пятница, 14 сентября 2012 г.

LSA insurance: planes yes, pilots maybe: the industry isn't exactly taking the LSA groundswell in stride. Insurance is available, but underwriters will like you better if you keep your medical.(KEEP ME COVERED)(light sport airplanes)(Buyers guide) - The Aviation Consumer

For aviation insurers, it's the best of times and the worst of times. In many traditional parts of the aircraft insurance market, an overabundance of capital and new insurers is forcing premiums--especially those for corporate airplanes--down to new lows. At the same time, buyers are snapping up new airplanes of all sizes faster than manufacturers can build them. And the two new market areas of the decade, Very Light Jets and Light Sport Aircraft, are beginning to take off.

In some ways, Light Sport Airplanes are an insurer's dream. If the glass-half-full guys are even remotely right, there will be shoals of them. And from an underwriter's viewpoint, they're attractive because they have what insurers call 'low severity.' Severity is essentially the average cost of an accident.

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LSAs are relatively inexpensive and have only two seats, so the cost of even a bad accident is not nearly as high as it would be in a heavy single with a half-million dollar price tag and six seats. The combination of potential large numbers of insurable LSAs and the low severity should make it easier for underwriters to predict the cost of accidents and set rates that will pay for them.

NOT SO FAST

In other ways, LSAs are an insurer's worst nightmare. Take the airplanes: Of the roughly 1000 that have joined the U.S. fleet, there are almost 50 makes. Why is that a problem, you ask? For one thing, it makes it harder for insurers to have large enough numbers of any one type to predict how often it will have accidents or how much it will cost to fix.

As one adjuster said to us, 'It was easier when we went out and looked at a Cessna, Piper or Beechcraft, with maybe a Tiger or Bellanca thrown in. You knew where to get parts, who was good at fixing them. Now you're not even sure what you're looking at sometimes.'

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There are also questions about the durability of LSAs used in pilot training compared to the traditional certified trainers that we've been using for decades. Several underwriters told us that they insured LSAs used by flight schools and felt that while it was too early to say for sure, that newer composite designs seemed less able to handle the daily abuse of flight training than Cherokees, Cessna 150s or Skyhawks.

An even larger problem is support. In order to fix airplanes, insurance companies need parts and experienced mechanics. A large number of small manufacturers just can't build and maintain the support networks that a small number of large manufacturers can.

Nor can mechanics have the same familiarity with 50 different makes of airplanes as they do with the first three or four. Underwriters told us again and again that the availability of a service network was one of their main factors in deciding whether or not to insure different types of LSAs. And many LSAs are constructed of materials that most hometown aircraft mechanics haven't worked with extensively and many are powered by engines that, until now, have been almost exclusively used in kit built airplanes. These factors tend to drive up the costs of repairs and limit the number of potential repair estimates that insurers can get.

PILOT PROBLEM

Underwriters that insure Light Sport Aircraft felt almost unanimously that the challenge presented by Light Sport pilots is far greater than the challenge of the stunning array of new airplanes. As one wag put it, 'After all, the airplanes fly well and the engines are reliable, something you can't always say about the pilots.'

It's important to differentiate between Light Sport pilots and pilots flying Light Sport Airplanes. Many of the pilots who are getting into LSAs right now are rated pilots who either have or think they will soon have a condition that will prevent them from passing an FAA medical exam. As soon as their medicals lapse, they become instant Light Sport pilots, as long as they're qualified in category and class. There are also pilots with medicals whose kids have gone off to school, who don't need six seats any more and who just want something that's inexpensive and fun to fly on a sunny day.

We think there are a lot more of the first category than the second, but it's impossible to know for sure. We do know that most LSA sales until now and for the foreseeable future are to licensed pilots, with or without medical certificates.

We're also seeing small numbers of Light Sport pilots who have learned to fly in LSAs and if the true believers are right, there will be many more. How well Light Sport training prepares these pilots to go out and take on wind and gravity may be a larger question than the medical one.

From the underwriter's point of view, the decision to insure Light Sport pilots involves taking on a new class made up of experienced pilots of unknown medical provenance and inexperienced pilots of unknown medical provenance. When faced with both the opportunity of large numbers of new customers and the challenge of new airplanes and a new pilot population, insurance companies react with predictable prudence.

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In fact, not all of them are quite ready for the brave new world of insuring pilots without the arguable filter of the FAA aviation medical system. One underwriting manager told us with a perfectly straight face that, 'Our approach is to be cautiously supportive of Light Sport. We support sport airplanes, at least the SLSAs. We'll write them all day long, at least the ones on our approved list. We don't support Light Sport pilots; we still require a medical.'

LIGHT IN THE TUNNEL

Fortunately, this is a minority view and there's a healthy number of aviation insurers willing to take on factory-built Light Sport Airplanes flown by Light Sport pilots, complete with driver's licenses. Some underwriters who can't quite completely let go of the medical thing will have a medical question or two on their applications. Most roughly follow the FAA's guidelines, essentially requiring that the pilot certify that he or she has no known condition which would prevent safe operation of the airplane.

If you're looking to insure an LSA, you'll find a number of choices, although not every company will cover every make of airplane. Insurers are looking at many of the same criteria that buyers should be looking at, mainly safety record and dealer support. Insurance companies aren't interested in insuring airplanes that can't be easily and economically repaired or for which replacement parts are not readily available. That puts the smaller LSA companies at a disadvantage, but that's life.

In general, reasonably-priced insurance is available for the more popular factory-built Light Sport Airplanes. Most companies said that the rates they charged for factory-built Light Sport airplanes were similar to or slightly higher than the rates charged for certified airplanes of similar value.

When we actually looked at rates, we found that this was true in some cases and not in others. Most insurers, hard as this may be to believe, will charge more if you either don't have a medical or are flying a fairly new type of airplane or both.

The Cub clones don't seem to enjoy a particular price advantage over the newer designs. We suspect this is because they have conventional landing gear. Not surprisingly, the lowest insurance premiums go to legacy airplanes like the venerable Champ, Cub and Luscombe that have been re-registered as Light Sport, mainly because of their lower values.

If you're building or considering the purchase of an experimental LSA, make sure that somebody will insure it for a price you're comfortable paying, as the rates are higher and availability is much lower. At least four companies told us that they insured amateur-built LSAs, but with the plethora of models and engine choices, nobody insures all of them. Like policies for larger amateur-built airplanes, most limit or exclude coverage for the first flight and often for the first few hours.

SEAT LIMITS

When it comes to liability coverage, insurers are hedging their bets. Most liability coverage is written with either per-person or per-passenger sub-limits. The typical per-passenger limit is $100,000. So-called smooth limits without reduced coverage for bodily injury might be available by exception, but are not widely obtainable for Light Sport pilots.

Whether this will change as the LSA fleet grows and gains experience is anybody's guess. Frankly, we wouldn't bet on it. If you need a smooth limit, keep your medical. If you can't keep your medical and you have the smash to do it, you might take the advice of one underwriter who counseled us to 'Buy a Gulfstream, bring it to us to insure and we'll see what we can do with your CT ... '

If you're considering letting your medical lapse and re-registering your legacy airplane as Light Sport, make sure you let your insurance provider know in advance. Just because you're all right with the FAA doesn't mean you're all right with your insurer. You might be or you might not, depending on the type of policy you have.

There are two problem areas to avoid. Some policies written for standard category airplanes require a current and valid airworthiness certificate. Some require pilots to have current and valid medical certificates. Policies written for LSAs and pilots will typically have wording which allows substitution of a drivers license for a medical and a Light Sport certificate for a standard certificate.

The entire world of insuring light sport airplanes is a little more than two years old, and like the LSA market itself, it's in constant flux. As of this writing, Light Sport pilots will find a healthy market for insurance for most popular factory-built SLAs and legacy airplanes. Coverage is available for kit-built SLAs, but costs more and is more restrictive.

We wonder if insurers will offer higher limits of liability as the LSA market grows, or whether Light Sport pilots will always be looked at as higher risks because of their lack of medical credentials. What will happen when Cessna and perhaps Cirrus start selling airplanes in large numbers is anybody's guess, but we think it can only help.

CHECK LIST

[+] Insurers are warming up to the LSA market, but rates aren't as low as some owners expect.

[+] There's enough competition to find insurance for most LSA models...

[-] ... but some companies won't touch certain types because they've never seen them.

[-] Heavy repair costs are high because only new parts are available.

RELATED ARTICLE: After a wreck, a new LSA may not be cheap to fix.

UNINTENDED CONSEQUENCES

After being medically sidelined from commercial flying for almost 28 years, I watched the Light Sport rule travel through the tortuous FAA labyrinth, never quite believing that it would get me flying on my own again. Over the years, I've kept my instructors' certificates and stayed current flying with instructor friends. A year after it became law, I realized that all I needed to become a Light Sport Pilot was a Light Sport Airplane.

I had been a partner in a Champ and thought that it would be nice to get an airplane with an electrical system and the modern conveniences like a starter and radios. Prices of used Cubs varied widely, but a vintage J-3 in good shape with an electrical system might cost as much as $50,000.

Among the ads, I found an American Legend Cub listed in St. Augustine, Florida, that was barely six months old and attractively priced. Besides electrics and radios, Legend Cubs have wing tanks, 100-HP O-200 engines, doors on both sides and, best of all, they can be flown from either seat.

When I spoke with the airplane's owner, Robert York, he explained that he purchased the airplane from its original owner, who had flipped it over while landing shortly after bringing it home from the factory. The Legend Cubs have heel brakes with hydraulic boost and overzealous application of the brakes while still on the runway had been the cause of the accident. Given the lack of effectiveness of the originals, entirely understandable.

York and a mechanic friend repaired the airplane, which was mostly a matter of replacing broken parts like the rudder, windshield, VHF antenna, upper cowl, two lift struts and the propeller. Throw in an engine teardown and I was good to go.

But here's where it gets interesting. Despite the minor nature of the repairs, the cost to fix the airplane was almost $60,000. Since it was new, so were the replacement parts, which made up the bulk of the repair cost.

We're guessing that an original Cub that suffered the same damage would have cost about half as much to fix with used and rebuilt parts, which aren't available for the Legend. Either way, a Legend Cub insured for $80,000 or a legacy Cub insured for $50,000, fairly minor damage will likely total the airframe.

The Legend Cubs (I have the open-cowl version) are great fun to fly. With both doors open, it's almost like flying an open cockpit airplane. On takeoff and landing, the airplane is well-mannered and predictable and will forgive a certain amount of hamfistedness or hamfootedness. If you're up to it, the airplane will handle a fair amount of crosswind, although with its light wing loading, beware of big gust spreads and high winds.

It does have some quirks. With the electrical system and bigger engine, the airplane is substantially heavier than the original J-3, and the CG is farther forward, which may be why the manual recommends wheel landings. If you're used to flying at 160 knots, the Cubs leisurely 75 to 80 MPH requires some adjustment. I've taken mine on some fairly long trips, but for the most part, Cubs are about flying and not as much about going somewhere. When I find bugs on the leading edges, I know they were headed in the other direction.

Jon Doolittle owns Sutton James Insurance in Hartford, Connecticut. (www.suttonjames.com.)