February 2009 Issue
Aviation Insurance Myths: Idiocy Isn’t Covered
Actually, it is. Although aviation insurers do deny claims, it’s rare, even when the pilot has done something profoundly dumb.
Test your knowledge of aviation insurance practices. Which of the following statements is true? If you take off 250 pounds over gross, you’re in violation of the FARs and your insurer won’t pay any claim resulting from an accident related to the overgross condition. On a long cross country, you blithely forget a weather briefing and fly straight into the icing layer from hell. You end the flight (alive and scared) in a farmer’s muddy cornfield. Your insurer won’t pay. Last, you forgot that your annual was due last week, but only after you landed gear up. Your insurer won’t pay. The answers? Probably false, even though the fine print in your insurance contract clearly allows the insurer to deny a claim, in many circumstances—perhaps the majority—they pay the claim anyway. Why? Several reasons. One is that laws governing contracts like insurance policies from state to state and some regulators take a more customer friendly stance than do others. Second, the aviation insurance business is a small (and shrinking) segment. A company with a habit of denying claims will soon find its business going elsewhere.
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