Students buying aircraft.

[FlyingVizsla]

Insurance

 

Hi Justin,

 

My insurance (I recently renewed) was 3.4% of the insured value plus $600 for the carnage I might cause on the ground and to my passenger - up to $1m. I get a no claim bonus (have not claimed in over 15 years) but it seems inflation keeps up with my discount. On a $100k plane that is $3,400 + $600 = $4,000 each year regardless of who flies. I have the aircraft insured for training, private hire and aerial work (not mustering). This gives me flexibility because there are not many aircraft for hire out in Western Qld and occasionally someone wants a licence or a night rating.

 

When choosing an insurer I asked a LAME, who did a lot of insurance work and also bought wrecks from insurance companies, What company is best to deal with? He highly recommended "The Pool" (which has now become QBE) - Pool because it was an amalgamation of insurers. I don't know what their reputation is these days, but they are serving me well - they seem co-operative, ask for their money nicely etc. If I have to pay insurance I would rather have one that co-operated when things turned pear shaped.

 

I was warned about a couple of insurers. One, which is no longer in business, had a reputation for not paying out, or taking ages to do so. I had personal experience of their tactics when a good friend died in a plane crash. I was at his house helping to field phone calls when the insurer rang. The bodies and wreck had been found that morning about 12 hours earlier, assuming I was the widow of the pilot the man began threatening me an insisting I sign a form he'd faxed to the office admitting he was at fault or he would "take the roof from over your head and everything you own". Doubtless they would do just that with ease once they had the signed confession. The aircraft owner said he chose them because they were the cheapest.

 

Commissions - I was the LAME's bookkeeper - he got an annual 10% of my premium every year for recommending me. When he died I asked if that could be taken off my premium - the answer was No, and because he was deceased no one got the 10%. It might be worth asking if they pay a spotters fee / commission, because you could get a friend who is an existing policy holder (or your LAME) to pick up the commission and share it with you.

 

As for the cost of 100 hrlys - see my post under a thread started by Crashbait about Aircraft ownership for my actual costs. These of course will vary given the age, condition, type of aircraft. Mine were about $2,000+ but, as I point out, the "surprises" can rip your guts out. Put aside something for the engine overhaul, prop replacement, instrument calibration etc. 50 hourly work you can do yourself.

 

Hope that helps. Search the forums because there has been a lot of discussions on the costs of owning, hiring, operating aircraft. Owning an aircraft is expensive, but also a tonne of fun.

 

Sue

 

 

[Guest davidh10]

...When choosing an insurer I asked a LAME, who did a lot of insurance work and also bought wrecks from insurance companies, What company is best to deal with? ...[/Quote]

 

As you have also disclosed in your post that the LAME was receiving a commission (ie. was a Commissioned Agent), this may not be the manner of obtaining advice to recommend to others. Clearly you had a two way business relationship and perhaps even a friendship, which could favourably change the colour of any advice given.

 

This issue has been long lamented in the finance industry with people obtaining investment advice from financial advisers who naturally have a very strong incentive to recommend the investments for which they get trailing commissions.

 

In other words, one should seek advice from someone who will not gain a pecuniary advantage from your choice.

 

...but they are serving me well - they seem co-operative, ask for their money nicely etc...

I've not heard of an insurance company that fails to co-operate in asking for the premium!

 

Unfortunately the real test is people who have claimed and can relate positive / negative experiences. If negative they need to be really careful that the insurance company does not get hold of the advice and consider it actionable.

 

... It might be worth asking if they pay a spotters fee / commission, because you could get a friend who is an existing policy holder (or your LAME) to pick up the commission and share it with you...

If anyone has ever done this I'd be surprised. To be able to receive a commission, the person would have to be an Insurance Agent, registered with ASIC, and registered with the specific insurance company. The other rub is that the person receiving the commission would be paying the tax on income, and could not claim the portion paid to you to diminish the tax liability.

 

On the other side of the coin, if the person receiving an unofficial rebate was claiming the full insurance premium on tax for business purposes that could land the claimant in trouble with the tax department, should they discover it.

 

It all just sounds too hard to me. IMHO, if you are the only pilot, self insurance is a real option.

 

[Methusala]

Market for budget priced aircraft.

 

G'day all, Back in 1995 I was in need of a basic aircraft just to have something to fly, you know. I saw posted in the showers at Mangalore an offer to sell a Volksplane in flying condition for $10,000. Long story short, I bought it , re registered it as AUF and flew it, 50 h/rs a year for 11 years. It was honest 60kts, well built (like the proverbial BSH!) and very safe. Went to Mang twice all around N/E Vic and sthn NSW. Narromine 8x and enjoyed the learning experience. It cost about $25/hr and wasn't very pretty. It could have been tarted up but all I did was to build a simple fairing for the turtle deck which improved the aerodynamics over the tail. Now the point of the story is that when I tried to find a new owner I got next to no interest! I know that most people wish for a fast modern plane and that the VP has some issues but hey! Isn't that what character building is all about? So there maybe some cheap alternatives to hiring if one is prepared to "think out of the box". Regards to all, Don

 

 

[justinm001]

thanks for the info everyone :)

 

 

[dodo]

Methusala's suggestion is very much along the lines I have been thinking of...

 

But it isn't terribly practical while still a student, because a two seater will be considerably more expensive.

 

And most of us get taught on higher speed, tricycle aircraft, and most of the cheap aircraft would require tailwheel and low speed endorsements.

 

Still, a two seater for 20-25K would be usable for getting those endorsements, if your instructor had the courage (or naivete!) to trust your new toy!

 

dodo

 

 

[Guest basscheffers]

I doubt many could tolerate the potential damage from a public liability claim that could run to $ millions. So, at least make sure you are covered for Public Liability.

Not an issue with RA-Aus, as every pilot has $1M 3rd party insurance as part of their membership.

 

 

[dodo]

If me, a Jab, and 100 liters of Avgas manage to do a million dollars of damage, my interest in insurance (and anything else) will have just gone up in smoke.

 

However, any dependents might care - so it is worth considering.

 

dodo

 

 

[dodo]

True. The answer is to assess your risks carefully. A million dollars of public liability insurance is relatively cheap (because the insurer knows you too have skin in the game) - but large sums, such as the "unlimited" amount government agencies used to require their contractors to hold is very expensive - because it scares the insurers by providing a large target for lawyers.

 

So a sensible medium is to find a reasonable level of insurance - reasonable being based on your own judgement...

 

dodo

 

 

[Guest basscheffers]

Giving $10M 3rd party for your car is easy; probably 40 million policies in Australia and nobody ever doing that much damage with a car. Kinda like offering a lifetime guarantee on a bag of nails. Nobody's going to claim it.

 

In RA-Aus, the $1M is 3rd party only and $250K for your pax.

 

The reality is, unless you are proven grossly/criminally negligent, any court is going to award the maximum you have in insurance (if it is a halfway reasonable amount) and leave it at that. Any structure you fly in to is (or should be) insured anyway. So the $5M paddock you destroy: their insurance pays the farmer $5M and they get $1M back off your insurance.