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#1
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insurance: vote with your $
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? |
#2
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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? |
#3
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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 |
#4
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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. |
#5
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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. |
#6
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#7
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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. |
#8
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"misha" wrote in message ... How many of you would dare to own a new a/c without having a full hull value coverage? I hope the discussion is coverage vs. not coverage, and not full value versus not full value. If you're going to insure it, not insuring it for the full value is a bad idea. After being hit with a $15K premium with a $10K deductable On what value hull or what value aircraft? I'm only paying $1500 and have no deductable. After all, my personal experience with car insurance is that money-wise, it does not make sense over any 10yr period. If you're talking collision, I might be inclined to agree. The question is can you afford the loss. On cars it's common for many to drop the collision (hull) coverage once the value of the car drops (and the loan is paid off). 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. We saw a steep jump in our premium last year but it dropped back down to what it's been all the prior years this year. |
#9
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I hope the discussion is coverage vs. not coverage, and not full value versus
not full value. Right. On what value hull or what value aircraft? I'm only paying $1500 and have no deductable. See prev. post. If you're talking collision, I might be inclined to agree. The question is can you afford the loss. I though that chances of survival are pretty slim in a total loss event in flight - I hope to make it to Eden and not to be too worried about the money part. Hull insurance on the ground (not in motion) is cheap, and we're not talking about it. |
#10
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"misha" wrote in message ... If you're talking collision, I might be inclined to agree. The question is can you afford the loss. I though that chances of survival are pretty slim in a total loss event in flight - I hope to make it to Eden and not to be too worried about the money part. You can do a lot of damage to the aircraft and still survive. If you have a loan secured by the aircraft, they will almost certianly want insurance to protect their interests by the way. |
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