Tuesday, January 27, 2009

Changing coverage

In these economically challenging times, insurance is often one of the first things that aircraft owners cut from their budget. Many owners feel that they can’t afford insurance, hangar AND fuel, so something has to go. That is very understandable.

But before you eliminate all the coverage, take a look at what you have and see if there are changes that can be made to the limits or the types of coverage. Like any other investments review what you have and check on alternatives so you do not lose all the value in the worst case scenario.

Many owners believe that if they crash the plane they will probably be gone anyway and they don’t need to worry about the value of the plane. But take a look at the accident statistics, in reality, general aviation is very safe and there are very few fatalities. (Even if there is a worse case situation, the estate will be out the value of the plane if it is uninsured.)

So that means the majority of accidents cause damage to the plane and even surrounding property but not fatalities. If it took years to build the aircraft, why take the risk of losing that investment? At least in the event of a loss if you have insurance you are allowing the insurance company to share part of the risk and help rebuild or replace the plane.

Most owners also think that “it won’t happen to them” and that might be the case, but are you willing to take that risk? If you are a gambler and willing to risk the value of your plane and can afford the loss, go for it.

Also if your age is in the sixties or even seventies, many insurance underwriters will not insure you as new business, especially in high performance aircraft. If you cut coverage this year expecting to get coverage back in five or six months, it might not happen. So it’s best to keep some sort of coverage in effect.

If you do not have a loan, look into reducing the coverage to something like liability only. If the aircraft is not financed, you could get rid of the hull coverage and at least keep liability coverage in effect. Liability is usually the lowest cost portion of a policy and usually what is required by an airport or state.

If you are in the older age group, this would keep the aircraft insured so you would not be a “new” risk. You could always look into adding hull coverage at a future date. At least you would be insured by a company which would make it easier to get additional coverage.

Ground not in motion hull coverage might also be an option. This type of coverage would protect the hull when it was not under its own power from things like fire, theft and storms. These are things that the owner tries to protect the plane from but is often out of the owner’s control.

What ever your decision, check out the options before you cancel all the coverage.

Friday, January 9, 2009

NEW ONLINE STORE OFFERS HARD-TO-FIND ORIGINAL BOAT PARTS

There are a lot of old boats still being used. I thought this press release was great news. Sure, it wont help everyone.

NEW ONLINE STORE OFFERS HARD-TO-FIND ORIGINAL BOAT PARTS

When repairing or updating a boat, finding the right OEM parts can be difficult. Making life a little easier, ReplacementBoatParts.com provides a huge selection of hard-to-obtain OEM equipment through a simple-to-navigate online store.

Now boat owners can purchase the same quality component parts boatbuilders use. The convenient website features products they wouldn't be able to find anywhere else. From customized water and waste systems to interior and exterior LED, halogen and incandescent lighting, ReplacementBoatParts.com has it all.

The innovative online store offers faucets, sprayers, transom showers, cup holders, hose fittings and adapters, as well as many other difficult-to-find accessories and hardware. With a convenient search bar, the website's selection of bilge blowers, plastic and stainless steel vent grills, portlights, hatches, switches and breakers is unbeatable. Plus, if ReplacementBoatParts.com doesn't have the part site visitors are looking for, they will try to find it.

Contact ReplacementBoatParts.com, PO Box 1777, Riverview, FL 33568. info@ReplacementBoatParts.com; www.ReplacementBoatParts.com.


If you have questions about this press release or client, please contact us: Martin Flory Group; PO Box 360, Gurnee IL 60031
Phone: 847-662-9070; Fax: 847-336-7126
info@martinflory.com; www.martinflory.com.

Martin Flory Group is now representing clients of Jerry Martin Company

Tuesday, January 6, 2009

Cape Town Treaty

Recently I had a customer buy a Cessna 421 and the finance company required him to get an international registration. This process takes time, escrow accounts and cost more money. This is a stage of the purchase process that I don’t see, so a little research was in order.

What I discovered was that while it takes time and money, international registration (known as the Cape Town Treaty) is not only required, but it is in the best interest for the buyers of certain aircraft.

Where does this registration come from?
The Cape Town Treaty establishes the right for owners of these aircraft to grant an “Irrevocable De-Registration and Export Request Authorization” (IDERA) to a secured party. The treaty was adopted in the United States by The Cape Town Treaty Implementation Act of 2004, on August 9, 2004. This also establishes the “Civil Aviation Registry”. The effective date of these changes was March 1st, 2006.

Still confused about the Cape Town Treaty?
Well so am I. This thing was voted on and adopted with little if any fanfare in the aviation industry (except maybe the NBAA (National Business Aircraft Association)) but for most of us general aviation pilots it is a new requirement.

Even if you are not planning on flying internationally, when you buy a certain plane you will be required register the plane not only through the FAA but also through this international registry program called the “The Cape Town International Registry” (CTIR).

The CTIR was designed to protect financial interests in certain aircraft and engines. The International Registry is recognized by a number of countries (not all, but yes, the USA) as an additional place for the filing of interests, including prospective interests, in certain airframes, helicopters, and aircraft engines. From what can tell, countries like Canada and Mexico opted out of the treaty.

Depending on who you talk to, it appears to have been started by a big aircraft company that wanted to find a way to protect their interest in planes and engines around the world. It was decided that an international registry would be a way to keep control of those interests outside of the FAA’s boundaries. But what wasn’t really planned was the trickle down to the general aviation flying public. I’m talking owner/pilots of smaller twins and singles.

What planes are included?
Basically any airplanes that are:
1.Certified with at least eight (8) seats including crew; or carrying “goods” in excess of 2750 kilograms (6050 pounds).

2.Helicopters that are type certificated to transport: At least five (5) persons including crew; or “goods” in excess of 450 kilograms (990 pounds)

3.Jet propulsion aircraft engines with at least 1750 pounds of thrust or its equivalent.

4.Turbine-powered or Piston-powered aircraft engines with at least 550 rated take-off horsepower or its equivalent.

The registration process is fairly simple, but does require a procedure through a title company, registration with CTIR which is based; it appears, in Ireland and of course additional funds. This registration can cost the new owner into the thousands of dollars.

Do you have to do this even if you never plan on flying internationally?

Yes, it is a registration requirement. But also, it appears to be in the best interest of the buyer/owner and financial institution because the priority of your lien will be at risk. The explanation I was given was that a person or company could register your aircraft on the international registry (before you) and that registration would take priority over the FAA registration and they would be come the “owner” of your aircraft. IF that is true, you might have to pay the internationally registered “owner” to release your aircraft registration to you. This could be a nightmare. Fear of fraudulent filing makes it important to take this serious.

I am not an expert in this by any means. But I do think that if you own an aircraft that meets these registrations requirements such as a Cessna 421 or even a Malibu Jet Prop, you should look into it. Call your bank or go online to the FAA at:

http://www.faa.gov/licenses_certificates/aircraft_certification/aircraft_registry/cape_town_treaty/

Still have more questions (I did) about the International Registry you need to go to the International Registry website at https//www.internationalregistry.aero.

Sun N' Fun is just around the corner.

As far as I am concerned, Sun N Fun is the big kick off airshow for the season. Sun N Fun is the time when we all get to see what is on the drawing boards for the rest of the year and what was in the shops over the winter. It is one of my favorite shows with a laid back, small show personality, but with the quality, quantity and performance of a big show.

Since it is the first show of the season it s also the first time many people get their planes out and take a trip. Who doesn’t want to start their aviation year off with a trip to central Florida for warm temperatures and sunshine, which is usually what Sun N Fun is like? The year 2008 started a little different, with about five inches of rain that turned the place into a giant mud puddle. Even an AOPA article coined the phrase “Mud N Fun”.

The mud and the weather surrounding the show was a deterrent to a few people. Many of the exhibitors I talked to had display planes stuck all around the country. Planes were arriving all week and the booths filled up along with the parking lots. Once the mud started to dry up it was probably even better than the previous years. Usually Sun N Fun is hot and dry. There have been times that cars have started fires in the parking lots because the grass was like kindling. At least that was not the problem in 2008.

Another nice thing that happens at Sun N Fun is getting to see a lot of the planes that I insure. Many of my customers travel to the show as a vacation. They too feel this is the start of the season, even if they have been flying their planes all year long.

Seeing a customer’s plane on display is always encouraging but also a little worrisome. I worry because no matter how good a pilot, airshows bring over confidence, risks and potential losses. So before you ever take off for the next show, make sure you have the correct coverage.

What type of coverage needed depends on what you plan to do with your plane once you get to the airshow. If you are the average fly-in attendee with a goal of parking the plane out in the field, pitching a tent and enjoying the fly-bys, you probably won’t need anything. But if you happened to have an aircraft that gets a lot of attention, parks in the manufacturers booth or you participate in the fly-bys you should make sure you have the correct insurance coverage.

The typical fly-in risks are things like: damage from storms, theft, and damage from other people or crashes. If all you are doing is parking in the boonies, then your regular coverage should protect you the same as any other day. Just because you are at a fly-in shouldn’t change the coverage you have.

But, if on the other hand, you put your plane in the manufacturer’s booth or on display in a specific area (make and model display, type club, warbird area, etc.) you might not have coverage. Certain companies actually have limitations as to how you display your aircraft. Its one thing to park it at an airport, but it’s a whole other risk if you put it on display and tempt the public to touch it. I know, touching is not what most people are asking the public to do, but the thought is, if it’s on display, the risk changes and there is more potential for damage. The risk will change even more if you decide to fly it in any of the fly-bys like a manufacturers showcase.

If you decide to put I on only “static display” most aviation insurance companies will cover the plan at whatever policy limits you have purchased, as long as you are not being paid to display your aircraft.

Has the airshow or manufacturer offered a free room or fuel if you will display your plane for them? If so, you might fall into a commercial category or, “for hire”. It is important to note that what I am talking about is from the insurance perspective not the FAA’s regulations. The insurance underwriters do not control the FAA regulations but their policy requirements and language can often go beyond the FAA scope.

Since getting a tank of avgas and a free hotel room constitutes payment for services your aviation insurance policy might not provide coverage while the plane is on display. This is a “gray area” of what is constitutes “for hire” and nothing more than “reimbursement of expenses”. The Federal Aviation Regulations (FAR) state something about reimbursements of expenses which doesn’t include making a profit or being paid to fly.

If you are at the fly-in and you are asked to make a few fly-bys the risk changes again. If you are getting the free room and the fuel it might be construed as payment for flying or “for hire”. Most policies will not cover that type of usage. Now, if you buy your own fuel and rent your own room and you aren’t making any money, it’s not “for hire”. But it still might not be covered by the policy. Every now and then an aviation insurance policy will have some language about using the aircraft for demonstration purposes, whether flying or static, make sure you check yours before volunteering.

In the beginning I mentioned that there is also overconfidence during fly-ins and airshows. It seems there are always a few pilots that try to take off a little too short or fly a little to fast or even climb a little to steep. It’s this kind of behavior that causes accidents. Many people that attend airshows can’t wait to get in the air and show off their pride and joy. There is nothing wrong with that, it is just how you do it that gets you in trouble.

One popular way is formation flights of aircraft that are all the same make or model. Formation flights are visually appealing to the spectators. From an underwriter’s position, the formation flights need to be done by experienced formation pilots. Many aviation insurance companies will require formation classes and training before adding coverage for formation flights to the policy.

Even if you have the formation training, remember the bit about being paid. In fact, that’s probably the biggest issue about taking your plane to a fly-in or airshow. If you get paid through rooms, fuel or money, you need to have a policy that covers commercial use and you need to be qualified to act as a commercial pilot. If you do not have either of those, your coverage could be voided. That is if you have any coverage for that usage to begin with.