Module 4 Analysis Discussion Insurance Policy

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Embry-Riddle Aeronautical University *

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404

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Accounting

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Feb 20, 2024

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docx

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Uploaded by ChiefValorGazelle39

Read Assume that the Data Page Direct Approach Non-Owned Aircraft Insurance Policy | Avemco (PDF) Links to an external site. has your name as the Insured (Policy Holder) with your address and the premium you paid to purchase the following coverage limits:  Coverage A: $1 million per occurrence and $100,000 per passenger  Coverage B: $350,000 And  The Policy Period began yesterday and continues for one year.  The pilot endorsement includes you, by name, holding a currently valid FAA Commercial Pilot Certificate with Second Class Medical Certificate. General Accident Scenario You are operating a rented aircraft with one non-pilot passenger on board. You attempt to land in a strong, gusty crosswind when you lose control. The aircraft departs the runway, the nose wheel strikes a runway light, and the aircraft flips over. The aircraft is damaged, and both you and your passenger are injured. Post Make your original, primary posting by the fourth day of this module week. Based on the Sample Non-Owned Aircraft Insurance policy provided (link above), will the insurance company pay for each of the following losses? If so, how much will the insurance company pay? Cite the policy paragraph(s) relied on for each answer. Treat each question as a separate response rather than a continuation or follow-up to the previous question(s). 1. The aircraft is damaged beyond economical repair. It would cost $175,000 to repair the damages, but an identical replacement aircraft can be purchased for $150,000. The insurance company would stand the expense of repairing or replacing the airplane since the Coverage B limit is $350,000. Nevertheless, it correspondingly doesn’t specify in the scenario if the plane falls outside of the specifications of a Turbine Engine, an engine with more than 450 horsepower, more than seven seats, or more than one engine. On condition that it did, the insurance company would not cover the impairments (Page 2, paragraph 6a,b,c,d.). 2. Your passenger, a friend who was along for this recreational flight, is injured and incurs $20,000 in medical expenses.

The insurance company will reimburse for the friend’s medical costs. Under Coverage A conditions: “We will pay for bodily injury and property damage for which you are legally liable. The bodily injury and property damage must be caused by an accident using a non- owned aircraft.” There’s also some confusing phrasing in “Medical Expenses” as it remarks: “We will pay for necessary medical expenses for bodily injury to you, your spouse, parent or child,” so in that sentence, it doesn’t sound like it’ll cover passengers. I’d contact the insurance company to gain a transparent explanation. 3. You are injured and incur $18,000 in medical expenses, and A. this was a recreational flight. Under “Medical Expenses,” notes: “We will pay for necessary medical expenses for bodily injury to you, your spouse, parent or child,” so the insurance would cover the expenses. (Page 2, Medical expenses). B. this was a flight made to visit a customer as a part of your employment. Under “Exclusions,” the policy mentions when the non-owned aircraft is used commercially. Therefore, the insurance company may not be liable if this trip is considered a commercial flight (Page 3, Exclusions paragraph 1b.). 4. Your passenger, a co-worker who was along on this business flight for your mutual employer, was injured and incurred $20,000 in medical expenses as a result. The policy would be under the “Exclusions” when the non-owned aircraft is used commercially. If this trip is considered a commercial flight, the insurance company may not be liable (Page 3, Exclusions paragraph 1b.). 5. You and your passenger each had a $1,800 laptop computer in the baggage compartment, and both were destroyed in the crash. The insurance company would not cover the entire expense of replacing the laptops. Instead, it states: “The personal effects of each passenger are up to $500.” (Page 2, paragraph 8d.). 6. Elk hunting season opens Monday, and the purpose of your flight was to spot herds of elk from the air to help you select your hunting area. How would this affect the insurance company's liability for A. damage to the aircraft? The insurance company would not cover the costs since this condition would be considered exclusion for spotting animals (Page 2, paragraph 9b.).

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