Defining The Power of HOPE
Earlier this year, we launched a short video series to help define the Power of HOPE. Our first video described “Our Path to Excellence” and reviewed how the company was founded and how we got to where we are today. We’re pleased to release our next video that highlights some of our primary strengths. What is it that we do that truly sets us apart from the competition? Why would you trust us with the placement of your important aviation insurance program? Click here to watch!
What Does it Cover?
This generally misunderstood insurance is a valuable risk-management tool for aircraft owners as well as FBOs. A definition of Hangarkeeper’s Liability (HKL) is a good starting point. In layman’s terms it covers an insured’s legal liability for damage to a non-owned aircraft in the insured’s care, custody or control. Generally this coverage is carried by commercial aviation businesses such as fixed base operators (FBO), aircraft repair facilities and airport operators but is also carried by corporate flight departments (e.g. for those departments that allow Board Members to store an aircraft in the company hangar while in town).
A recent loss will help illustrate the issue. A client called to report a large dent he discovered during pre-flight on the vertical stabilizer of the insured King Air 350, which was housed in a large hangar operated by a brand name FBO and used by multiple companies. The flight was cancelled and a charter arranged for the owner.
The client notified the FBO that the mishap must have occurred in their hangar since the damage was not there during preflight inspection prior to their last flight.
FBO management stated they would investigate but suggested that the client also submit the claim to the owner’s insurance company. Line service personnel were interviewed and lo and behold, no one recalled any scenario where they could have damaged this aircraft. After some sleuthing of his own, our client discovered what appeared to be corresponding damage on the horizontal stabilizer of another aircraft that resides in the same hangar. His theory: a lineman pushing the other aircraft into the hangar banged it into his.
Unfortunately the client’s supposition remained a theory without proof. His firm’s insurance company paid for the damage with the following negative consequences:
The loss now resides with the aircraft owner’s loss history, potentially impacting his future insurance program.
The aircraft owner does not get paid for any loss of use or diminution of value.
There is no compensation for lost time related to the aircraft repair process.
In fairness to FBO’s and Repair Facilities, many aircraft owners are also prime customers that they are motivated to make happy. When one of these customers “notifies” the FBO they have discovered damage to their aircraft and expect the FBO to take care of it, many well-meaning but uninformed facilities manager tell the customer they have insurance coverage that will respond.
While that statement is true, remember the FBO’s insurance is liability coverage. If it cannot be shown that FBO’s negligence caused the damage while the aircraft in question was in their care, custody or control, the FBO’s Hangarkeepers Liability insurance will not respond. How does the FBO know the aircraft wasn’t damaged at another airport while on a trip?
Neither party wants their insurance to be responsible because of the impact to their insurance program. Unless there is clear liability on the part of the FBO, it is considered best practice for both parties to turn the claim into their respective insurers for action. Generally the aircraft owner’s insurance company will pay to repair the direct damage and then subrogate (or go back against) the FBO’s insurance if they feel the FBO’s negligence caused the damage.
The FBO’s insurer will then either agree (thereby reimbursing the owner’s insurer for the repair cost) or if they don’t feel their client [FBO] was negligent, deny liability and refuse to pay. That action causes the aircraft owner’s insurance company to decide whether it makes sense economically to sue the FBO for damages and let a court of law decide, or drop the claim altogether. The decision will depend on how compelling the evidence is against the FBO and how large the claim amount is potentially to be recovered.
Perhaps the biggest elephant in the room is the diminution of value to the aircraft due to damage history as well as loss of use. If the FBO is found to be negligent and their insurance responds, their Hangarkeeper’s Liability policy typically covers diminution of value/loss of use claims (assuming you didn’t sign away those rights in a hangar agreement). Otherwise, the owner’s insurance policy must respond and there is no coverage for diminution of value or loss of use under an aircraft hull & liability policy.
Neither party wants such losses to occur. Many FBO’s now utilize cameras on their ramps and shop areas for protection. The pilots for aircraft owner’s must remain keenly vigilant in every pre-flight, looking for any damage to their aircraft, or run the risk of having to eat a claim that wasn’t really theirs. Beware my friends.
And The Beat Goes On
As an aviation insurance broker, nothing continues to amaze me more than the requests I receive to add a pilot to an aircraft owner’s policy and the indignation of the person making the request. Why, they ask, do I have so many questions about the pilot’s experience and credentials?
The vast majority of aircraft accidents result from pilot error. I know that and the insurance companies know that, but maybe aviation professionals haven’t done a good job of educating aircraft owners of that fact. Many companies spare no expense maintaining their aircraft to top mechanical standard, and then continually gripe about the cost and inconvenience of initial and recurrent training for their pilots.
We recognize that more than 85 percent of aircraft accidents are caused by pilot error. Simple logic should tell us that we should focus our time and money toward making sure our pilots are the most qualified, well trained, safety-focused team we can put in the cockpit. Hence the need to ask questions and expect satisfactory answers when addressing a client’s questions about adding an additional pilot to the list of approved aviators.
Furthermore, if coverage under an insurance policy can only be denied when there is a claim presented, and if more than 85 percent of aircraft accidents are related to pilot error, then the most likely area of claim denial will be an unapproved pilot flying the aircraft. It is a savvy aircraft owner who recognizes the importance of this fact and makes certain any pilot flying the company aircraft meets the pilot requirements of the insurance policy to the letter of the law!
Yet time and again, I can hear the exasperation in a caller’s voice at not being able to simply add a pilot without having to answer a bunch of insurance questions or complete a pilot form. Generally the urgent request is caused by time pressures. The boss has a trip this weekend and the regular co-pilot is sick or on emergency leave. Finding qualified pilots for a particular make and model aircraft on short notice is difficult, particularly if the aircraft is not based in a large metropolitan area.
Let’s illustrate by imagining I receive the call to add a pilot, and I start asking questions that I know the underwriter will ask me. The conversation goes something like this:
Me: How many hours does the pilot have in this make and model aircraft, and when did he last complete simulator based training for this make and model aircraft?
Caller: “Oh, this pilot has 200 hours in LearJets and completed simulator based school earlier this year”
Me: So the 200 hours in LearJets were in your make and model, Lear 60, and the sim school was also Lear 60?
Caller: “No, it was all in a Lear 31, but this guy is an airline pilot and a guru in our area, and the FAA only requires him to have three take-offs and landings to act as SIC (Second in Command), so if he’s good enough for the FAA, he should be good enough for the insurance company! These darn insurance companies are in cahoots with the simulator training companies! It’s a racket. So much bureaucracy!”
And so it goes. The truth is all aircraft are different, even within the same make and model designation (different avionics, panel layout, etc.) The FAA doesn’t have any money in the game, so their requirements will obviously be different from the insurance company. There are a number of simulator training companies, all in competition with each other. But the conspiracy theory survives.
WHEN PARTIES SUE
Consider a plaintiff’s attorneys delight after a loss. In front of a “jury of your peers”, he or she states “It is considered best safety practice by flight departments that all pilots complete annual simulator training for the exact make and model aircraft they are flying, and the very best flight departments do this drill semi-annually. Yet, this aircraft owner engaged a pilot who had never even been to simulator training for the Lear 60 aircraft, and now this resulting accident has robbed my client of her husband”.
In the real world it is virtually impossible for many flight departments to always have a well-qualified, simulator-school current (in the exact make and model aircraft), and experienced PIC and SIC back-up pilot for every flight. This situation requires us to walk a legal tight-rope when it comes to the pilots we use. In the end, our best option might possibly be to use the legal “reasonable man” theory. Can you convince a jury that the pilot you used would be considered a reasonable back-up pilot by any flight department?
New & Noteworthy:
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“Simply the best! After 18 plus years in this industry I have yet to find a better group of folks to work with. The knowledge, integrity and respect with which they operate is second to none.”
Director of Aviation
Challenger 300 Operator
Welcome New Senior Account Executive Bernadette Manglaris!
Our “2020 Vision” is one part continuous improvement and one part profitable growth. We are pleased to welcome another strategic addition to the HOPE family who will help us achieve that vision. Bernadette Manglaris joins our firm with over twenty years of high-level aviation insurance experience. Bernadette’s expertise includes handling complex risks such as air ambulance, air cargo, charter and airline operations. In addition, she brings deep knowledge on aviation workers compensation coverage.
Say hello to Berni at (803) 404-6162 or send an email to help welcome her aboard![email protected]
HOPE Begins Implementation of New Agency Management System Technology
One of the seven strategies that make up our new five-year strategic action plan is built around efficiency. To that end, effective April 1st we began phasing in a new technology platform designed to enhance efficiency, make us smarter about our business and improve the overall client service experience with our firm. Utilizing the popular Salesforce subscription-based technology solution, a dedicated project team led by our own Samantha Hayford has been hard at work behind the scenes laying the groundwork to get us to implementation. We will be rolling out this new technology in phases over the next couple years as we continue “to get better at what we do so we can do more of it!”
HOPE-USAIG-BMW “Performance Program” Highlights Bizav Safety Initiative
Earlier this month, Hope Aviation Insurance partnered with USAIG to host a one-day “Performance Program” designed to raise awareness about Performance Vector, a value-added safety initiative for certain business aviation clients of USAIG. The event was held atBMW’s Performance Driving School near Greenville, SC and featured a morning business meeting to outline the features and benefits of the Performance Vector safety program. The afternoon session was spent on the track driving a variety of hot-handling BMWs, including a “hot lap” ride with BMW instructors! Program participants came away with helpful insight on getting higher performance out of their own safety efforts while experiencing the thrill of driving several high performance automobiles.
The “Better Aviation Insurance Deal”: Is it Really Such a Good Deal?
Searching for a better aviation insurance deal is wise. But getting a legitimate apples-to-apples quote is exceedingly difficult. Unless you are a savvy and educated insurance buyer, you may save a few dollars only to discover after an accident you’ve lost far, far more, cautions Stuart Hope.
Senior Account Executive Kelli Feathers Celebrates Ten Years at Hope Aviation!
We have faithfully confessed through the years that the REAL power behind “The Power of HOPE” is our bench strength – not just our Brokers but especially our Account Executives. This month, we’re pleased to celebrate another milestone as Senior Account Executive Kelli Feathers has now been with the firm for ten years. Kelli has been and continues to be a key part of our team, helping manage our Pleasure & Business department and directly servicing a diverse book of business while also serving as an effective mentor. Plus, she’s hard at work finishing the comprehensive Associate in Insurance Account Management credential (AIAM). Congratulate Kelli by ringing her up at (803) 404-6164 or send an email to:[email protected]