3rd Party insurance

[skybound®]

Spawned from another topic.

Referring specifically at 3rd party to cover any flying incident/accident.

[Arnulf]

Hi Skybound,
Skybound wrote in accident and incident thread:

I think that would play out in the following way:

- The insurers will settle the claim
- They will attempt to recover the funds from the negligent party.

Is that not the crux of the matter? You religiously pay your 3rd party insurance, then have a glipsie of some sorts, cause an awful lot of damage. The insurance fixes the damage to the third parties, decides that you were negligent, and presents you with the bill to fix the damage.
What does the fine print say? does anybody know?

Regards,
Arnulf

[skybound®]

Arnulf. Good question.

Negligence can also be a little subjective. For instance if you had done everything correct, and lets say your aerie after hand propping jumped its chocks, they may say the chocks were not big enough.

How far does one go? I guess it comes back to the reasonable man test again. Be reasonable and you should be okay.

Now define reasonable

Of those that have answered yes, I wonder how many include Pax 3rd party? The offering from MISASA excludes Pax.

[Arnulf]

Now define reasonable

Exactly. I could imagine that if it comes to the crunch, there will be a substantial difference between what you call being reasonable, and what the schmuck from the insurance calls reasonable. You can also rest assured that they can afford better laywers than what you can.

Regards
Arnulf

[Tumbleweed]

I don't understand.

3rd party simply means that in the event of somebody sueing you, you have an insurer who is carrying that risk.

Without knowing about your particular cover, I would assume that unless it can be proven that you did something intentionally or with gross neglect i.e. flying outside the parameters of your plane or licence, if anyone institiutes a claim against you, including your pax, simply steer him to your insurer.

[skybound®]

....if anyone institiutes a claim against you, including your pax, simply steer him to your insurer.

If you are relying on the MISASA 3rd Party insurance offering, the Pax is excluded and a claim against that insurance fund cannot be made. It is clearly stipulated on the 3rd party sticker that you receieve from them.

Don't get me wrong, the MISASA insurance offering is really great at the price. Bang for buck - difficult to beat.

[Tumbleweed]

Why would you want to include the pax?. You remain in control.

If he wants to institute some claim against you it would be as a passenger in a car. He must look to your insurar. I'm sure that the public liability cover most people take out along with short term also covers people against sueing you.

Take the runaway plane on the ground for instance. That owner should expect a claim against the stationary plane as well as the bakkie. If someone was injured to the extent of inapacity the 'culprit ' would look at his public liability cover.

[skybound®]

Delta VV you do raise what I have been thinking about for a long time regarding the use of the 3rd party that often gets bundled with your other short term insurance offerings (car and household). Would be interesting to see what the brokers say if this cover would work.

From what I recall when investigating it some while back, was that the bundled insurance could only be used if the claim was a result of use or occupancy of the insured assets.

For instance the 3rd party cover could be used if a visitor tripped over the skateboard and broke their leg in your house (and they had a successfull claim against you). If they did the same in your hangar, and your hangar not part of your insured assets on that insurance scheme, then the 3rd party cover would not be able to be used. So if your bicycle/hovercraft/jet ski/aircraft is not covered as an asset under your short term insurance then you may have a problem

But I state again - I am no boffin, and if you are relying on this bundled offering, a call to your broker may be a good idea. Let us know what the outcome is.

[Tumbleweed]

My (personal and layman) analysis of this is;

Legal pilot, legal plane- Flying solo, drift whilst landing on a farm strip, park your plane in the farmer's mansion.

A) Your medical cover - I guess as trauma accident - medical aid. Did'nt inform of flying-eish, best of luck, should still pay. Sick leave, paid - 36 days for last 3 years- after that, unpaid leave.

B) Trike write-off - In my instance, tough luck, no cover. With someone who has comprehensive cover - current book value less 20% excess.

Not new replacement value. current. How do they estimate book value? I presume current market value of 2nd hand 582 trike compared to escalation in price from last year's model to the latest. If there's no price escalation because of favourable exchange rate on motor e.t.c. from last year's and the advertised prices are ranging R130 K, deduct 20%excess = R104 k.

C) Farmer submits claim to his (umbrella) all risks policy. Once they clear that he will not be penalised for allowing trikes to land at his house - (in which case he's coming after you personally), they will cover his claim of R 800k and look to you for recovery. You refer them to Misasa, who's underwriters, once convinced that you were'nt showing off and can put it to 'wind', pay out the prescribed R250k or how ever much you required cover.

The balance, they will serve you with a letter of demand. Submit to your public liability cover, but I think that's out of it's framework.

They will first bombard you with letters of demand, scare the shit out you and if that does'nt work, will analise whether you can in fact pay, or offer some settlement taken off your earnings for the rest of your life. Once you tell them to get stuffed and carry their own risk, they will decide whether the court will rule in there favour, but generally add it to the pile of taxi drivers who total cars and are not worth pursuing.

Never say I'M SORRY'. Thats admitting liability and your insurers could hold it against you, coz they can't wangle themselves out of the claim against them.

Say "SHIT, F#&*k, EINA" but never "Its my fault, don't worry, I'm insured, how can I make it up to you?"

D) You're dead. Did'nt endorse your new flying hobby/ penalty to your life cover - no pay out. Your insurance covering your house bond -no settlement. Your widow will have to continue servicing the bond or sell and move in with the new boyfriend - who does'nt fly

E) Flying with pax - Joins you in the farmer's house. He's by himself, own medical, loss of earnings e.t.c.

His death would probably be settled by his life cover coz he was not the pilot and so not require the flying endorsment.

You can't phone your insurance every time you go to the Rand Show, take a once- off pleasure flip in a licenced plane, skiing e.t.c. If you had charged a fee, then I think the pax's insurers are entitled to some recourse.

F) The ousie in the kitchen meets the plane head on, drops the tea and fails to recover.

I think her many dependants would claim against the pilot, CAA, plane, farmer and all the benificiaries. That to me is 3rd party.

The farmer's insurance should cover under his public liability and then look to your public liability for compensation and probably end up flipping for it. He'll still have k@k from the farm workers union for dangerous workplace and no warning / signage e.t.c.

Indemnity. My analysis of those forms you sign before you (pay / profit)bungee jump, can't miss the visible sign " At your own risk, not responsible for ... is K@k.

The insurers will settle the claim, but if the operator was found to have been operating outside of their licence, i.e. to the letter, safety strictly not as prescribed, the operator was not certified / trained, the equiptment is anyway defective, the insurers are definately going to pursue them for recovery.

So whether you have your pax sign an indemnity form or not, as long as you fly legally and within normal ( weather) boundaries, he accepted his own risk and and his insurers can fu%&k off, they're only trying to recover from their pay out.

My 1Zim $ worth.

[skybound®]

I can help you out on point B. That I do have some experience with insuring aircraft.

B) Trike write-off - In my instance, tough luck, no cover. With someone who has comprehensive cover - current book value less 20% excess.

Not new replacement value. current. How do they estimate book value? I presume current market value of 2nd hand 582 trike compared to escalation in price from last year's model to the latest. If there's no price escalation because of favourable exchange rate on motor e.t.c. from last year's and the advertised prices are ranging R130 K, deduct 20%excess = R104 k.

If it is standard aircraft insurance - it works completely different to all other short term asset insurance such as your motor car.

You as the aircraft owner decides the value up front. That is - this is the amount I want you Mr Insurance, to pay me in event of a complete write off. They then work a premium out as a percentage of that (self declared) value.

This then ensures that you put your own checks and balances in place and that you value it correctly.

For instance take following scenario:
Real Market value: R200k
You insure it for: R100k
You have an accident. Damage is R50k

Mr insurance will give you a check for R100k as that is what you insured for. They will take the damaged aircraft - pay the R50k and sell for R200k. They make a R50k profit.

This has happened and it is quite clearly worded in the insurance contract -not even in fine print.

If you over insure - say R250k, well Mr Insurance scores again as you are overpaying on the premium which is a percentage of market value.

Basically it encourages you to value your aircraft correctly in the first place.

The 3rd Party - can only suggest again to contact the broker.

At end of day - they are all grudge purchases aren't they?

[Tumbleweed]

Worse than grudge purchase. Ultimately acceptable overhead.

Imagine if we could recover / pool / dividend insurance.

Don't get me started on bond interest/ interest on interest. Biggest plague we have. You can pay off a loan over 5 years but most have this bond noose around their necks for most of their working lives. 2ns bond. 3rd bond. Somme k@k

[skybound®]

Imagine if we could recover / pool / dividend insurance.

It can be done. At our fixed wing club, we have 6 aircraft and we have gone the self insurance root. We have for the past two and a half years been only insuring for ground risk.

We put the saving on premiums into a self insurance fund. We have sufficient in our fund to cover a total loss of any one of our aircraft.

It took us a while to get there, as we started off by self insuring only a portion - for instance on the cheaper aeries we went 50/50 and the more expensive 80/20. We adjusted these numbers every year as the self insurance fund grew stronger. Took us about 7 years to get to the full strength situation we find ourselves in now.

I have a few mates who have also pooled their short term household and car insurance premiums and effectively run their own 'fund'. Guess you need some stiff rules, and be totally comfortable with your mates in order for it to work.