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Thread: What is the correct hull value to insure for (at renewal)?

  1. #1

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    Question What is the correct hull value to insure for (at renewal)?

    I'm up for renewal and the FX-3 is about a year old. My question is what is the correct hull value to use on insurance? Obviously to replace my FX-3 would cost significantly more as prices have gone up, however, I don't believe insurance policies are "replacement cost". My renewal still has my hull value near what I paid for it but if something happened, is the assessor going to only pay some value less based on what I paid minus some depreciation formula? I don't want to over insure (or under insure) but there has to be some way of determining the correct "value" of your aircraft for hull value based on insurance and if something happens?

    Any suggestions or lessons learned from those that had to go through a claim such as for total loss?

    Thank you.

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    jrussl's Avatar
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    What is the correct hull value to insure for (at renewal)?

    Airplane policies are based on a declared value. The insurance company will simply pay that amount in the event of a total loss. Blue book and depreciated value arenít relevant with aircraft insurance.

    That said, a declared value policy is a bit of a double edged sword. For instance, if you declare too low of a value, it becomes possible for the repair costs to more quickly get above the declared value. The insurance company then totals your airplane and pays you their lower amount. Then they sell the hull for salvage value. There have been many an aircraft that were very fixable but got totaled by the insurance company.

    The other issue with high value airplanes like CCís is that some insurance companies limit the declared value they are willing to insure. There are several other threads here related to this.

    Hope this helps.


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    Narwhal's Avatar
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    About tree-fiddy. Seriously, in this case.

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    Steve Pierce's Avatar
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    Having seen some FX3s sell recently I would say $375k. If you are under insure (say $250k) you can ding a wing (say $90k repair bill) and they can total it and then sell the salvage ($180k) and you are screwed. It is dollars and cents to them, what ever is the cheapest.
    Steve Pierce

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  6. #6
    mvivion's Avatar
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    Good advice above, particularly Jeffís. The key is to decide what you believe the plane is worth, then be prepared to justify that assessment when you submit for renewal. If your airplane has increased in value due to market trends, or modifications/improvements, be able to articulate that to your insurer. Barnstormers is a helpful indicator of prices.

    But as others have noted, donít try to low ball coverage.

    MTV
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  7. #7
    Grand Pooh Bah soyAnarchisto's Avatar
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    I had this explicit conversation with the writer of my insurance policy (Avemco) about under-insuring my 180. They assured me that if the damage reached my declared value they would pay that out, but I would still own whatever is left over to do with as I wished. Now this was over the phone - I'd like to re-read my policy and make sure this is the case because it's the opposite of what Steve and Jeff are saying. I think most of us are under-insured today unless we've written a policy in the last month or two so we outta be able to figure this out for sure.

    Perhaps I would have to pay the difference between the repair estimate and the declared value to retain ownership of the pile of metal? I need to go read my policy in detail - just not sure what to look for. This is not the same as a car policy, for sure. I don't think it's correct to expect the same behavior for car insurance wrt to salvage.

    Quote Originally Posted by Steve Pierce View Post
    Having seen some FX3s sell recently I would say $375k. If you are under insure (say $250k) you can ding a wing (say $90k repair bill) and they can total it and then sell the salvage ($180k) and you are screwed. It is dollars and cents to them, what ever is the cheapest.

  8. #8

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    Last week I increased my hull value for both airplanes covered by Avemco. They requested documents and lists of upgrades to support the requested increase in hull value. I also provided a price range of comparisons currently on the market. It helped to have a recent Vref appraisal done on one of my airplanes. Their generic hull value list does not reflect the current market conditions. My personal thought is that if I needed to replace a plane in the current market, I would want my insurance amount to reflect that value.
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    Taledrger's Avatar
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    I can only offer my own experience.. Over a decade ago, we had a Husky end up on it's back.. It was insured for replacement cost.(good thing)
    Avemco adjuster determined that it would cost more than "70%" of the insured value to repair the airplane. It was their decision to "total" the aircraft, give me a check for the insured value and they would take the airplane..
    I did not think it was hurt that bad.. thought I could fix it.. asked if they were willing to pay 70% to fix it, would they give me the 70% and let me keep it.. YUP!!
    They gave me a check for 70% of the insured value and the airplane, still on it's back, at a friends farm strip.. was mine..
    Long story, but they were right... it was more than we realized.. sold the carcass on Ebay and came out ok ..
    Lesson learned .. Don't under insure!! Insure to replace!!
    Bob D
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  10. #10

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    Unless you can "do it yourself" a ground loop plus prop strike will be enough to total a good Cub. Shop rates and parts are right on up there, and crankshafts are made out of unobtanium.

  11. #11
    stewartb's Avatar
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    Avemco uses Vref and a menu of adds for special equipment. A few weeks ago Robyn at Avemco persuaded me to increase the declared value of my 180. Vref plus adds was $190K. Replacement value is said to be that plus 25-30%. Iím not going to pay extra to insure to todayís inflated values knowing those values will likely tumble soon. Vref works for me. My Cub is worth more than the $200K max value Avemco will cover but I can rebuild a lot of damage for that so Iím not too concerned.
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  12. #12

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    Going through this now with BWI.
    The issue, as their brokerage represents it, is that many insurance company underwriters are using 2020-21 "blue book" values and are not yet allowing for the rapid escalation in selling prices. Doesn't help an owner that needs to replace an aircraft in today's market.

    Quote Originally Posted by Cbass View Post
    Last week I increased my hull value for both airplanes covered by Avemco. They requested documents and lists of upgrades to support the requested increase in hull value. I also provided a price range of comparisons currently on the market. It helped to have a recent Vref appraisal done on one of my airplanes. Their generic hull value list does not reflect the current market conditions. My personal thought is that if I needed to replace a plane in the current market, I would want my insurance amount to reflect that value.

  13. #13

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    Quote Originally Posted by stewartb View Post
    Avemco uses Vref and a menu of adds for special equipment. A few weeks ago Robyn at Avemco persuaded me to increase the declared value of my 180. Vref plus adds was $190K. Replacement value is said to be that plus 25-30%. Iím not going to pay extra to insure to todayís inflated values knowing those values will likely tumble soon. Vref works for me. My Cub is worth more than the $200K max value Avemco will cover but I can rebuild a lot of damage for that so Iím not too concerned.
    Check to see if you have a buy back option, if you donít, and they total it, it goes to auction.


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    stewartb's Avatar
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    Checked. Not my first rabbit hunt.
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