Things are well under way for N27RM to start a rebuild.
However, I am learning that insurance companies think
differently than pilots.
Lets assume for explanation’s sake that you have an
aircraft that you have $200,000 invested in. You figure that since you
built it, you could repair it if you had a relatively minor accident, like a
gear up, loss of a brake and ground loop, running into a hangar, etc., so you
insured it for $75,000 with the thinking that if it was a total loss, you most
likely would not have “walked away” anyway, and who cares.
The $75,000 insurance you thought you
bought should fix any likely damage you might expect for a minor
accident.
Now, let’s assume you land gear up. First thing
is that Hartzell will tell you (if you have the three blade scimitar I had)
that you need a new prop, your “slightly bent one” can’t be
repaired. $14,000 retail plus shipping! Next thing is the engine,
you can expect (in an IO-550-N like mine) a bill for just under $7,000 plus
tax, shipping, etc for an inspection and replacement of items required under
Continental’s specs…..that is if nothing is wrong inside………(a
new crank is $3850.00,no core credit allowed), Continental says they won’t
“bend” but will crack. In 70% of cases with prop strike while
at idle, no crank damage occurs, how lucky do you feel? Mag gears are easy to
break also.
From there, let’s figure that you could repair the
belly/wing damage for $10,000 by buying parts and doing it yourself.
Would you be surprised that the insurance company would “total”
your aircraft and write you a check for $75,000 less your deductible?
Most likely they would. I learned that my insurance was not the face
value I thought I bought. Insurance companies start with the insured
amount, then look at the repair cost and the salvage value. Lets go back
to our hypothetical case. Your insurance company would look at the cost
of repair (in this case $14,000 plus $7000 plus $10,000 minimum, expecting to
be lucky) $31,000, then look at the salvage cost which, lets say is $50,000 hypothetically,
remember that fancy panel and radios, and the value of your “slightly
used” engine?
They may not want to allow you to rebuild, since writing you
a check for $75,000 less deductible (let’s pretend you had $2500
deductible) and then selling your “slightly damaged” jewel for
$50,000 would cost them only $22,500 out of pocket instead of paying you the
rebuild cost of $31,000. That’s $8,500 in their favor by paying you and
walking away with your little jewel.
My how things add up! My numbers are only arbitrarily chosen
to wake some of us up who may be underinsured (no, I don’t get a
commission when you “up” your insurance, just pointing out how
things work in the real world.) You can’t believe that your rebuild
cost of $31,000 was not covered by your $75,000 insurance premium!!!!!!!!!!!!!
I’m not done yet…UUGGHH
Are your log books perfect? Any lack of a required
inspection (annual return to service, engine AD not accomplished, etc), or
operating IFR without required log book entries (there are many, both aircraft
and your personal logbook) and it will be declared a non airworthy operation
not covered by insurance. How about your medical and recurrent
training? If not up to date, likewise, you are operating illegally and
not covered by insurance.
Just a few possible “gotcha’s” to
think about?
Fly safe out there!
Ron