Insurance rate drivers?

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Atrosa
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Insurance rate drivers?

Postby Atrosa » Thu Feb 14, 2019 11:07 am

I was recently quoted 1,700 to insure a sportcruiser. I was thinking that is a little high so i was wondering what are the major factors in rate calculations? Why is a Cessna $500 yet a sportcruiser is 1,700.

Assuming the pilot is of equal hours and the hull of equal value what determines the rate?

I actually work in the insurance industry in the back office on the investment side. Im familiar with actuarial concept so dont be afraid to get techical.

Thank you,
Tony

3Dreaming
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Re: Insurance rate drivers?

Postby 3Dreaming » Thu Feb 14, 2019 12:17 pm

The underwriters take several things into consideration. The liability rate should be the same based on the number of seats. For the hull they likely have a sliding percentage scale based on the type of airplane. For example in commercial use for a SLSA the hull part of the insurance will be roughly 10% of the value of the airplane annually.

For private use the factors are not just the value, but also the cost of repairs and parts availability. Cessna produced aircraft in great numbers with parts available for most here in the US. The insurance companies have a large data base on what repairs are going to cost if there is damage. First and foremost a SLSA aircraft has a special issuance airworthiness certificate. All most all of the SLSA aircraft are built in relative small numbers compared to Cessna. Many are built half way around the world. Sometimes it takes months to get parts and procedurers to make repairs. Because of those factors and the insurance companies lack of experience with the SLSA aircraft they increase the rates to protect their investments.

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drseti
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Re: Insurance rate drivers?

Postby drseti » Thu Feb 14, 2019 8:20 pm

Another factor keeping LSA insurance rates high is that these little kites are actually harder to fly than the ubiquitous Skyhawks and Cherokees that dominate the GA fleet. Lightly loaded wings are, let's face it, squirrely. They take a lot of finesse to fly properly. That's why so many experienced GA pilots end up running them off the left side of the runway during takeoff or landing (check the NTSB accudent database if you don't believe it).

Thankfully, because of the light weight and low stall speed, most of these accidents are non-injury events. But we manage to collapse a lot of nosesheels, wrinkle a lot of firewalls, and crumple a lot of wings. Insurance premiums have to be sufficient to cover those losses.

My own insurance premium went up 15% this year - and not because of anything I did! Such is the nature of risk-pooling.
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drseti
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Re: Insurance rate drivers?

Postby drseti » Thu Feb 14, 2019 8:25 pm

3Dreaming wrote: in commercial use for a SLSA the hull part of the insurance will be roughly 10% of the value of the airplane annually.


I got off easy, Tom. My hull is more like 5% of insured value.
The opinions posted are those of one CFI, and do not necessarily represent the FAA or its lawyers.
Prof H Paul Shuch
PhD CFII DPE LSRM-A/GL/WS/PPC iRMT
AvSport LLC, KLHV
fly@AvSport.org
AvSport.org
facebook.com/SportFlying
SportPilotExaminer.US

3Dreaming
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Re: Insurance rate drivers?

Postby 3Dreaming » Thu Feb 14, 2019 9:42 pm

drseti wrote:
3Dreaming wrote: in commercial use for a SLSA the hull part of the insurance will be roughly 10% of the value of the airplane annually.


I got off easy, Tom. My hull is more like 5% of insured value.


I was pulling figures off the top of my head. Thinking back it was the taildragger that was 10%. Anyway it is a sliding scale, the more expensive the airplane the percentage goes down. I remember dropping hull value on one of my airplanes, and at one point as the value dropped the rates went up because I jumped up a percentage point.


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