Mooney_Driver wrote:
In Switzerland you can also do agreed value. You have to prove it however if you feel it is outside the Bluebook or other estimates.
What you are actually saying is that in Switzerland you can not do agreed value. Agreed value is a value that is totally detached from the object and does not represent its value but something you agree on, typically more than the object’s value.
Ok, then what is it if your policy says on a total loss you get sum x? No calculations on time value, depreciation, nothing, total loss = fixed amount. And that fixed amount needs to be agreed on, yet the insurance will want to back up your claim of value with substantiation. That is what I have.
I understand that the way it is in some countries (or with some insurances even where agreed value is allowed by law) is that they will pay you the depreciated value according blue book, also the question whether yours is a total loss or not is if decided on the basis of whether repair costs exceed the blue book time value, not the value you want to get and pay for.
My primary concern is that after a total loss of the airplane I can replace it with one of the same capability and equipment. As I know what it cost last time, I have a pretty good idea what it will cost next time.
I know that this is different for a car for instance, as with a full collision damage insurance you will always only get the equivalent of the blue book value back.
The cost of replacing a plane with nice kit will always be way more than its market value – because money spent on nice kit is mostly “wasted” as soon as you do it.
I insure my TB20 for GBP 195k, agreed value. I might get 140k for it (the MV) but to replace it I would need to buy a TB20GT for say 120-140k and spend some 30-50k on it to bring it up to the same standard. And that assumes it has a brand new engine and prop, etc. So we are talking about just the avionics here.
Agreed value insurance is not acceptable in some states because there is an element of gambling involved, whereby you could be much better off as a result of a claim. Pure insurance would only return you to the same financial position you were in prior to the loss. However paying more than the strict loss is now very common and is quite normal in residential insurance for example.
Agreed value policies for aircraft is a very practical way of arranging insurance, it avoids the huge arguments that occur when the insurance is Subject to Average (pro-rata deduction for under-insurance). Also you don’t have to try to value the aircraft (the only truly effective way to value an aircraft in the present market is to sell it to a willing buyer – not very practical if the aircraft is destroyed!). Agreed value would not work for many items because of the risk of fraud, but this risk is much less for aircraft. For example vehicle fraud often involves simulated theft or arranged collisions, neither of which is very easy to arrange for an aircraft.
achimha wrote:
§ 74 VVG, applicable to all insurance binders under German law
Would the second section really by applicable in the case of your boats? If the higher agreed value is intended to make a quick replacement possible, it shouldn’t be a “rechtswidrigen Vermögensvorteil”. OTOH I assume this has been tried in court?
This is a difficult one. If Peter actually went and re-created his high-spec TB20 after a total loss, and does have no money left over, it will be hard to argue that he derived any benefit from this.
If Peter walks away, takes the money and buys a house instead it will the other way round, because he could never have sold the aircraft for the “agreed value”, and in some jurisdictions this would be illegal.
Somewhere between these extremes, a very fuzzy line is crossed (how about using the money as a downpayment for an SR22?)
If you’re based in Europe (and possibly worldwide), try www.visicover.com for competitive cover.
They’re gaining a reliable reputation, and quotes are negotiated 100% online.
They offer attractive terms for both Agreed Value* up to £750k and Betterment** – see below for definitions.
I have no connection other than moving our insurance to them when our current cover expires.
*This is the maximum amount payable in the event of loss or damage to the aircraft hull. You should select a level which reflects the full market value of the aircraft, including all fitted equipment. A higher value will mean a higher premium but if you set the agreed value too low then you may not have sufficient funds to buy a similar replacement aircraft in the event of a total loss.
The minimum agreed value we can accept is £5,000 while the maximum is £750,000.
**Under the standard hull cover, if a repaired or replacement part is required following an insured loss or damage to the aircraft, the amount payable under the claim is normally reduced to reflect the wear and tear the part has suffered. Thus if a £10,000 propeller is damaged and it is 70% through its ‘life’ then the claim settlement may be £3,000 with the owner paying the difference. The betterment cover option means such wear and tear would be ignored so you will normally be paid the cost of a new part, minus any deductible in force.
Within any group of owners of a given type -
Anyone who doubts #2 should post in their favourite type specific forum, under a previously unknown name (or via someone they know who doesn’t post there much), saying they are looking to buy, and watch who PMs them saying they would sell 
One reason for insuring for agreed value is that, obviously, one may need to buy a plane fairly quickly and, less obviously, one may end up having to buy one which is being advertised at a silly price.
This scenario is not one which normal insurance addresses – unless you can insure for a higher agree value.
Cobalt wrote:
If Peter walks away, takes the money and buys a house instead it will the other way round, because he could never have sold the aircraft for the “agreed value”, and in some jurisdictions this would be illegal.
There is a common misunderstanding that insurers can pay on this basis if the contract is not on an agreed value. It is not true, unless they can prove that the insured was a willing seller of the aircraft at the time of loss. Otherwise they must pay the sum for you to buy a reasonable replacement aircraft. In a weak market selling and buying values can be dramatically different.
