SilverLink - Winter 2008 - (Page 13)

Betterments “Betterments” occurs when new, “latest and greatest” parts are used for aircraft repair because original parts are obsolete. With these parts, of course, come the “latest and greatest” prices. Helicopter and engine components are traditionally in this pool. This increase in parts costs (when compared to the original parts costs) could, in some cases, drive the cost of the repair above the hull value. As the owner, you may be given the option to cover the overages out of your own pocket. This scenario is another area to address when determining hull value. Decisions, Decisions—And a Market Update The insurance market continued to soften throughout 2007, with most operations seeing premium reductions around 15%. Record numbers of new aircraft have been delivered, and there has been a dramatic increase in the total number of passengers being carried. But an interesting dynamic is unfolding: as exposures to hull and liability increase and premiums decrease, underwriters are pressured to keep a stable bottom line. Eventually these curves will cross, and underwriters will have to increase premium to strengthen the reserve for claims. For now, the good news is that the aviation insurance market is expected to continue softening over the next 12 to 18 months. Top-notch flight departments should continue to see decreases in premium totals around the 10% level, driven in part by low claims rates within the airline and general aviation industries. The insurance industry has experienced many changes since the days when Edward Lloyd served coffee to his clients. Lloyd’s of London has grown to be the world’s largest insurance market, offering coverages for unique exposures. SilverStone Group is proud to partner with Lloyd’s when placing complex aircraft coverages. When you need aircraft insurance, it’s important that your agent or broker has expertise in dealing with the specifics of your business and your fleet. Don’t hesitate to ask questions. A competent agent will welcome them. “Duncan Aviation’s recent installation of the Honeywell CDS-R “Glass Box” upgrade in a Falcon 900” withstands damage that is normally repairable, the insurance company may “total” the aircraft when the cost to repair reaches the level of underinsured value. At this point, all you can expect to recover is the limit of the hull value. The cost of repair above this amount becomes your responsibility. In some cases, the insurance company may want to take ownership of the damaged aircraft for salvage in a total hull payout. In either case, you may come out short. And given the myriad ways aircraft valuation can fluctuate, we recommended that you obtain a valuation for your aircraft both at the time application is made for coverage and with each subsequent year during the renewal process. In this way, you protect your investment by providing adequate coverage, thus assuring that if you do sustain a loss, you will be indemnified or returned to the same financial position you held prior to the loss. That’s why you purchase insurance in the first place. What was true for Edward Lloyd and his clients is true for you, too—it’s all about the hull value. * Supplemental Type Certificates (STCs) are issued by the Federal Aviation Administration (FAA) and define modifications or changes made to a specific aviation product (i.e., engine, propeller, hull, etc.). Issuance of an STC by the FAA indicates that such modifications have been approved by the FAA. 13 silverlink — Winter 2008

Table of Contents Feed for the Digital Edition of SilverLink - Winter 2008

SilverLink - Winter 2008 Contents Risk Management: Where in the World is Human Resource Consulting? Workers’ Compensation Rate Declines Insurance Certificates Haute Retirement It All Began with a Cup of Coffee Playing Fair in the Housing Market Captives 101 Proceed with Caution Fore! (Or is it Pull? or Giddyup?) Don’t Be Fuelish Employee Benefits: Medical Trend Countdown to Compliance Private Client Services: Buy & Sell Agreements Flood Insurance Pushing Wealth to the Next Generation Client Spotlight: Travel and Transport Internal Happenings: SilverStone Group Giving Back Since 1945

SilverLink - Winter 2008

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