An insurance policy should provide peace of mind when putting capital at risk. However, when operating your King Air, you should be aware there are some perils that may not be covered, thus, giving you a false sense of security. A well-constructed aircraft hull and liability policy can, and should, provide a broad array of coverages to protect you. This includes “buying back” some of the standard exclusions found in aircraft policies covering turbine aircraft. Adding “Mechanical Breakdown” or another version of a limited write back endorsement, may be something you want to consider.
Within your policy, under the exclusions section you will find multiple paragraphs on what is not covered. To some extent, the following two policy exclusions can be added back:
Under all Section Three – Physical Damage Coverage, to any loss, damage, claim or expense:
– Which is due and confined to wear and tear, rust, corrosion, deterioration, freezing, mechanical or electrical breakdown of the insured property, its equipment, components or accessories, or to tires, unless the damage is caused by fire, malicious mischief, vandalism or theft or unless the loss or damage is the direct result of other Physical Damage, including Ingestion, covered by this policy. Damage resulting from the breakdown, failure or malfunction of an engine component, accessory or part (as noted on the manufacturer’s parts list for the engine or accessory) is considered “mechanical breakdown” of the entire engine.
– To any of the Aircraft’s turbine engines (including its turbine powered auxiliary power units) caused by heat resulting from starting, attempted starting, operation or shutdown thereof.
Aircraft insurance policies have been around for over a century. Over time the content of the insurance contract has expanded dramatically to be more explicit in what they intend to cover, varying from just a few pages to as many as 80. We’ve all heard the popular television commercial stating, “we know a thing or two, because we’ve seen a thing or two,” (trademarked by Farmers Insurance Exchange). This is an accurate summation of how the aviation insurance industry feels. Policies have evolved so carriers can manage their claim exposure, using actuarial data to assess their risk. The carrier must have objectivity when determining what is considered a covered claim, as they move forward with you, the King Air owner, to make the aircraft airworthy again.
The King Air family of aircraft has been around for over 50 years now. When insuring a new King Air, the exposure to exclusions outlined are minimal. Although when insuring a 1971 King Air, those exclusions may be very important. One exclusion not mentioned, but is listed in the policy, is the “Asbestos” exclusion. Even in a policy covering a new King Air this exclusion exists, but it exemplifies the extent the carriers go to in their efforts to manage exposure to potential claims.
Some scenarios that have come up over the years where these exclusions apply, resulting in denied coverage:
In my article “The Hard Market of Aviation Insurance,” published in the December 2020 issue of King Air magazine, I mentioned the hot start situation and a brief story of the “freezing exclusion” resulting in an uncovered claim. To recap, a pilot landed at a remote airport during liquid precipitation. While on the ground the temperature dropped below freezing, but the precipitation also quit. When the passengers arrived, the pilot walked around the aircraft, got in and went to start the engines. He noticed one engine wasn’t operating normally during the start phase and aborted the start. Upon investigation, it was discovered the fan blades had frozen in place, prohibiting the air flow for a normal or cool start. This occurrence was not covered by the policy under the “freezing exclusion.”
King Airs are an extremely well-built aircraft and offer a great deal of efficient utility in the modern age. That makes it easy to justify an investment of the latest avionics and engine upgrades. However, when the aircraft is stripped down, a lot of surface area that hasn’t seen the light of day for decades is now visible. What you see may be bittersweet. “Sweet” because you found “wear and tear, rust, corrosion, or deterioration” before it caused structural failure of the aircraft, but “bitter” because of the unbudgeted repair costs not covered by insurance.
Damage to engines due to excessive heat is also not covered. Have you ever flown a King Air 200 with the -41 engines that are around TBO? The one I flew was a hangar queen and I have vivid memories of being ITT limited in the climb at a very low altitude. When starting the engines, we were always on high alert for a potential hot start, just like being in the simulator waiting for the instructor to toss that one at you! Again, an uncovered occurrence.
Compressor stalls can be difficult to determine if there is coverage under the policy, primarily because first it must be determined what caused the compressor stall and what is the resulting damage. If the engine experiences a compressor stall and resulting damage is determined to be the result of normal wear and tear or mechanical breakdown, then it isn’t covered. If the compressor stall occurred because the engine was already damaged by undetected FOD, then it would be covered because there was an “occurrence” in which ingestion was the direct correlation of the resulting damage.
While you can’t buy back or buy out the entire exclusion around mechanical breakdown and heat damage to engines, some carriers allow you to purchase some of it back. The write back can be very specific and detailed. A recently reviewed endorsement for adding some of this coverage back is three pages long. To summarize: “Coverage is extended to apply to physical damage caused by and confined to mechanical or electrical breakdown, failure or malfunction to an insured engine.” Additional language also states that the damage had to be a single incident during the policy period that requires immediate repairs due to the severity of the breakdown. Also, the buyer needs to be aware that if they have a separate contract or warranty that covers such incidents, then that contract shall pay and not the insurance coverage. For example, an engine service or pay by the hour engine maintenance contract.
There are also conditions within the add back that should be understood, such as: “If the failure of the part was a result from not complying with an Airworthiness Directive issued by the FAA or the failure of the insured to conduct other required maintenance as outlined by the engine manufacturer, then there is no coverage.” The amount the policy will pay is also reduced based on the cycle-life or time-life limit of the components, parts or accessories at the time of the loss. With this in mind, meticulous maintenance records are imperative. And if you are operating your engines on a MORE program, this coverage may not be applicable at all based on the interpretations of the cycle or time-life wording. The particular endorsement reviewed for this article defines Time-Life Limited as “that component, part or accessory is subject to replacement or overhaul requirements of a manufacturer based on a specified number of hours of operation.”
Underwriters are trying to manage their exposure to the older aircraft and the expense to adjust or deny claims. During this current hard market, underwriters are taking into consideration the age of the airframe and the total flight time on the airframe when determining whether or not they will provide a proposal to insure. Each carrier is different in their underwriting guidelines. One particular leading King Air insurance carrier has implemented a 10,000-hour ceiling. If you are a potential new customer to this underwriting company and your King Air has 10,000 or more hours, they will not offer terms. However, they are still renewing customers who were with them before 10,000 hours. This new guideline is not exclusive to the King Air market, this is for all aircraft, including the business jet.
Aircraft insurance policies can be complicated to follow. The best preflight is a comprehensive review of your policy leading up to your renewal. Your broker should be willing and able to walk you through the policy, clarifying what is covered, not covered, or is a coverage that can be purchased either via endorsement or through a different carrier.