Page 16 - Volume 14 Number 1

Here are a couple of examples of how different the policies could be that you are faced with choosing from:
1. Your aircraft is damaged and you make the repairs: This doesn’t affect many of you, but if it does, it is important to understand. Traditionally, when the aircraft is damaged, you’ll seek out several repair estimates and then decide which one to choose. For the operator who does their own maintenance, they may want the option to do the repairs themselves. Wording in the policies vary greatly in terms of what the carrier will reimburse you for when you make your own repairs. Some carriers state they will pay the straight, line labor rate at 100% and no overtime. However, there are few carriers that will offer up to 200% or allow overtime pay. The difference between the two can be meaningful.
2. Your aircraft is damaged due to excessive heat (hot start): This is normally excluded from the policy. However, some carriers will allow you to buy the coverage back. Like the first example, this may not be important to everybody, but if you are operating a King Air per the program that allows you to go well past the TBO, you may want to look into this option.
The Checklist
Having the right policy is the foundation for having the smoothest claims experience possible. The next step is having a checklist in place. In my article in the October issue, an ERP (Emergency Response Plan) was mentioned. It may be cumbersome for the owner-operator to implement; however, corporate and commercial operators should strongly consider creating one and regularly reviewing it with their insurance broker.
Often, damage to a King Air is minor, and in some cases, operators don’t even turn in a claim. However, there are times when something as simple as hangar rash turns into a nightmare claim. If a third party (an FBO) damages your aircraft, you may find it more desirable to have your insurance company adjust the claim and then subrogate against the FBO, assuming your hangar lease will allow subrogation.
Looking at your policy, you will see a “Conditions” section, which will outline what you are required to do when physical damage occurs. The following is wording from W. Brown & Associates aircraft hull and liability policy form NAC-02-PB1-1215. Under the “Conditions” section of this policy form it states:
APPLICABLE TO COVERAGES F AND G (PHYSICAL DAMAGE)
9) YOUR DUTIES WHEN LOSS OCCURS. When loss occurs, you agree to:
14 • KING AIR MAGAZINE
a. protect the Aircraft, provided you are able to do so, whether or not the loss is covered by this Policy, and any further loss due to the Insured’s failure to protect will not be recoverable under this Policy; reasonable expense incurred in affording such protection will be deemed incurred at our request;
b. give notice thereof as soon as practicable to the Aviation Managers, and also, in the event of theft, to the police, but not, except at your own cost, offer to pay any reward for recovery of the Aircraft;
c. file proof of loss with the Aviation Managers, or us, within sixty (60) days after the Occurrence of loss, unless we or the Aviation Managers extend such time in writing, in the form of your sworn statement setting forth your interest and that of all others in the property affected, any encumbrances thereon, the actual cash value thereof at time of loss, the amount, place, time and cause of such loss, and the description and amounts of all other insurance covering such property. Upon our request, you will show the damaged property to us, and produce for our examination all pertinent records and sales invoices, or certified copies if originals are lost, permitting copies thereof to be made, all at such reasonable times and places as we designate.
This is the exact language from the contract between the insurance company and the aircraft owner/insured. The wording represents the intent of many aircraft hull and liability policies. When you review yours, you will find very similar language. What does all of this mean? How does the process actually work?
First off, no matter how insignificant the damage is, notify your broker. This doesn’t mean you are turning in a claim, and it doesn’t affect your loss record, it is simply protecting you against the failure to report clause. With this referenced policy, you have 60 days to do so. If you fail to report the claim during that timeframe, they could deny coverage. Though it is rare a claim would be denied under that clause, it is possible.
Assuming you are definitely turning in a claim; gather all of the facts as stated in the “Conditions” section. No assumptions, just facts as you know them at the present time. Send all of this information, in writing, to your broker and they will be able to help you through the process of notifying the carrier. The insurance company will assign a claims adjuster and review the circumstances to determine how coverage applies. In the vast majority of situations, coverage is available.
Always keep the process moving. It is up to you to seek repair estimates and submit them for review by the carrier. Remember, you can’t authorize payment for the repairs directly, you need approval from the insurance company. Be prepared, most likely not everything on ›
JANUARY 2020