You can in the UK.
In the case of a total loss (e.g. a ditching) you get the agreed value, not the market value.
The upside is that is gets you a payout which should enable you quickly replace your aircraft. Anybody looking to buy quickly is going to pay over the top.
The downside is that – in case of not a total and obvious loss, like a ditching – the insurer has an incentive to repair the aircraft no matter how long it takes, so with some types you could be grounded for months or years.
The premium is probably a bit higher…
You cannot in Germany. The blue book is used as a reference. In case of a claim that results in a repair, they check if you’ve under-insured and would then only pay pro-rata. Therefore on every substantial upgrade (e.g. avionics), you have to adjust the hull value. A lot of people are not aware of that trap.
You can do it in France which is why my boat business has its boats insured there — above what would probably be the market value but at a value that would allow us to quickly get replacement and keep the company going, whose revenue depends 100% on the boats. I don’t think such a setup would be possible in Germany.
I agreed on a fixed value with my insurance, and they have confirmed (more than once) that they will pay that amount if I total the airplane.
Yes, Gerling. I guess you are right, but wouldn’t a UK insurer deny insurance if the proposed value was completely unrealistic?
No, under UK and French jurisdictions, you can insure your underwear against fire for $1m. The insurance contract can be detached from the insured object and its value. That’s a liberty the German insurance law does not allow. There are pros and cons to both systems.
If you insure your aircraft at €50k in Germany (according to the blue book with some discretion) and you add a new instrument panel for €30 but fail to tell your insurance company and now have a shock load inspection for 20k€, they will only pay you 50/80*20 = 12.5k€.
you can insure your underwear against fire for $1m
I don’t think that would be possible, because of the incentive for fraud. The price range has to be something reasonable.
If you insure your aircraft at €50k in Germany (according to the blue book with some discretion) and you add a new instrument panel for €30 but fail to tell your insurance company and now have a shock load inspection for 20k€, they will only pay you 50/80*20 = 12.5k€.
Same here (UK). If you insure a 50k-real-value asset for 25k, they will pay out only 12.5k – because they will argue that you paid a premium for a 25k asset, they were at risk for 50k (so twice as likely to incur a loss than if the asset was worth 25k) but since they got only half the correct premium they will pay only half i.e. 12.5k.
The shock load scenario raises the issue of Betterment and is potentially complicated.
Adding avionics is interesting. Would a German insurer really think that adding 30k in eye candy increases the MV by 30k? It increases it by only maybe 10k.
It is noteworthy that in some markets insurers are now asking for a “professional” valuation to support the insured’s assessment of the actual value. From the insurers view point that seems reasonable, if a pain from the insureds pov.
Peter wrote:
Adding avionics is interesting. Would a German insurer really think that adding 30k in eye candy increases the MV by 30k? It increases it by only maybe 10k.
That depends on the case. You have to inform your insurance broker and agree on a new (or same) value. Otherwise they can come with that 50/80* repair cost equation. In one case I had to increase the hull value, after another avionics project, we agreed that the increase in value would be offset by depreciation and the hull value remained.
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.
When i did the avionic upgrade, I provided the full bills to the insurance, together with the estimate of Jimmy Garrison, which is pretty much acknowledged as a good base for Mooney evaluations but does, in the automatic version, not include stuff like an Aspen and a complex AP’s. My argument was that if someone crashed my plane and I wanted to replace it, that is what I would have to pay. They agreed without any problem.
