Author Topic: Anyone involved in insurance underwriting? (Read 406 times)

Wolfala · « **on:** February 19, 2008, 08:08:36 PM »

I have a specific situation where I am keeping my aircraft under a leaseback agreement. I have the hull insurance taken care of for around 11K per year, so if someone augurs it into a mountain it won't completely bankrupt me.

But I had a situation come up where I was quite frankly blindsided. A renter, ran the engine at 107% power and toasted all of the cylinders. We have evidence through oil analysis records that he did the damage - since we removed the oil at 9 hours instead of 50, and the levels of metal in the oil were 5x above previously recorded levels - and records from a JPI Engine Monitor which tracked his engine usage every 6 seconds.

Effectively, the guy completely disregarded the POH - went full throttle, and cooked everything at 450* and we gotta change out somewhere between 3 and 6 cylinders depending on the breaks. The general consensus is the guy did the damage - we met with him and showed him the data from the JPI and oil reports, he told us that he flew every plane the same way - full throttle (which in this case was completely improper). But now I am looking at a 15K repair bill because of this dumb **** and my existing commercial policy that I paid 11K for doesn't do me any good - because he wasn't nice enough to crash and kill himself.

So my question is, is there a renters insurance policy out there that would insulate me from this pilots negligence - specific to the engine. (i.e. running it improperly, damaging something, having proved beyond a reasonable doubt he did the damage - and repairing the damage to get me back up and running.)

eagl · « **Reply #1 on:** February 19, 2008, 08:15:24 PM »

Have you considered suing the guy for the damages? At the very least, the FAA should be informed that he willfully destroyed your engine. Even a jury of incompetents ought to understand that "107%" is not good...

Wolfala · « **Reply #2 on:** February 19, 2008, 08:41:20 PM »

Yea I'm giving him a week to go over the data from the flight computer, and gave him the logbook entries, compression data and oil analysis from when the plane was put online. He said he would pay for the damage if he was convinced he did it.

Of course if he denies responsibility at that point, then yea - I'll sue his bellybutton into the ground based on the evidence I've got and make life miserable for us both.

DiabloTX · « **Reply #3 on:** February 19, 2008, 08:49:47 PM »

Not to hijack the thread or anything...but you 2 guys have the exact opposite when it comes to avatars.

I'm in agreement with the suit, though. How can he deny that he did it with the hard evidence in front of him? But then again this kind of thing nowadays doesn't surprise me.

Wolfala · « **Reply #4 on:** February 19, 2008, 09:00:34 PM »

Quote

Originally posted by DiabloTX
How can he deny that he did it with the hard evidence in front of him?

Simple answer is people will **** you if they can get away with it. The problem is, I carry a baseball bat and grew up in Jersey.

Maverick · « **Reply #5 on:** February 19, 2008, 09:02:44 PM »

I doubt you are going to be able to buy insurance against faster than normal wear on your equipment. If by some chance you could find coverage it likely would be about as expensive as the repair anyhow.

Your sad experience is not unusual for a leaseback operation. That's why I avoided them like the plague with my plane. A previous employer decided to lease back the 3 birds the company had. I explained he was going to get bent over, especially since he did it without benefit of a written agreement with his good buddy the FBO operator. In less than 6 months serious repairs were required, were performed by the FBO that leased the planes and rather interesting rate higher than the normal rates charged for work. By the time the planes were pulled back we (the company) were paying them $15.00 an hour to use our planes.

Wolfala · « **Reply #6 on:** February 19, 2008, 09:08:58 PM »

No I think you are missing the point. Its something the pilots would have to carry - not me. But not operating by how the POH says to operate and going beyond the red line - its just negligent.

Covering negligent operation is what I want to find a policy for - and to require pilots to have before they get in the cockpit.

This is a clear cut case of the guy just plain ****ed up - and we got the data to support it. But I wouldn't have to sue him if there is a policy out there that he could carry that I could tap onto.

Maverick · « **Reply #7 on:** February 19, 2008, 09:56:31 PM »

Nope I'm not missing the point. I understand where you are coming from. You want to protect your investment. That means you are the one needing protection for the property, not the renter. Besides that you are the one with what would be the insurable interest in the property. I am not aware of anyone who is providing renters insurance that covers wear and tear.

If you are going to try and hold the renter liable for any excessive wear and tear on the plane you are going to need the services of a contract lawyer to provide a contract that will specify exactly the conditions they will be liable for. Then you will have to have a means to insure that you can specifically show who did the damage. In the situation you have now you will have a good indicator of how you can make that stick in court. I hope you don't, but I believe you will need to file a suit to recover damages. I doubt your renter will be willing to cough up a significant amount of money on the wear on your bird voluntarily.

Frankly, the best way to protect your property is to not allow it to be on leaseback. People just do not tend to take care of rental property like it was their own. Example, how do people usually treat a rental car?

Wolfala · « **Reply #8 on:** February 19, 2008, 10:12:22 PM »

I see your point. I'll chew on it for a day or 2 and see where the underwriters stand on their liability limits if renters hold their own policies.

eagl · « **Reply #9 on:** February 19, 2008, 10:33:47 PM »

Maverick,

The performance requirement might lie in the FAA's certification process. Unless I'm mistaken, at the very least it is against FAA rules to operate a plane outside of it's operating limits, and it might be illegal too.

In any case, the guy might be willing to cough up some cash in return for the incident not making it into the FAA's hands because the guy might lose his license for trashing a plane. It sounds like the guy said he flies every plane like that (ignoring operating limits) so he might end up in deep crap.

Thruster · « **Reply #10 on:** February 20, 2008, 05:52:28 AM »

If you look hard enough, you will find a company that will issue a policy on customer negligence. there are policies written for just about every risk imaginable. The issue is cost. Unless there are a lot of endorsements of this type written the actuaries will have a hard time establishing a safe premium and will recommend a fairly high number. I don't know if there's much pricing competition but the cost will obviously impact your rate.

Would it be easier to amend your contracts to specifically assign liability for abuse? Car rental companies have verbiage in their contracts that assign liability in the event a unit is abused during the rental term. Auto lease agreements do also. It's rarely enforced but the disclosure's there if there's sufficient cause. I recall some years ago one of the big guys looked into the possibility of enforcing "reasonable diligence" by way of data recovered from the cars' ecms and charging for excessive use. Don't know if it went anywhere though. I haven't read a rental agreement cover to cover for a long time.

culero · « **Reply #11 on:** February 20, 2008, 07:09:45 AM »

Wolfala, one thing to consider is that when you depend on someone else's insurance coverage for compensation for damages done by them to you, you are in an adversarial situation with their insurance carrier. They may well decide, in any given situation, that its better for them to roll the dice so to speak rather than pay up.

The question then becomes whether or not you are willing (and able) to invest in enough legal expense to force them to pay up with a judgment against them. Note that I didn't say "whether or not the facts merit a judgment". If you have your own coverage, your own insurance carrier then becomes an interested party and thus has reason to provide their own legal resources in search of a resolution.

Bodhi · « **Reply #12 on:** February 20, 2008, 10:38:08 AM »

I believe AOPA offers a type of renter's insurance. You'd have to check with them though.

LePaul · « **Reply #13 on:** February 20, 2008, 05:06:40 PM »

I meant to ask this during your last thread...where I used to rent from, you were required to go up with the instructor/check pilot for 2 hours. Basically reviewing everything. Does the place you leased the aircraft to do that?

I'm just playing devil's advocate here. Did he just get handed the pilots manual and told to adhere to it? Or did he physically get a check ride, etc to make sure he was clear on the basic operating parameters?

The point I'm trying to make is at what point can he just shrug and say "Well nobody told me" and there's no documentation to prove otherwise?

I'm really sorry to hear about all the damage done to your airplane.

eskimo2 · « **Reply #14 on:** February 20, 2008, 05:25:02 PM »

I bet the guy flew AH and hit WEP all the time without it costing him a penny.