Is it possible to get small-fry specialty insurance?
May 29, 2013 3:56 PM Subscribe
It's possible to get insurance for strange things: for example, Lloyd's of London once insured Troy Polamalu's hair for $1 millon. How can I get some esoteric insurance of my own? For details...
In 2010, an FAA emergency airworthiness directive grounded the LET L-13 Blaník, a popular two-seater glider used for flight training and rides. Dozens of gliding clubs and commercial operations found themselves needing to buy a replacement. Airplanes are expensive.
The L-23 Super Blaník still flies, and folks say that its improved design makes it more resilient to the fatigue problems the L-13 encountered. Still, it evolved from that type, and that makes some people nervous. Suppose I owned one and wanted to buy insurance that would cover any FAA airworthiness directive (or similar regulatory action) issued against the type---either by paying for mandated repairs, or by paying for a replacement airplane if the FAA grounded the L-23. Is this possible?
This seems like a kind of specialty insurance for which no off-the-shelf policy exists. The coverage amount would not be large as these things go, somewhere in the low tens of thousands of dollars, which is not really in the same league as Polamalu's hair. Is this problem too small-fry?
Note: I am not asking about liability insurance. I am specifically concerned with insurance against costs associated with regulatory action.
In 2010, an FAA emergency airworthiness directive grounded the LET L-13 Blaník, a popular two-seater glider used for flight training and rides. Dozens of gliding clubs and commercial operations found themselves needing to buy a replacement. Airplanes are expensive.
The L-23 Super Blaník still flies, and folks say that its improved design makes it more resilient to the fatigue problems the L-13 encountered. Still, it evolved from that type, and that makes some people nervous. Suppose I owned one and wanted to buy insurance that would cover any FAA airworthiness directive (or similar regulatory action) issued against the type---either by paying for mandated repairs, or by paying for a replacement airplane if the FAA grounded the L-23. Is this possible?
This seems like a kind of specialty insurance for which no off-the-shelf policy exists. The coverage amount would not be large as these things go, somewhere in the low tens of thousands of dollars, which is not really in the same league as Polamalu's hair. Is this problem too small-fry?
Note: I am not asking about liability insurance. I am specifically concerned with insurance against costs associated with regulatory action.
Response by poster: BenPens, can you be more specific about what a "decent broker" is? I'm afraid I don't know much about insurance, and I feel like this is this something that they wouldn't be able to take care of at the State Farm office down the street. Am I wrong about that?
posted by tss at 4:22 PM on May 29, 2013
posted by tss at 4:22 PM on May 29, 2013
Best answer: So, the big three brokers in the US are Aon, Marsh, and Willis.
If you find a broker who works with one of them, they can probably get something like this set up for you. It will be one-of-a-kind, specifically written to a contract for you. There might need to be some give and take as to coverage and price. I suspect Ms. Vegetable's company would also be able to set something up.
This will take some time, though - maybe a week or two is my guess. It is definitely not like walking into a State Farm office and walking out with immediate car insurance.
posted by a robot made out of meat at 5:25 PM on May 29, 2013
If you find a broker who works with one of them, they can probably get something like this set up for you. It will be one-of-a-kind, specifically written to a contract for you. There might need to be some give and take as to coverage and price. I suspect Ms. Vegetable's company would also be able to set something up.
This will take some time, though - maybe a week or two is my guess. It is definitely not like walking into a State Farm office and walking out with immediate car insurance.
posted by a robot made out of meat at 5:25 PM on May 29, 2013
Husbunny is an actuary, and he works with after-market auto warranties. Now they base the rates on average cost per claim, number of claims, by specific vehicle. They rate vehicles from 1 (Honda) to 16 (Land Rover.) They have decades of claim information and they constantly refine and revise the stats as the gather more data.
So...in order to come up with a price for your policy, they'd need to figure out, based on the history of the vehicle, the odds of such a directive being issued. So two things could happen, either the policy would be prohibitively expensive, say the cost of a new glider, or they could decline to cover it at all.
Insurance is a game of risk, why would you insure something if you were 80% sure you'd have to pay out on it? Short answer, you wouldn't. The warrantee insurance on the Land Rover is pretty expensive. The Land Rover is a piece of shit. With frequent and expensive repairs.
So, you'd have to contact a specialty insurance company to even see if they'd entertain writing the policy, and you might not like the answer.
posted by Ruthless Bunny at 5:39 PM on May 29, 2013
So...in order to come up with a price for your policy, they'd need to figure out, based on the history of the vehicle, the odds of such a directive being issued. So two things could happen, either the policy would be prohibitively expensive, say the cost of a new glider, or they could decline to cover it at all.
Insurance is a game of risk, why would you insure something if you were 80% sure you'd have to pay out on it? Short answer, you wouldn't. The warrantee insurance on the Land Rover is pretty expensive. The Land Rover is a piece of shit. With frequent and expensive repairs.
So, you'd have to contact a specialty insurance company to even see if they'd entertain writing the policy, and you might not like the answer.
posted by Ruthless Bunny at 5:39 PM on May 29, 2013
The thing about Lloyd's is that they're not an insurance company but more of a broker or exchange like the stock market. So it's like calling them and saying "I have this strange thing I want to insure, is somebody interested?" and then the appropriate investors in this instrument will or won't appear.
posted by dhartung at 5:49 PM on May 29, 2013
posted by dhartung at 5:49 PM on May 29, 2013
Response by poster: Thanks, a robot made out of meat. What is "Ms. Vegetable's company"?
posted by tss at 7:53 PM on May 29, 2013 [1 favorite]
posted by tss at 7:53 PM on May 29, 2013 [1 favorite]
See your MeMail for details.
posted by a robot made out of meat at 5:40 AM on May 30, 2013
posted by a robot made out of meat at 5:40 AM on May 30, 2013
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posted by BenPens at 4:05 PM on May 29, 2013