Occurrence vs. Claim
By Bob Mackey, representative for the EAA Aircraft Insurance Plan, Administered by Falcon Insurance Agency
May 28, 2009 — It’s a pleasant summer evening, you’re enjoying the smooth air flying your favorite Aeronca Champ, just taking in all the beauty of the season. Your destination is a private grass strip, not too far away, and maybe 1,800 feet long. The place is owned by a good friend who keeps his J-3 Cub there, and some other friends have already flown in for brats and burgers. With light and variable winds, you can land from either the north or the south - it makes no difference. Since you are coming from the south, landing to the north is what you decide to do. With a 45-degree to final approach you line up on the runway and prepared for what you hope will be a smooth touch down. Just as you’re getting ready to cross the road you remember the unmarked power-line and you add power and even though your touch down will be further down the strip you know you’ve got plenty of room. As you cross the road you feel a little bump and proceed with a picture perfect landing.
After you taxi up to where everyone else has their airplanes parked you shutdown and hop out to a round of applause. You bow gently as if you were on stage on Broadway then you hear someone say, “nice job…you’re lucky we’re grilling out because we’ve got no power.” You turn around and see the power-line dangling from the pole and suddenly realize you hit the wire. Upon inspection it was actually your tailwheel that clipped the line, creating the “bump” you felt as you came in. There are only a few marks on the fabric and the tailwheel appears to be undamaged. Soon the utility company’s truck shows up and after a short discussion the crew gets to work and restores power.
What just happened? You had what’s called “an occurrence.” Do you have a claim? Maybe, maybe not. Do you know what you are supposed to do? Probably not, but most owner/pilots don’t. Let’s take a look at what you have to do and what choices you have.
First off, according to your airplane insurance policy (and I’ll paraphrase here), an occurrence is when something happens that is not expected or intended and results in bodily injury, property damage, and/or damage to your airplane. Well let’s see, the power-lines were damaged and maybe your airplane was slightly damaged. Is that all? Again, maybe, maybe not. So what are you supposed to do? Once more, paraphrasing from the insurance policy, after an occurrence you are supposed to report the following as soon as possible to your insurance company:
- Names & Addresses (Injured and Witness)
- Policy Report (Theft or Vandalism)
If you are served with a lawsuit, or if you receive a letter relating to the occurrence from someone or their attorney, you are also supposed to forward this information to your insurance company right away. You are also supposed to protect you airplane if it is damaged from any further damage.
Let’s go back to the power-line incident. Suppose you decide not to report the occurrence to the insurance company because you figure it will just go away and you don’t want the company to jack up your insurance premiums. What’s wrong with this plan?
Eighteen months pass after you clipped the power line and you never reported the occurrence to the insurance company. Seems like everything will work out with no further problems…until one day you get a letter from an attorney who represents the utility company stating you owe $25,000 for damages to the power-line, cost of doing the repairs, or other electrical equipment. The next day you get another letter from a different attorney who represents a meat packing company demanding $300,000 for spoiled meat when the nearby meat packing company lost power because you hit the power-line. Finally, (bad things always come in threes), you get a third letter the next day from yet another attorney representing a poultry farm that lost all of its chickens when the farm’s air systems failed as a result of the downed power line. They’re demanding $500,000 for the loss.
After the initial shock, you call your insurance company and report the occurrence along with the three letters demanding restitution for damages. What would your insurance company do? Most likely the insurance company will open a claim file and send you a letter acknowledging receipt of your notice of a claim. Also the company will very likely advise you that it is reserving its right to not defend or indemnify you because you did not adhere to the terms and conditions of the insurance policy, which states that you must report all occurrences as soon as possible.
Further, you must cooperate and assist the insurance company in the process of dealing with the damages related to the power line and any subsequent damages. Who knows? It may turn out that the chickens were already sick and the power outage was not the actual cause of their demise. Or maybe the meat packing company had contaminated meat and the power outage was not the true cause. The problem is that 18 months later - when the meat and the chickens are long gone - it would be very difficult to prove otherwise.
It’s your option whether or not to make a claim for minor damage to your airplane, but you still must report the occurrence ASAP! If you don’t, you could be creating a huge liability issue for yourself.
One last point: Say you initially decide not to make a claim for the damage to your airplane and you discover later the damage is greater than originally thought. You might have a problem if you start making repairs to your airplane and upon discovering the greater extent to the damage go back to the insurance company and tell them you want to make a claim for the damages to your airplane. Make sure you know the extent of the damage before your decide to not make a claim for damages to your airplane.
Read your insurance policy. It is for your own protection that you understand your insurance coverages, your responsibilities, and your options. Also make sure and ask your insurance agent about anything in your insurance policy you may not completely understand. It also doesn’t hurt to ask your insurance agent so “what if” questions to make sure you totally understand all the details of your insurance. After all, that’s part of their job!
If you’re not sure about your airplane insurance you need to check out the EAA Aircraft Insurance Plan that is administrated by Falcon Insurance Agency. Our aviation insurance specialists will make sure you have the right insurance at the best price. Give them a call at 866-647-4EAA (4322) or visit www.eaainsurance.org to submit an online quote request.
The EAA Aircraft Insurance Plan provides aviation insurance coverages for a wide range of aviation activities and is administrated by Falcon Insurance Agency, Inc. Bob Mackey is senior vice president of Falcon Insurance Agency, Inc. and you are welcome to send your suggestions for insurance-related topics that you would like to see addressed to Bob at email@example.com. Thanks for supporting EAA by participating in the EAA Aircraft Insurance Plan.