They say, "Those that have and those that will," are the two categories of pilots when it comes to an accident. I don't subscribe to that philosophy, as Costello Insurance has many clients who are loss free and will remain so until they quit flying. Even so, pilots realize the potential for financial loss due to pilot error, acts of God, or due to the negligence of others. To protect themselves, they transfer their risk of loss to an insurance carrier.

A loss to your glider can be emotionally devastating. It's like your child being hurt. Then you turn to your insurance carrier for help. Some people are wary from the outset as they don't know what to expect from the company. Perhaps the information provided here will make things easier should a loss occur.

After a claim is reported to the claims department, an adjustor is assigned. If the loss is uncomplicated, the insured should expect to deal with the home office adjustor exclusively. Other losses may cause the carrier to hire an independent claims adjustor who may go to the scene and develop information to be passed along to the carrier.

One might expect the adjustor to arrange repair estimates for the insured. Those days are decades gone. The adjustor may provide a list of repair stations to consult, but arranging for estimates is typically the duty of the owner. (It's pretty much that way with auto losses too).

While the insured makes the final decision on who will do the repairs, it is the carrier that will decide what they will pay. We recommend to our clients that they wait to start repairs until they know what the company will pay. Should the carrier and insured disagree on the amount of the settlement the insurance policy contains arbitration provisions. The cost to arbitrate is an expensive proposition for both sides. Costello Insurance has yet to have one client feel the need to go through the arbitration process. If the presumption that insurance companies try to take advantage of their clients was accurate, arbitration would be a common practice.

In addition to the cost of repairs, the glider owner often has an additional financial consideration that the owner of a Cessna, Piper, or Beech does not; transportation costs. In most cases powered aircraft can be repaired by mechanics that are within 100 miles of the insured. This is not so for gliders.

There are few glider repair facilities. An insured may have to pay a great deal of money to have the damaged glider transported to and from the repair station. That is where the insurance company steps in again. They may pay some or all of that expense. Conflicts arise when two or three repair stations give repair estimates. All three can do an acceptable job, but the insured has selected the highest bidder who may be hundreds of miles further away. Since all three can do the job, it's not uncommon for any carrier to offer to pay for a lower bid and the closer transportation costs. The insured would have to pick up the difference.

A "total" doesn't necessarily mean the aircraft is destroyed. It may be repairable, but the cost to repair plus the salvage value may meet the agreed insured value of the glider causing what is known as a "constructive" total loss.

The most common formulas used by aviation carriers to determine if a repairable aircraft should be totaled are:

1. Cost to repair plus the salvage value equal or exceed the insured value.
(The program uses this method.)

2. Repair costs meet or exceed 70% of the insured value.

Notice the controlling factor in both cases is the insured value. The price to be paid for being under insured may be a carrier totaling your glider when they might have paid to fix it had it been insured to the correct value.

In the event of a "total," the carrier will take the aircraft and try to sell the salvage to reduce their loss. Insureds can let the carrier know they want the salvage and ask to participate in the bid process. If the carrier agrees to sell the salvage back to the insured, the sales price is typically subtracted from the amount the carrier would have settled the claim for. If the insured value was $9,000 and the sale of the salvage was $2,000 the claim check would be $7,000 less the deductible. While some might say this is common sense and expected, others have said they didn't realize a carrier can take their glider after a total loss.

Once the carrier and insured have agreed to a partial or total loss settlement, the adjustor may send the insured a Proof of Loss form. This is the agreement spelling out final settlement details. It should not be signed by an insured unless they are satisfied with the terms of the settlement. The Proof of Loss form is then sent to the carrier who, on average, takes less than 30 additional days to make the payment. Most carriers including the program's pay even faster than that.

A short word to the wise. Settlements are sometimes delayed due to an insured not having clear title to their aircraft. If a lienholder, prior owner, or prior partner is paid off be sure to have them cleared off the title or the carrier may have no choice but to issue a claim check which has their name on it. Some insureds have had great difficulty in locating those long gone for their signature so the check can be cashed.

Claim payments may be made by draft or by check. If by draft the funds are not credited to the insured's account for a number of days. It must be sent to the carrier's bank who must obtain approval from the carrier to honor it. It just takes a few more days before the funds can be used compared to a check. It's good for an insured to know this for planning purposes. The Group Plan's carrier uses checks.

While the adjustment of a glider hull loss may seem complicated, it seldom is. It is still a "people" process which depends on good lines of communication between the insured, the repair station, and the claims adjustor. When communication is good, the process is relatively simple.

Soaring Magazine
(Updated 9/30/03)