War, Terrorism, and Allied Threats

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N9657
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War, Terrorism, and Allied Threats

Post by N9657 »

Just got an e-mail from my insurance co. reiterating they do not cover war, terrorism, or allied threats. So if a terrorist steals my plane I'm not covered? What the hell are allied threats? Seems like the only thing Insurance company's are good for is collecting premiums. Sorry Chris but my property is destroyed, my building undermined, and yes "that's not covered"
Pilots aren't good cause their old, their old cause their good.

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Post by Ric Rozum »

I agree. They sure know how to cover their ass and leave yours haging out in the breeze.
Read and understand your contract. Remeber THE LARGE PRINT GIVETH, AND THE FINE PRINT TAKETH AWAY!
1973 M4 220c

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Lowflybye
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Post by Lowflybye »

Interesting how you are accusing the insurance companies of "covering their ass and leaving yours in the breeze" because they advised you that something is not covered before you have a loss. That hardly seems like leaving your ass in the breeze to me...sounds more like they are trying to cover your ass. What you failed to mention is that the same email also advised you that coverage for those risks is available should you choose to purchase it. It is your choice whether or not to cover your ass or leave it hanging. You should be thanking your agent (or Avemco) for watching your six by reminding you of this exclusion and the available coverage before you have a loss instead of complaining when they keep you informed.

War, terrorism, and allied threats have never been covered on the basic policies. It was not until after 9/11 that the Terrorist Risk Insurance Act was put in place by the government requiring insurance companies to offer many of these coverages. Most people don't purchase it because they are of the mindset "what are the chances that will happen to me". Sound familiar?

By the way, allied threats, along with war, hi-jacking, and other perils are all defined in your policy under the WAR, HI-JACKING AND OTHER PERILS EXCLUSION should you take the time to read it.

As mentioned before, the coverage is available to purchase, but most never do...much like flood or earthquake coverage...it will never happen to me.
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Post by Ric Rozum »

Lowflybye,
OK, poor choice of words on the first line. It does not change the fact that we all have heard the horror stories about how some claims get settled. Loop holes can be used be the insurance companies to get out of paying for some things.
For example; I have a shoulder harness installed in my plane. Its not approved for the M4. I'm trying to prevent a head injury (that would save them money and/or my life), but at the same time I'm flying an airplane with an unapproved modification. Is that a loop hole or what.
Another example is a friend of mine was in a crash that almost killed him. When a claim was filed they were told there was no policy. The owner had called in the day before the accident and cancelled the policy. This was in the early 70's. Back then didn't a cancellation have to be in writing?Anyway doesn't it seem odd that a person would cancel their insurance the day before the first flight of their homebuilt? My friend never got a penny!
Thats why I'm leery of them.
1973 M4 220c

cs409
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Post by cs409 »

Just got an e-mail from my insurance co. reiterating they do not cover war, terrorism, or allied threats. So if a terrorist steals my plane I'm not covered? What the hell are allied threats? Seems like the only thing Insurance company's are good for is collecting premiums. Sorry Chris but my property is destroyed, my building undermined, and yes "that's not covered"
_________________
Pilots aren't good cause their old, their old cause their good.

My first thoughts are this. Why did his agent email him about this? Does his
Agent know something? Or is he trying to just covering all bases. Whats sad
Is the insurance company do cover their ass but do offer help at an extra
Cost and in some cases more loop holes. SO If your plane is stolen and later its in a crash and kills the person
that stole it and a family watching TV and its discovered the
Thief is a known terrorist but his actions where not terrorist
connected but just a joy ride that the insurance company
Would not have to cut a check? If the answer is yes then
Thats hanging you out . What if someone steals your plane
flys it into the IRS building due to a tax issue would
The insurance co. PAY. Whats the difference with this person
and a terrorist? Both actions intended to inflict fear, death
and make a statement. The loop hole the insurance company
Uses is a single word here. So the end result in either case is
Lost of property and maybe life but if they are
Wearing a blue shirt we pay if a red shirt we dont pay
But we sell a red shirt addition at and extra cost. Well thats my 2 bucks worth

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Post by Lowflybye »

cs409 wrote:
My first thoughts are this. Why did his agent email him about this?
I cant speak for all agents, but we did a blog on it and sent out an email blast to clients because of the recent headlines found on most any news source.

Fox News
CNN
AVweb
AOPA

Shall I list more?
cs409 wrote:Does his Agent know something?
Yes...he knows that the risks mentioned in the news articles are specifically excluded on your policy because it is his job to read, and understand your policy. He also knows that most likely you did not read your policy as you did not ask him any questions about it so you probably do not know that these risks are excluded.

The emails, blogs, etc are simply a reminder to clients and others that these risks are not automatically covered, but can be should you wish to purchase it. I guess we all could have kept our mouths shut and just assumed that you all read your policies and understand them since we rarely get questions about the coverages offered. Of course this would further fuel the "loophole" and "small print" fire if one of their aircraft happened to be used for one of these excluded activities and their claim was denied due to the exclusion that they never took the time to read.

cs409 wrote: the insurance company do cover their ass but do offer help at an extra Cost and in some cases more loop holes.
Um yes, why is that surprising or wrong? Every year on renewal the underwriters determine various limits of "help" that they are willing to offer and you choose which limit of "help" you want to purchase. The more help you choose, the more it will cost. Unfortunately many aircraft owners make their choices based strictly on price and never ask anything further. I would guess that only 1 out of 25 clients ask me which policy has the best coverage instead of which one has the best price.

An insurance policy is simply a contract between a company and a customer in which a service (risk transfer) is offered for a price. Any changes to the original contract must be agreed to by both parties and any limits above what it listed or risks that are specifically excluded in the contract are not covered. If you want additional services such as higher limits, additional coverages, or changes to the risk then it will cost an additional premium or may not be offered. This is no different than any other business.

Insurance is not a charity and the companies are not obligated to offer their services. If you don't like a specific company's policy then by all means don't buy it...however, if you buy the policy then at least take the time to read through it and know what you have purchased. If you have questions, ask your agent...that's what you pay him for. After a loss it is too late to make changes, but beforehand (as in the case with the origin of this thread) you can still take steps to cover your ass.
Ric Rozum wrote: I have a shoulder harness installed in my plane. Its not approved for the M4...Is that a loop hole or what.
Did you list it on the application when it asked if there has been any modifications from original that have been done to the aircraft? If so, then you have disclosed it to the underwriter and it should not be an issue. If not...why not? By answering NO to the question you have actually committed fraud in which case a denied claim could be the least of your worries. In all actuality, unless the shoulder harness has something to do with the claim it would be a non issue...for instance, if you ground loop causing a prop strike and wingtip damage the shoulder harness had nothing to do with the loss and is treated as such. However, if your passenger gets strangled by the shoulder harness during an accident and you never disclosed adding them to the aircraft you may have a very different story.
Ric Rozum wrote:Another example is a friend of mine was in a crash that almost killed him. When a claim was filed they were told there was no policy. The owner had called in the day before the accident and cancelled the policy. This was in the early 70's. Back then didn't a cancellation have to be in writing?Anyway doesn't it seem odd that a person would cancel their insurance the day before the first flight of their homebuilt? My friend never got a penny!

Thats why I'm leery of them.
I have seen people do stranger things than that...sometimes I get off the phone and simply shake my head. :roll: I have been doing this for 10 years now and I have not yet seen a claim be denied that I can recall. On the contrary, I have seen claims paid when it was obvious to all involved that it was fraudulent, but often times it is cheaper to pay the claim than to defend the position in court. I have heard stories such as you mentioned that were to have happened long ago and they may very well be true. In todays litigious society and digital media world, if an event such as that were to happen with an insurance company it would spread like wildfire and their reputation would be shot...not something that they can afford to let happen.
"To most people, the sky is the limit. To a pilot, the sky is home."

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Post by cs409 »

Without insurance you will end up in the
Wind. Your doing a great job defending
The insurance industry. But after going thru
3 hurricanes, Rita,Humberto,Ike(4 if u count katrina,, wifes GM/GP and
Other family) i have no respect for and
Insurance industry that SCREWED so many
And this space is to small to list. I know
That you should read. Ask question etc but
Even with all that they do at times twist turn
Etc to do their part to pass the buck. We where lucky
On our insurance issues after three storms
Hit us here in south east texas. Many others in
Our area didnt fare well and many still
R fighting. Heres an interresting one. 2 houses
Side by side. And both have same ins. Agent and same policy. Basic word for word. Both totals. One
Got a check fast and was happy. The other just
Finished getting fixed with lawers at side. Both same
Agent. Only difference was claims filed 2 weeks apart
And different adjusters( each housed was adjusted as totals without any question)Our Family
In new orleans didnt fare as well with
Insurance. O well. Cant be with out insurance. And yes lots
Of bad people trying to screw insurance also. Another
Buck and half

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Post by Lowflybye »

I'm not necessarily trying to defend it, just help understand it.

I cant speak to the Property & Casualty side of insurance too much as I specialize in light aircraft...but you hit the nail on the head when you said 2 different adjustors. Having the same agent made no difference as it is out of his hands for the most part once the claim happens. Many insurance companies hire independent adjustors as needed and when a disaster such as hurricanes hit. In these cases they often contract with many adjustors that are not their normal in order to meet the demand as quickly as possible. Unfortunately this can often lead to the problems that you have mentioned as the adjustors may not be familiar with the policy coverages, procedures, etc. I'm not trying to make an excuse for it, just give you an idea as to why it may have happened. Scenarios like these leave the agent's reputation tarnished (even as a bystander in this case), does nothing good for the insurance company themselves, and hurts the entire industry.

I have heard horror stories from the Katrina disaster where some of the insurance companies were trying to deny claims based on the flood exclusion definition to mitigate their losses. While there were some valid denials based on this exclusion definition (and people elected not to purchase the coverage) there were also many that were not. It was these invalid denials that put another black mark on the industry and caused valid denials to be paid anyway due to government intervention.

Having said that, there is a big difference in the P&C world and the Aviation world. There are countless P&C companies writing insurance and only a small number (15) writing Aviation. Of that 15 the number is further diminished depending on the type of aviation risk presented. It's a comparatively small "family" in aviation insurance where most of the players know each other and may have even worked with each other at different companies in the past. Shady dealings are hard to keep hidden in our "small" world and can ruin your career very quickly unlike the P&C world.

I am not naive enough to think, nor will I sit here and say that it does not happen in or world, but I will say that in my experience it is the exception to the norm rather than the other way around. For instance, what other form of insurance do you know of where agents and underwriters participate in forums like this and answer most anything asked of them knowing the flame suit may not withstand the heat. :wink: I (and many others like me) do this because we love aviation and this is our way to pay for our addiction. I get paid to help fellow aviators, hangar fly on each phone call, spend time on forums like this, and participate in fly-ins, air shows, etc. Not a bad gig if you can handle being just one step above the FAA in some pilots minds. :lol:
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Post by cs409 »

U make great points. Your also super helpful
On this site. Now that said read
My first response to this subject and try
To answer the two thiefs/accidents and tell
If the insurance would cut the check
On one r both etc. R would this fall
Under the extra coverage etc. Thanks.

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Post by Lowflybye »

cs409 wrote:read My first response to this subject and try To answer the two thiefs/accidents and tell If the insurance would cut the check On one r both etc. R would this fall Under the extra coverage etc. Thanks.
I'll make a deal with you...I will pull the War, Hi-jacking, and Other Perils Exclusion when I get to the office tomorrow and answer your questions for you with the proper recerences and explainations. In the meantime, pull your policy and read this same document and let us know how you interpret those 2 sceanrios with regards to how the claim will go and why.
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Post by aero101 »

From what I've seen of the general aviation payoffs, is that they are usually more then fair and as Lowflybye stated, most often pay out on questionable items as well, rather then tying up their legal dept's... And the bottom line is that we all pay for that if you buy insurance. I've never heard of ANY standard policy of any sort that automatically covered acts of war or terrorism?? And if you can't afford to spend the few bucks required to get those shoulder harnesses approved by either a field approval (which is relatively easy) or put in something that's STC'd, you probably shouldn't be flying anyway? Personally, I would not risk any passenger injuries of any sort with an unapproved installation of such importance as a restraint system as the liability issue would be unquestionable by a judge and jury in my minds eye? If it's an approved installation, installed per the approval, the insurance company is going to unquestionably pay as required, otherwise you're on your own....
Jim
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Post by N9657 »

So back to my question. What the hell are "Allied Threats" and who gets to define them. Why is it ok for the insurance company to charge extra for these risks? A drunk steals my plane and I'm covered a suspected terrorist steals it and I'm not. Are there more terrorists than drunks? I would like to know how many light aircraft terrorist planes were used in acts of terrorism. It seems to me this is CYA in the extreme. I know insurance agents feel they provide an essential service, and they do, but the company can write it's self out of it's obligation and then charge extra if you want coverage. Notifying you dosent make it right.
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Post by Lowflybye »

N9657 wrote:So back to my question. What the hell are "Allied Threats" and who gets to define them.
Allied Threats does not appear in any of the aviation policies that I am aware of as it is not standard wording on the AVN 48B form. I have not heard of that term being used in other lines of insurance either, but as I mentioned before, I specialize in aviation. Can you provide us with the form ID, name of the underwriting company, type of policy, or the wording of the paragraph in which this is found?

The London insurance market introduced the AVN 48B form in the late 60's and it has been on aviation policies worldwide ever since. The wording is standard amongst the aviation underwriting world and the definitions of the terms are typically defined by law. The AVN 48B form is known as the:

WAR, HI-JACKING AND OTHER PERILS EXCLUSION CLAUSE

This Policy does not cover claims caused by

(a) War, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power or attempts at usurpation of power.

(b) Any hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.

(c) Strikes, riots, civil commotions or labour disturbances.

(d) Any act of one or more persons, whether or not agents of a sovereign Power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional.

(e) Any malicious act or act of sabotage.

(f) Confiscation, nationalisation, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any Government (whether civil military or de facto) or public or local authority.

(g) Hi-jacking or any unlawful seizure or wrongful exercise of control of the Aircraft or crew in Flight (including any attempt at such seizure or control) made by any person or persons on board the Aircraft acting without the consent of the Insured.

Furthermore this Policy does not cover claims arising whilst the Aircraft is outside the control of the Insured by reason of any of the above perils. The Aircraft shall be deemed to have been restored to the control of the Insured on the safe return of the Aircraft to the Insured at an airfield not excluded by the geographical limits of this Policy, and entirely suitable for the operation of the Aircraft (such safe return shall require that the Aircraft be parked with engines shut down and under no duress).

AVN 48B 1.10.96
N9657 wrote:Why is it ok for the insurance company to charge extra for these risks? ...the company can write it's self out of it's obligation and then charge extra if you want coverage. Notifying you dosent make it right.
Because the insurance company is the one offering the service therefore they have the right to dictate the terms and price of that service. They are not obligation beyond what they have offered and bound under contract. If you want more services then they have the right to agree, or decline to offer them along with the right to name their price for it. For example: if you purchase a VFR equipped Maule and later decide that you need to fly it IFR you would not expect the factory to upgrade it for free would you? The factory knew that you might need the IFR capability some day and made that option available at the time of purchase, but you (the consumer) chose not to purchase that option. They are not obligated to upgrade the base model that you purchased now that you need additional capabilities.
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Post by Lowflybye »

N9657 wrote:A drunk steals my plane and I'm covered a suspected terrorist steals it and I'm not.


It is not determinate on if the person is a drunk or a suspected terrorist, but the persons actions that would dictate if the policy will respond. In order for the claim to be denied based on a terrorist act, the act would have to be declared as such by the government.
N9657 wrote:I would like to know how many light aircraft terrorist planes were used in acts of terrorism.


It's irrelevant, the exclusion came about as a result of hi-jackings costing the London insurance markets a lot of money. These kind of losses cannot be predicted or planned for so they came up with the aformentioned exclusion. They then offered the coverage as a "buy-back" to those who wished to purchase it thereby contributing to the "reserve funds" designated for such losses. Since policies must use forms and wording approved by each state and country in which they are issued and since the London markets back the rest of the world markets, wording on the basic policy wording becomes pretty standard...from country to country and from the airlines down to the J-3 Cub.
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Post by Lowflybye »

Here is the text of an article appearing in our latest magazine that may further help to answer your questions. I would have posted it sooner, but we just got it loaded onto the server this morning.

War Risk Insurance: To Buy or Not to Buy - That Is the Question
"To most people, the sky is the limit. To a pilot, the sky is home."

Still a bit cloudy when it comes to aviation insurance? Find some clarity: Clear on Top

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