SUMMER 2008

What type of coverage do I have on my PC-12’s maintenance log books?
Although one of the most important items associated with your aircraft, you will be surprised to find out that there is absolutely no coverage that applies to the loss or destruction of your aircraft maintenance logs. A review of policy definitions of several of the broadest policies in the aviation insurance industry yields no coverage avenues to pursue:

Global Aerospace ”Broad Horizon Policy”

• “Scheduled aircraft” means the aircraft described in Item 4 of the declarations and any newly acquired aircraft, including the propulsion system and the parts and equipment installed in or on the aircraft (1) while installed and (2) while temporally removed until replacement has commenced: also tools and equipment in the aircraft which have been designated for use with the aircraft and are ordinarily carried in the aircraft.

AIG Aviation's “Gold Medallion Policy”

• “Aircraft” means the aircraft described in Item 4 of the Declarations (and when appropriate any aircraft qualifying under the provisions of Special Insuring Agreements I, II, or III) including the propulsion system and equipment usually installed in the aircraft (1) while installed in the aircraft, (2) while temporarily removed from the aircraft and (3) while removed from the aircraft for replacement until such time as replacement by a similar item has commenced; also tools and equipment which are specially designed for the aircraft and which are ordinarily carried therein.

Starr - Starr Elite Comprehensive

• “Aircraft” means any scheduled aircraft and any other aircraft for which insurance is provided under the Policy. The definition includes the aircraft’s propulsion system, and parts and equipment installed in or on the aircraft. Parts that are temporarily removed are also included in the definition even if replaced by similar parts. Tools and repair equipment standard for the aircraft and normally carried on the aircraft are also included within the repair equipment standard for the aircraft and normally carried on the aircraft are also included within the definition.

USAIG “360 All Clear “Policy

• What is an aircraft?
  Your aircraft includes your airplane or rotorcraft and any operating, navigating or radio equipment that's usually attached to the aircraft. Parts of your aircraft that are temporarily removed are also included even if replaced by similar parts. Any tools and repair equipment standard for your type of aircraft are also included. In addition, we will cover personal property, carried in your aircraft, which is used in the operation of your aircraft. If you have other insurance covering a loss to a replaced part or personal property, this Coverage shall be excess of the other insurance. And, personal property does not include wearing apparel and other personal property not used in the operation, communication or navigation of your aircraft.

As you can see even the most creative interpretation of these definitions cannot tie your logbooks into the coverage arena. Although there is no credible argument here for coverage, some companies’ claims adjuster may try to help with reconstruction or simply decline a claim made. In any event you are entirely at the mercy of the companies’ frame of mind at the time. In any case, either is not a good position to find ones self in when dealing with a $3M+ PC-12.

There are a number of back up systems that offer non insurance solutions to this most important detached part of your PC12 aircraft. Visit the following sites to learn more:

• www.campsys.com
• www.lboinc.com
• www.avtrak.com
• www.managerplus.com

I recently lost my baggage on an airline trip after delivering my PC-12 to maintenance.
If you or a crewmember looses your bags on an airline your primary insurance again will not cover you. I would suggest you look to your personal homeowner’s coverage and whatever cover the airline offers for such an event. Even check with your credit card company as some extend baggage coverages if you book and pay for the trip through their travel service.

As you can see there are areas where you are not covered by your aircraft insurance. It is prudent to review with your aviation insurance specialist regularly to see to what extent you are inadequate in extended and ancillary coverages.

Insurance issues concerning aircraft maintenance Log Books: Is there insurance coverage?

What does the FAA say about your maintenance log books..

• FAR part 43, 91.417 and 91.419 requires the owners of US registered aircraft to transfer all related maintenance logs at time of sale and title transfer.
• If you research these regulations you will find that the FAA does not consider any maintenance logs as a “part” of the aircraft.
• Even if they did , it would have no bearing on an insurance company’s obligation under a policy to pay.
• The FAA has never paid an insurance claim

How does your Aircraft insurer view your maintenance logs..

• First look to your aviation insurance contract for coverage through definitions
• Are there any policy exclusions that address maintenance logs…

Global Aerospace "Broad Horizon Policy"

• “scheduled aircraft” means the aircraft described in Item 4 of the declarations and any newly acquired aircraft, including the propulsion system and the parts and equipment installed in or on the aircraft (1) while installed and (2) while temporally removed until replacement has commenced: also tools and equipment in the aircraft which have been designated for use with the aircraft and are ordinarily carried in the aircraft.

AIG Aviation’s “Gold Medallion” Policy

• “Aircraft” means the aircraft described in Item 4 of the Declarations (and when appropriate any aircraft qualifying under the provisions of Special Insuring Agreements I, II, or III) including the propulsion system and equipment usually installed in the aircraft (1) while installed in the aircraft, (2) while temporarily removed from the aircraft and (3) while removed from the aircraft for replacement until such time as replacement by a similar item has commenced; also tools and equipment which are specially designed for the aircraft and which are ordinarily carried therein.

“ USAIG 360 All Clear ”

• What is an aircraft? Your aircraft includes your airplane or rotorcraft and any operating, navigating or radio equipment that's usually attached to the aircraft.  Parts of your aircraft that are temporarily removed are also included even if replaced by similar parts.  Any tools and repair equipment standard for your type of aircraft are also included.  In addition, we will cover personal property, carried in your aircraft, which is used in the operation of your aircraft.  If you have other insurance covering a loss to a replaced part or personal property, this Coverage shall be excess of the other insurance.  And, personal property does not include wearing apparel and other personal property not used in the operation, communication or navigation of your aircraft.

Starr - Starr Elite Comprehensive

• “Aircraft” means any scheduled aircraft and any other aircraft for which insurance is provided under the Policy.  The definition includes the aircraft’s propulsion system, and parts and equipment installed in or on the aircraft.  Parts that are temporarily removed are also included in the definition even if replaced by similar parts.  Tools and repair equipment standard for the aircraft and normally carried on the aircraft are also included within the repair equipment standard for the aircraft and normally carried on the aircraft are also included within the definition.

Allianz

• “Aircraft” means any Scheduled Aircraft and any other aircraft for which insurance is provided under this policy. The definition includes the aircraft’s propulsion system as well as all parts and equipment that are installed in or on the aircraft. Parts that are temporarily removed are, even if replaced, also included in the definition. Also included in the definition are tools and repair equipment standard for and normally carried on the aircraft.

Conclusion on aviation policy recovery

• even the most creative interpretation of these Aviation policy definitions cannot tie your logbooks into the coverage arena.
• Although there is no credible argument here for coverage, expect that some Aviation claims adjuster may try to help with minimal reconstruction cost, most likely a declination on any claim made will be issued in compliance with policy claims protocol, this varies from state to state
• In any event you are entirely at the mercy of the aviation underwriting company’s frame of mind at the time of loss which, is not a good position to find ones self in when dealing with one of your company's largest property assets.

Other areas to test for recovery

• Your Business personal property may have some buried cover in valuable papers endorsement ( remember an endorsement adds to or changes standard policy wording).
• If you have hangar property coverage, a Business personal property endorsement cover may reside here and respond
• Definition of Valuable Papers in one hangar property policy states...
• You may extend the insurance that applies to Your Business Personal Property to apply to your costs to research, replace or restore the lost information on lost or damaged valuable papers and records including those which exist on electronic or magnetic media for which duplicates do not exist.

Caveats !!!!

• Visit with your Insurance Broker (hopefully and aviation specialist), he or she may not be aware of these critical issues
• Create an email chain on issue and understanding with your Broker and carrier
• Check BPP limits and Aviation exclusions
• If you are a Fleet manager, look close at definitions, your owned aircraft logs may be covered as valuable papers, your managed logs may be considered property of others and excluded.
• Diminution of valued not covered in any event on owned aircraft
• As a Fleet manager you may be liable for any resultant diminution of value action for losing or destruction of Client’s Maintenance logs while in your care custody and control.

Q&A

• Lance Toland Associates L.L.C.
  100 Midfield Drive Griffin Airport
  Griffin Georgia 30224
  lance@lancetoland.com

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Spring 2008

I am selling my PC12 and taking delivery of a new PC12-47/E, what do I do to qualify under my present insurance arrangement?
Basically all you will need to do is contact your broker and have him add delete your present aircraft and increase the physical damage coverage to the new aircraft’s replacement cost. Although the underwriters are not really going to specify /45E training, you and or all pilots will have to attend initial or differences training on the new machine. Also take this opportunity to revisit your legal liability limits and secure the highest level your carrier will offer…

My PC12 in under contract for sale, I currently have a loaner engine it, is there anything special I should consider from and insurance standpoint?
Typically a loaner engine situation will require an additional insured from the engine owner; this ensures both liability protection for them as well as physical damage protection while the engine is affixed to your airframe. In most broad form coverages you will also have embedded protection for some spare parts; it would be wise to look into these provisions with your insurance agent to determine that you are covered adequately.

Caveat: If you sale your PC12 and transfer title with the loaner engine affixed make sure you advise your insurance carrier, there is a potential for a covered loss if the engine is inspected and FOD damage is determined after the sale. In this event your carrier would most likely be on the hook for the repairs and replacement of parts, but not any cost associated with your routine maintenance. Additionally it is vitally important that any damage items be held by the inspector and made available to the claims adjuster for their adjusting and determination of coverage. I have seen such and event which came to light many months after the sale …

My Pilot recently hot started the engine on our PC12, is there any insurance that will cover this damage. Looks like the bill is going to run $400K to repair.
This is a real wake up call and unfortunately not a covered event. This is considered normal wear and tear, and not an occurrence. In order for an insurance to respond you must have an event, in the case of engines this is usually limited to FOD losses and sudden stoppage.

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