You Built It, You Damaged It, Now What?
For insurance purposes, an airplane is a total loss when it is not economically feasible to repair it and return it to the condition it was in before the loss. Avemco’s policy defines a total loss as one when the estimated costs to transport and repair or replace parts exceed 70% of the insured value. In the event of a total loss, the insurance company retains the salvage, after settling the claim. Homebuilders often will want to negotiate a settlement that will allow them to keep the salvage. This is where it becomes crucial to know the conditions of your policy before you purchase insurance. If you are interested in retaining the salvage, let your claims adjuster know as soon as possible.
Most aircraft policies are written on a stated-value basis. In plain English, this means in the event of a total loss the insurance company will pay you the value that you and they agreed to for hull (physical damage) coverage when you took out the policy. You’ll need to read your policy since the handling of deductibles and unpaid premiums is spelled out in the policy. The same goes for the things they will pay if the airplane can be repaired vs. the things they won’t. For example, if you haven’t painted your plane yet, the insurance company is not going to paint it as part of the repair.
What could complicate accident repairs to a homebuilt plane? Transportation for repairs is calculated into the equation in determining if your plane is repairable or a total loss. If there is only one shop that will take on the job and it is on the other side of the continent from you the transportation costs may move your plane from the repairable column to the total loss column. The engine may also be a factor that limits who will work on your plane (who has experience on a converted Wankel rotary engine?). What customized features have you built into your plane? You built the plane the way you did because you enjoyed the building process and you wanted to incorporate specific items (multi-function motorcycle throttle on the stick?) into the plane. A shop may look at repairing your plane as a combination of discovery, reverse engineering, and unconventional re-assembly. None of which is bad, it is just different than repairing a certificated plane.
No one plans to have an accident. However, reviewing your options for repairs when you decide what plane you want to build, or purchase, may prevent unpleasant surprises later. Be prepared so that regardless of the chain of events, your joy of flying your homebuilt will never be diminished.
Our best advice? Carefully read your policy and if you have questions, call your insurance company.
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Avemco® does not provide technical or legal advice, and is not affiliated with companies whose products and services are highlighted, advertised, or discussed in content contained herein. Content is for general information and discussion only, and is not a full analysis of the matters presented. The information provided may not be applicable in all situations, and readers should always seek specific advice from the FAA and/or appropriate technical and legal experts (including the most current applicable guidelines) before taking any action with respect to any matters discussed herein. In addition, columns and articles solely reflect the views of their respective authors, and should also not be regarded as technical or legal advice.