Insurance Claim Denials

[GAHorn]

I received an article by Jim Lauerman (Avemco) explaining the most common causes of insurance claim denials. (He is promoting what he believes is his company's low rate of denial.) It was interesting reading. (Some of the examples given are not in his article but are my own.)

According to his article the most common causes of denial of a claim are:

1- Not an approved pilot under the policy. Unlike automobile policies, aircraft policies insure "named operators". If anyone other than a "named pilot" or a pilot that meets the requirements described in the "open pilot warranty" of your policy is operating the aircraft, then the insurance is not valid. Does your policy require instrument currency? Do you maintain currency with regard to FARs? (or does your policy provide coverage when you receive flight instruction from a CFI in your aircraft? Is it required for the CFI to also meet currency requirements in your aircraft?...or does he otherwise meet the open pilot warranty

2- Excluding "in flight" hull coverage. Some owners, in an effort to reduce premium costs, will opt for "not in flight" coverage. This means that any loss from "in flight" use of the aircraft is not covered. Example: You land and taxy to and hold short of a crossing intersection. A brake grabs and you end up in a ditch or taxy across a taxiway light fixture and suffer a prop strike. Even though the aircraft is being operated on the ground, the taxying action is associated with the inflight activity and is not covered. (See the FAA and your underwriter's definition of "in flight". In my own policy the definition of "in flight" differs slightly from the FAA definition in that it states the flight ends when the aircraft has "landed" and further states it has "landed" when it has stopped or left the runway under control.)

3- Mechanical Wear and Tear. Loss as a result of mechanical breakdown may be covered, but the mechanical failure itself is not.

4- MIsrepresentation. A material misrepresentaion made on the application or renewal is cause for denial. Insurance is predicated upon representations made by the insured and if those representations are false then any coverage may be void. Example: Does your policy expect your biennial flight review to be current at the time of application and at all times subsequent during the policy period? )

5-Outside the Policy Period. Failure to renew in a timely fashion, or to make payments within the alloted time frames of the policy. Some insurers are very good about notifying owners about payment...some are not. (Some states also have stringent notification requirements and some others do not.)

6-Commercial purpose exclusion. Warning: I personally have been advised that some policies do not allow "reimbursement" of expenses for operations. Contact your insurer and get it in writing!

7-Invoicing disputes. If a mechanic lien is placed upon an aircraft, or if accessories are being held by a service provider for lack of payment, then a theft claim will likely not be considered valid. If you wish to make a claim of theft, be certain to file a complaint with law enforcement authorities and make reasonable efforts to recover the property if you wish to make a convincing claim.