insurance: vote with your $

The insurance industry is not making a lot of money even at the new higher
rates, so don't expect them to decline soon. Personally I only carry
liability because I think that the hull coverage I have been offered is not
a good deal. Insurance pricing is a combination of premiums and how much
money the insurance company can make by investing those premiums before
there is a claim. Obviously the expected rate of return on those
investments is much lower than it was three years ago.

What plane are you trying to insure and what are your pilot qualifications?

Mike
MU-2


"misha" wrote in message
...
How many of you would dare to own a new a/c without having a full hull
value coverage?

After being hit with a $15K premium with a $10K deductable, I have
decided to vote with my hard earned cash against the outrage and to only
get the mandatory liability and not-in-motion. After all, my personal
experience with car insurance is that money-wise, it does not make sense
over any 10yr period.

If we get out of mentality 'everybody does it, so should I', maybe the
insurance industry will wake up (again) to a sharp drop in revenue and
stop the rip-off. In the meanwhile many of us would save some money.
Comments?

On 10-Jul-2003, "Mike Rapoport" wrote:

Obviously the expected rate of return on those
investments is much lower than it was three years ago.


I think you have identified the primary reason why premiums have been going
up recently. Certainly claims costs have not risen as fast. On the other
hand, in my case aircraft hull and liability insurance price is still
roughly comparable to auto insurance. For $85 hull (zero deductible) and
$1M smooth coverage on our Arrow IV we pay around $2200/year. For a car
worth about $18K, and adding a reasonable portion of the cost of $1M
umbrella liability insurance, I pay about $1100/year ($500 deductible). The
key is that all named pilots of the plane have at least several hundred
hours and, very significantly, all are instrument rated.

I was recently told by an insurance broker that for a typical aircraft
owner, the cost of getting an instrument rating (in your own plane) will be
returned in less than 3 years by reduced insurance premiums. Has anybody
seen their premiums go down after getting their IFR rating?

-Elliott Drucker

wrote in message
...

On 10-Jul-2003, "Mike Rapoport" wrote:

Obviously the expected rate of return on those
investments is much lower than it was three years ago.


I think you have identified the primary reason why premiums have been
going
up recently. Certainly claims costs have not risen as fast. On the other
hand, in my case aircraft hull and liability insurance price is still
roughly comparable to auto insurance. For $85 hull (zero deductible) and
$1M smooth coverage on our Arrow IV we pay around $2200/year. For a car
worth about $18K, and adding a reasonable portion of the cost of $1M
umbrella liability insurance, I pay about $1100/year ($500 deductible).
The
key is that all named pilots of the plane have at least several hundred
hours and, very significantly, all are instrument rated.

I was recently told by an insurance broker that for a typical aircraft
owner, the cost of getting an instrument rating (in your own plane) will
be
returned in less than 3 years by reduced insurance premiums. Has anybody
seen their premiums go down after getting their IFR rating?

-Elliott Drucker

To return the cost if an instrument rating in 3 years the insurance company
would have to pay me about $1,000 a year. Not going to happen.

On 11-Jul-2003, "Dave Stadt" wrote:

To return the cost if an instrument rating in 3 years the insurance
company
would have to pay me about $1,000 a year. Not going to happen.


Well, I do know that when my partners got their IR (both in the same year)
the tab for insurance the following year went down by about $800. And this
was a few years ago, before the current craziness in the insurance biz.

The cost of getting the rating IN ONE'S OWN AIRPLANE may be a bit more than
$2400, but not that much more. I figure on around 45 hours of training, of
which 35 involves the use of a paid instructor. (The other 10 being
practice with a licensed safety pilot who is not being paid).

45 hours @ $40/hr marginal cost for airplane* = $1800
35 hours @ $40/hr for instructor = 1400

TOTAL = $3200

*Marginal cost is the cost for "additional" hours of use, and thus does not
include any fixed expenses. Basically, it's the hourly cost of fuel and
oil, plus reserve for overhaul. $40 is what I figure is about right for a
C-172 or similar airplane.

This suggests that a few years ago the payback in reduced insurance premiums
was around 4 years. In the current insurance situation, it is therefore
quite believable that payback could be quicker.

It also suggests that if you are not instrument rated you might ask your
broker how much you could save if you were. (Note that significant savings
will often require changing insurance carriers.) That just might provide
the impetus for you to finally get to work on your instrument ticket.

wrote:

This suggests that a few years ago the payback in reduced insurance premiums
was around 4 years. In the current insurance situation, it is therefore
quite believable that payback could be quicker.

What current situation? The insurance on my 182 keeps getting cheaper.
I called my broker and asked him what the difference was between an
instrument and non instrument rated pilot with my 900 hours in my plane.
No difference. Not only did the premium go down $170 this year, I
changed from USAIG to Global, they rasied the hull value from $65K to
$70K without me asking them to do it. My insurance has gone down in
each of the six years I have insured it for. If this insurance
situation gets much worse I may have to buy another plane.

"Newps" wrote in message
et...

What current situation? The insurance on my 182 keeps getting cheaper.
I called my broker and asked him what the difference was between an

You may be very lucky to own one of the few airplane types where there are
sufficient numbers in the fleet to generate competition in the industry.
For that matter, a C182 has an excellent safety record as well.

For those of us who own rarer airplanes -- regardless of whether they are
smaller or lager than a C182 -- obtaining reasonably priced insurance has
reached a critical situation.

--
Richard Kaplan, CFII

www.flyimc.com

On Sat, 12 Jul 2003 19:55:59 GMT, Newps wrote:

This suggests that a few years ago the payback in reduced insurance premiums
was around 4 years. In the current insurance situation, it is therefore
quite believable that payback could be quicker.

What current situation? The insurance on my 182 keeps getting cheaper.
I called my broker and asked him what the difference was between an
instrument and non instrument rated pilot with my 900 hours in my plane.
No difference. Not only did the premium go down $170 this year, I
changed from USAIG to Global, they rasied the hull value from $65K to
$70K without me asking them to do it. My insurance has gone down in
each of the six years I have insured it for. If this insurance
situation gets much worse I may have to buy another plane.

I think Richard was right, the 182 is a rare circumstance. We're
lucky.

The guys who own the next step up, the 210 series, or a twin or
retractable, are going to have faced substantial increases over the
past few years. And even asking what the rates are for commercial
usage are likely to induce high expenses (medical ones, that is!).

OTOH, there are exceptions. I looked at an RV-6 and the insurance
rate was slightly less than for my 182. However, that quote wasn't as
good as it first seems when you consider the lower hull value on the
experimental, and the fact that it included sublimits (something my
current policy does not have).

--Ron

Ron Rapp wrote:

On Sat, 12 Jul 2003 19:55:59 GMT, Newps wrote:


This suggests that a few years ago the payback in reduced insurance premiums
was around 4 years. In the current insurance situation, it is therefore
quite believable that payback could be quicker.

What current situation? The insurance on my 182 keeps getting cheaper.
I called my broker and asked him what the difference was between an
instrument and non instrument rated pilot with my 900 hours in my plane.
No difference. Not only did the premium go down $170 this year, I
changed from USAIG to Global, they rasied the hull value from $65K to
$70K without me asking them to do it. My insurance has gone down in
each of the six years I have insured it for. If this insurance
situation gets much worse I may have to buy another plane.


I think Richard was right, the 182 is a rare circumstance. We're
lucky.

I wouldn't call it rare. Every 152, 172, 180, 182, 185, all FG
cherokees, all the Beech FG types like Musketeers would also be the
same. Several guys here with Bonanzas, no problem there either. Twins
I can understand, that will always be a problem.

wrote in message
...

On 11-Jul-2003, "Dave Stadt" wrote:

To return the cost if an instrument rating in 3 years the insurance
company
would have to pay me about $1,000 a year. Not going to happen.


Well, I do know that when my partners got their IR (both in the same year)
the tab for insurance the following year went down by about $800. And
this
was a few years ago, before the current craziness in the insurance biz.

The cost of getting the rating IN ONE'S OWN AIRPLANE may be a bit more
than
$2400, but not that much more. I figure on around 45 hours of training,
of
which 35 involves the use of a paid instructor. (The other 10 being
practice with a licensed safety pilot who is not being paid).

45 hours @ $40/hr marginal cost for airplane* = $1800
35 hours @ $40/hr for instructor = 1400

TOTAL = $3200

*Marginal cost is the cost for "additional" hours of use, and thus does
not
include any fixed expenses. Basically, it's the hourly cost of fuel and
oil, plus reserve for overhaul. $40 is what I figure is about right for a
C-172 or similar airplane.

This suggests that a few years ago the payback in reduced insurance
premiums
was around 4 years. In the current insurance situation, it is therefore
quite believable that payback could be quicker.

It also suggests that if you are not instrument rated you might ask your
broker how much you could save if you were. (Note that significant
savings
will often require changing insurance carriers.) That just might provide
the impetus for you to finally get to work on your instrument ticket.

You make a few wrong assumptions. First, not all planes are capable of
being instrument trainers. I myself would not want an IFR capable airplane.
Second, you mention some craziness and insurance situation alluding to
increasing premiums. My premiums have not gone up in years. For my
airplane and the flying I do an instrument rating would be less than
useless. I don't believe an instrument rating is guaranteed to lower
premiums no matter how many times you change carriers.

On 12-Jul-2003, "Dave Stadt" wrote:

You make a few wrong assumptions. First, not all planes are capable of
being instrument trainers. I myself would not want an IFR capable
airplane.
Second, you mention some craziness and insurance situation alluding to
increasing premiums. My premiums have not gone up in years. For my
airplane and the flying I do an instrument rating would be less than
useless. I don't believe an instrument rating is guaranteed to lower
premiums no matter how many times you change carriers.


Obviously, my analysis assumes that you start with an IFR-capable airplane
that you use at least occasionally for travel. If your flying is just for
fun in a VFR-only airplane, the discussion doesn't apply.

-Elliott Drucker