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Rotax 912 - the dirty secret

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  • Rotax 912 - the dirty secret

    I recently had the sobering and rather upsetting experience of having the engine (and complete instrument set) stolen from my aircraft. It was touch and go whether the aircraft would be written off but the insurance company decided (after some helpfull cost savings from Flylight and CT Aviation) that they would pay for the aircraft to be brought back to life with everything replaced.

    All good news then.

    Well, no, not exactly. The sting in the tail is the principle of betterment that the insurance companies have the right to apply. This has the effect that a 2000 hour 912 engine has zero value. None. We tend to consider that the 912 is a class act and can go on for ever, and this has some truth in it, but not to the insurance company.

    What this means is that if you have, lets say, a 1000 hour 912 engine that is lost, stolen or written off for any reason, the insurance company has the right to (and in general will) apply betterment and will only pay half of the cost of a replacement 912 engine. You will have insured the aircraft for the value you believe it is worth if selling but if the engine has done an appreciable fraction of that 2000 hour life then you would not get the amount you had insured it for, and in fact if the aircraft had a new engine put in, you would have to stump up the betterment, in our example half of the cost of the new 912 engine.

    Bear in mind that the insurance company will not deal with second hand engines. They do not want to get involved in any claims arising from supplying an engine of unknown provenance
    .
    Makes you think doesn't it.

    What it says to me is that if you are looking to buy a 912 engined aircraft then unless you are confident that you will never need to make an insurance claim involving the engine then very careful consideration should be taken of the engine hours and the price being asked should reflect the true value of the engine, based on zero value at 2000 hours.

  • #2
    Rotax 912 - the dirty secret

    Well, that's bad news Laurie! Sorry to hear of your plight, that certainly seems unfair! Who are the insurers?

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    • #3
      Rotax 912 - the dirty secret

      A fair and proper question Andy. I never had this issue with OnRisk.

      Andy Fell wrote: Well, that's bad news Laurie! Sorry to hear of your plight, that certainly seems unfair! Who are the insurers?

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      • #4
        Rotax 912 - the dirty secret

        So wouldn't it have been better to make sure that it was a write off so that the full insured value was paid out?

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        • #5
          Rotax 912 - the dirty secret

          I paid a little extra with Visicover so that betterment didn't apply, in other words new for old.

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          • #6
            Rotax 912 - the dirty secret

            A friends Cessna got blown over 2 weeks back. The insurance company wrote the aircraft off just on the pictures..and have paid out the full hull value. they insured it for.
            Even though the engine was well over TBO.

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            • #7
              Rotax 912 - the dirty secret

              Gwyn Carwardine wrote: I paid a little extra with Visicover so that betterment didn't apply, in other words new for old.
              The Visicover online quote asks if you want to insure against betterment, it explains the risk and allows you see the effect inclusion has on your premium.

              https://app.visicover.com/PagesCP/Vi.../AvFwIn01.aspx

              Good of you to post your experience Laurie. Hopefully, it will save others from a nasty surprise, should they suffer a similar misfortune to yours.

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              • #8
                Rotax 912 - the dirty secret

                Even a 2000 hour 912 has some value - as defined by what you would have to pay to buy one second-hand on the open market, even if that is not what is being used as a replacement in this case.

                Otherwise the insurance company is setting some arbitrary life on the engine.

                Worth arguing for some value at least?

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                • #9
                  Rotax 912 - the dirty secret

                  I guess it depends how you look at it - having an new engine increases the value of the aircraft substantially - and I guess the insurer thinks thats not part of the deal.

                  It not really a Rotax thing - would be proportionately worse with an engine with lower TBO number.. But then again those are not so attractive to the robbers.

                  Betterment crops up from time to time and not just on engines - I have known them do it on sails too - the insurance company has offered patch repair, but wanted betterment adjustment to replace with new. Sometimes the Insurance company strong arms the repairer to buy the repairable sail and reduce repair invoice accordingly - I have two Skyranger wing skins I rashly agreed to do that with that I still have 4 years later!

                  I guess the moral of the tale is that the lowest quote for hull may not be the best value.. And to clarify this when buying the policy / renewal.

                  Often the insurance company will agree a price for the repair and its possible to negotiate to be paid that amount and organise the repair yourself - which then gives the opportunity to source a used engine.

                  Paul

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                  • #10
                    Rotax 912 - the dirty secret

                    so, is betterment good or bad
                    Itís often best to keep one's mouth shut, and let everyone think you are a twit, than open it, and remove all bloody doubt....

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                    • #11
                      Rotax 912 - the dirty secret

                      Gwyn Carwardine wrote: I paid a little extra with Visicover so that betterment didn't apply, in other words new for old.
                      Although the subject title is disingenuous, this is an insurance industry issue, there is no Rotax 'dirty secret', I appreciate the issue being raised and have also just renewed with Traffords and insured against the application of betterment for a relatively modest sum.
                      subscribe to Microlight Flying eNews here : http://dm-mailinglist.com/subscribe?f=c4198184

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                      • #12
                        Rotax 912 - the dirty secret

                        Betterment is an interesting concept/problem.

                        With a Rotax 912, if you employed your own loss adjuster I would expect them - at least - to make the counter-arguement that the expected life for a non-certified Rotax 912 in a microlight is in excess of 3,000 hours.

                        The second-hand value of a Rotax 912 at 2,000-ish hours is basically GBP2,000 from Eccleston Aviation, the last time we sold one.

                        Now, if you bend the leading edge tube on a weightshift, you get a new one from the insurers. I have never heard of them claiming " betterment" here. Of course, one would argue that an entire aircraft with a new leading edge tube is not worth any more than the entire aircraft with the old tube, even though the new tube has a longer life.

                        So apply that argument with a, say, C42. We put a new engine - cost 12,000 - into one of ours. Might have been worth 34k before we fitted the new engine, maybe only worth 40k with a new one. So 12k spent, minus 2k back for old one = 10k cost. But only a 6k betterment.

                        This sort of argument is why you might even want to consider your own specialist loss adjuster.

                        One question is whether they are insuring the aircraft, or insuring the engine and insuring the airframe!

                        If insuring the engine, then one can see why one wouldn't get new for old. And betterment easy to calculate. But if insuring the entire aircraft, then you probably will have to pay some betterment for the new engine - because an aircraft with a new engine is worth more - but the betterment is only the increase in the value of the whole aircraft with a new engine, which will be not as much.

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                        • #13
                          Rotax 912 - the dirty secret

                          I'd have thought the purpose of insurance is to return the item to its state prior to the incident. So I'd expect a payout (less excess) of enough to return a healthy 2000hr machine back to that.
                          Dave

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                          • #14
                            Rotax 912 - the dirty secret

                            Donald Walker wrote:
                            Originally posted by Gwyn Carwardine
                            I paid a little extra with Visicover so that betterment didn't apply, in other words new for old.
                            The Visicover online quote asks if you want to insure against betterment, it explains the risk and allows you see the effect inclusion has on your premium.

                            https://app.visicover.com/PagesCP/Vi.../AvFwIn01.aspx

                            Good of you to post your experience Laurie. Hopefully, it will save others from a nasty surprise, should they suffer a similar misfortune to yours.
                            Hmmm....Think you have it the wrong way around..You pay more for Betterment ( New for Old) not tick the box to insure against it!

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                            • #15
                              Rotax 912 - the dirty secret

                              Yes, just done mine, you must select the betterment option, so that you have new for old.

                              Regards Jonathan.

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