direct to organise copies of all the appropriate paperwork (for the glider, pilot's details, B.G.A. accident form etc.) and takes statements, as applicable, then produces preliminary report to update Insurer
Repairer produces detailed estimate of work involved for loss adjustor's comments/negotiation
Loss adjustor's full report gives Insurer full details of accident including statements and full detail breakdown of damage. Report confirms the papers for glider and pilot are in order and that the policy covers this particular loss. Suggests acceptance of estimate
Insurer accepts liability for the incident and authorises repair work to begin
On satisfactory completion of the repair work the loss adjustor issues a release form to be signed by all insured parties (please see the Release Form section for more on this important document)
Glider inspected by owners who, if happy with repair, collect glider and sign release document
Completed release is received by Insurer who orders settlement of repair bill
Loss adjustor submits fee invoice to Insurer
Insurer's accounts department pay repairer's invoice and loss adjustor's fee invoice

Obviously not all claims are the same but this is good indication of a 'straight forward' hull claim.

The release form

What the release is NOT for
The release is not signed to release payment from the Insurer to the glider's owners or to the repairer. Neither is it intended to release the repaired glider from the care of the repairer back to the owners.

What the release IS for
The release is so called because it releases the Insurer from any further responsibility. By signing the release those concerned are agreeing that this completes their claim in relation to the stated item/repair/whole accident. In other words, they are satisfied with any repairs that have been done and they agree that there won't be any further claim for it. The purpose of the document is to draw a line under the claim or a specific part of it, so that everyone concerned knows the score.

As with any document, you should read it carefully and all should be clear. If you don't understand anything you must ask the loss adjustor or your insurance agent straight away. An unsigned release will delay payment of the bills (the Insurer needs to know you're satisfied with a repair before he pays for it) so any problems need fixing as soon as possible.

Keep a good look out for more news and views soon.