Posted by: Christopher Turnbull | January 27, 2010

Policy Premiums After a Claim

OK, so you’ve had a claim. How is it going to affect your record and premium? After lengthy conversations with several underwriters from different companies, they consistently reported that claims are looked at on a “case by case” basis. As a result, just having a claim on your record isn’t the end of the world and may not affect your premium at all. It really depends on a number of factors. For example, was it controllable? Did you forget to put the landing gear down because you didn’t use your checklist or did the nose gear collapse as a result of an unforeseeable mechanical problem? Did the aircraft run out of fuel because you pushed the flight beyond the aircraft’s fuel limits, or did the engine stop because of unforeseen contaminated fuel from an FBO?

FAA violations are generally regarded in a similar manner. For example, an unintentional, minor altitude violation would be looked at differently than an intentional or gross violation of an FAR that resulted in an accident or long-term suspension of your license.

Other factors that may affect your insurance include the number and severity of claims. If you have claims every year that continue to exceed the premium you’re paying, chances are the underwriter is either not going to renew your policy or may have to increase your rates and/or deductibles in order to contain your losses. Other underwriting companies may not have an interest in providing coverage if your policy was cancelled or not renewed because of a bad claims history.

There are too many such examples and “what if” scenarios to be covered in one article. Underwriters do in fact understand that accidents occur and that’s why you purchase insurance. The bottom line; when an underwriter looks at your claims history, they look at the specific details including whether it was controllable, the number and severity of claims you have, and whether you’re taking the necessary steps to prevent future claims.

Let’s not forget to take all the safety measures possible to avoid an accident!

Safety attitude, training, checklists, not rushing … unfortunately, I can tell you as a former Director of Safety, trained accident investigator as well as an Airline Transport Pilot, the headline “Pilot Error Was The Cause Of … Or Contributed To” the accident is unfortunately true in many cases. “We” pilots can be our own worst enemy when we don’t follow that golden rule “Safety First”!

Part of that safety attitude includes the understanding that “it can happen to me”. We frequently speak with clients that remind us that “they’ve never had a claim” and don’t like buying insurance. This always gives me the opportunity to tell them about one of my clients that had been flying for 20 years without an accident. Unfortunately, 2 days after his new policy went into effect, he had an accident in his new airplane. At that point he was delighted he had insurance and extremely grateful for the claims response he received.

Keep in mind, there are many types of occurrences or claims scenarios and every policy is different. As a result, I encourage you to read your policy carefully and discuss any questions you may have with your agent. Paying more for a policy doesn’t necessarily mean you have a better policy; conversely, trying to cut corners and save a few dollars may cost you in the long run if you have a claim.

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