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The Cost of Insur nee

2nd June 1933, Page 52
2nd June 1933
Page 52
Page 53
Page 52, 2nd June 1933 — The Cost of Insur nee
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Conditions f a ask Policy and Average Premiums in Accordance Therewith. Last Month's Article Followed Up with a Closer Examination of Insurance Forms and Costs

Y S. 11: Our Costs Expert CONIMMICIAL-MOTOR users contemplating the field of air transport need to know the cost of insurance, and the subject was briefly discussed in our Air Transport Supplement for May. Road-transport men must first appreciate that the much wider scope of air transport brings in its train a corresponding variation in the premiums, although those variations may he, in the first place, pro rata to the value of the craft insured.

Modification of insurance premiums according to the radius of operation and locality of headquarters is already familiar to readers of this journal in relatiec to road vehicles. In insurance applied to commercial motor vehicles in Great Britain . three schedules apply, namely, (A) those for vehicles operated in densely populated

areas ; (B) those in industrial areas

7 and ('C) those in rural districts, Air transport. may roam the whole world over so that the variety of insurance schedules might justifiably be infinite.

Factors that Affect the Premium

Most prominent amongst the factors that have to be taken into consideration when assessing a premium are the following; (1) The type, . make and size of aircraft employed, whether single or multi-engined, . and whether both aircraft and engines are made by a firm which has a good reputation with underwriters. • (2) The countries in which the machines are to be operated. The probable weather conditions at the different seasons of the year have to be taken into consideration, and the suitability, or otherwise, for forced landings of machines, in the event of engine failure, of the countries in which the machines are to be operated.

(3) What sea crossings are involved, including the weather likely to be experienced during crossing.

(4) What facilities there are for -repairs and the obtaining of spare parts in those countries of operation. . (5) The experience and accident records of the pilots.

It is necessary also to take into account the experience of the operating company, the pilots it employs, and the accident records of the concern.

There is a further complication, so far as overseas air transport is concerned, arising from the various conditions under which flying is permitted in different countries, conditions which, moreover, are constantly subject to alteration.

The standard policy issued by the u34 British Aviation Insurance Co., Ltd., covers five principal sections. These comprise accidental loss or damage to the aircraft, (a) caused by collision but excluding that resulting from fire, (b) arising from fire, (c) theft, (d) third-party—excluding passengers, employees, sub-contractors. and property belonging to the insured, (e) legal liability to passengers. .

The last-named is stringently governed by a condition which strictly limits the liability of the .insured in respect of the passengers he carries. These limitations, according to my reading of them, are devised to exclude the insured from any liability to his passengers other than that arising from neglect.

There is a schedule of general exclusions which, at first sight, seemS somewhat formidable but, on closer examination,. is evidently intended. merely to confine the application of this policy of insurance to legitimate commercial or private flying and to ekclude the use of the aircraft thus insured for any special purpose whatever.

Schedules to the Policy

There are two schedules to the policy. One specifies in detail the aircraft insured and the names of the pilots. It embodies a statement of the purposes for which the aircraft will be used and the radius within Which it will be flown..

The other schedule stintilates the maximum amount payable under the five sections just enumerated, (a.) in respect of a single accident, (b) in all. There is provision for " excess " (that is to say, the amount of "first loss" to be borne by the assured : it is rarely less than two per cent, of the value of the machine), and a statement of the actual premium involved.

One more point before the reader turns to the accompanying brief average schedule of premiums.

In the case of any claim under scheme "a," " b " or " c " the insured is called upon to pay an additional premium on the amount paid by the underwriters pro rata to the unexpired period of the policy. , This is important as it must obviously directly affect the cost of

Insurance, although seriously, of sured is particularly unfortunate.

• A feature of the premiums pay course, only in cases where the in able in connection with these insurthis graph of pay

load against

ances is the much lower scales, pro insurance pre rata to the value of the machines, mium is useful. which prevail in connection with the larger types of aeroplane. This peculiarity is, perhaps, expressed more clearly in the diagram, Fig. 1, which shows the relation between annual premiums and first cost Of aircraft.

There is a steady rise in the premium for machinescosting less than 18,000. Then there is the equivalent of a break in the -graph,

which starts again on a similar grade, not quite so steep.

Apparently the insurance companies, acting, as they invariably do, On experience, have come to the conclusion that the larger and more expensive types of aeroplane are less (Left) First cost liable to accident than the others.

and insurance oversea flying are lated; inland and premium col

covered. ties afford a steady basis .upon . which underwriters can gauge risks. their operating methods and statisnaturally are in. a position such that The big operating companies In conclusion, should state that, whilst the foregoing may be :taken as comprising the. conditions of a representative policy, a fair amount of aviation business is transacted by Lloyd's underwriters and their policy is rather more simple.

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