AVMG 5090 EXAM 2 5-8 QUESTIONS WITH VERIFIED
ANSWERS
A real estate brokerage firm specializing in large farm and ranch properties scattered
across the rural Midwest and western United States hires you to buy a suitable airplane
and set up a flight department to enable the company to transport prospective buyers to
view these properties. The company will make its money from real estate sales, and
there will be no charge to these customers for the air transportation. You are about to
buy the aircraft insurance policy.
a. What is the appropriate purpose of use to cover the proposed operations? Why?
b. On the hull coverage, what risks will you insure against? Why?
c. What method of valuation will you select for the event of a total loss? Why?
d. Will a policy containing an FAR violation exclusion clause be acceptable? Why?
e. The company's bank, which has no prior aircraft financing experience, is willing to
finance a portion of the purchase price of the aircraft if (and o - Answers - a.Industrial
Aid
b.All risk. It covers anything that might happen.
c.Stated Value - so I get paid what the aircraft cost.
d.No - Fars are sweeping in scope and more than likely a violation can be discovered. If
so - no pay
e.Yes, through hull coverage with the leader as the loss payee
*** lien holders interest e-dorsement****
You are camped beside you floatplane on the shore of a remote lake in the Alaskan
wilderness. A friend who operates the same make and model as yours and knows
where your favorite fishing hole is stops by to bring you a copy of a new Airworthiness
Directive (AD) that the FAA has just issued against these aircraft. The AD requires that
a certain test be performed "before further flight." The equipment needed to perform the
test is not portable and the only repair facility in the state with that equipment is located
over 500 miles away in Anchorage. Therefore, you will be required to obtain a special
flight permit (ferry permit) from the FAA in order to legally fly the aircraft from your
present location to the repair station where the AD can be complied with.
a. Do most aircraft insurance policies cover operations under a special flight permit?
b. What would be the prudent thing to do about your aircraft insurance cove - Answers -
a. no
b. Purchase additional coverage for the "ferry flight"
For each of the following events, indicate whether the event triggers considerations
relating to your aircraft insurance policy, and explain why.
a. The aircraft is to be used for a different purpose than before.
b. A different pilot will be flying the aircraft.
c .The aircraft is going to be flown outside the contiguous (lower 48) United States.
d. You have upgraded the aircraft's avionics, adding significantly to its value.
, e. You are going to fly the aircraft to Santa Fe, New Mexico.
f. You have finally paid off the loan you took to purchase the aircraft.
g. You sell the aircraft. - Answers - a. If changed it will not cover, review policy you may
need additional coverage.
b. They must be qualified.
c. Yes, chances are you'll need extra coverage.
Review geographical boundaries.
d. Need to upgrade product liability.
Increase state of value policy.
e. no
f. No longer need lien holder.
g. Cancel insurance once sale is final.
What is subrogation, and how can renter pilots be protected against it? - Answers - is
the right of an insurance company who paid a claim to sue anyone other than the
insured who contributed to the cause of an accident. renter pilots can be protected by
purchasing a wavier of subrogation endorsement.
While filling out your application for aircraft insurance, you round off your total flight time
to the next higher 100 hours. You are issued an aircraft insurance policy based on that
application but have an accident that causes extensive damage to the aircraft before
you actually accumulate the total number of hours you reported on your application for
that insurance policy. Is the insurance company obligated to pay for repair of the
aircraft? Explain. - Answers - Never round off
While you believe that you have now accumulated over 10,000 hours of flight time, it
has been your habit to record in your pilot logbook only time required by FAR to be
logged to show proficiency, so you have logged only 3,000 hours of flight time. Which
figure should you use in your application for aircraft insurance? Why? - Answers - 3,000
- its what you can prove.
Your airplane crashed, and a passenger was injured. You are absolutely certain the
accident was not your fault. Does your insurance company have to get your permission
to pay a settlement to the injured passenger? - Answers - No, they are prohibited
because that would interfere with effected damages being suffered by the insured.
You are opening an aircraft repair station that will inspect, repair, and modify customer's
aircraft, providing necessary parts in the process. The business has its own hangar,
where the work will be performed, and offices including a reception area and pilot
lounge for customers along one side of the hangar. The business will not own or
operate any aircraft. What insurance coverages will the business need? - Answers - 1.
Product liability insurance
2. hanger keeper unemployment
3. Airport liability policy
4. umbrella policy
ANSWERS
A real estate brokerage firm specializing in large farm and ranch properties scattered
across the rural Midwest and western United States hires you to buy a suitable airplane
and set up a flight department to enable the company to transport prospective buyers to
view these properties. The company will make its money from real estate sales, and
there will be no charge to these customers for the air transportation. You are about to
buy the aircraft insurance policy.
a. What is the appropriate purpose of use to cover the proposed operations? Why?
b. On the hull coverage, what risks will you insure against? Why?
c. What method of valuation will you select for the event of a total loss? Why?
d. Will a policy containing an FAR violation exclusion clause be acceptable? Why?
e. The company's bank, which has no prior aircraft financing experience, is willing to
finance a portion of the purchase price of the aircraft if (and o - Answers - a.Industrial
Aid
b.All risk. It covers anything that might happen.
c.Stated Value - so I get paid what the aircraft cost.
d.No - Fars are sweeping in scope and more than likely a violation can be discovered. If
so - no pay
e.Yes, through hull coverage with the leader as the loss payee
*** lien holders interest e-dorsement****
You are camped beside you floatplane on the shore of a remote lake in the Alaskan
wilderness. A friend who operates the same make and model as yours and knows
where your favorite fishing hole is stops by to bring you a copy of a new Airworthiness
Directive (AD) that the FAA has just issued against these aircraft. The AD requires that
a certain test be performed "before further flight." The equipment needed to perform the
test is not portable and the only repair facility in the state with that equipment is located
over 500 miles away in Anchorage. Therefore, you will be required to obtain a special
flight permit (ferry permit) from the FAA in order to legally fly the aircraft from your
present location to the repair station where the AD can be complied with.
a. Do most aircraft insurance policies cover operations under a special flight permit?
b. What would be the prudent thing to do about your aircraft insurance cove - Answers -
a. no
b. Purchase additional coverage for the "ferry flight"
For each of the following events, indicate whether the event triggers considerations
relating to your aircraft insurance policy, and explain why.
a. The aircraft is to be used for a different purpose than before.
b. A different pilot will be flying the aircraft.
c .The aircraft is going to be flown outside the contiguous (lower 48) United States.
d. You have upgraded the aircraft's avionics, adding significantly to its value.
, e. You are going to fly the aircraft to Santa Fe, New Mexico.
f. You have finally paid off the loan you took to purchase the aircraft.
g. You sell the aircraft. - Answers - a. If changed it will not cover, review policy you may
need additional coverage.
b. They must be qualified.
c. Yes, chances are you'll need extra coverage.
Review geographical boundaries.
d. Need to upgrade product liability.
Increase state of value policy.
e. no
f. No longer need lien holder.
g. Cancel insurance once sale is final.
What is subrogation, and how can renter pilots be protected against it? - Answers - is
the right of an insurance company who paid a claim to sue anyone other than the
insured who contributed to the cause of an accident. renter pilots can be protected by
purchasing a wavier of subrogation endorsement.
While filling out your application for aircraft insurance, you round off your total flight time
to the next higher 100 hours. You are issued an aircraft insurance policy based on that
application but have an accident that causes extensive damage to the aircraft before
you actually accumulate the total number of hours you reported on your application for
that insurance policy. Is the insurance company obligated to pay for repair of the
aircraft? Explain. - Answers - Never round off
While you believe that you have now accumulated over 10,000 hours of flight time, it
has been your habit to record in your pilot logbook only time required by FAR to be
logged to show proficiency, so you have logged only 3,000 hours of flight time. Which
figure should you use in your application for aircraft insurance? Why? - Answers - 3,000
- its what you can prove.
Your airplane crashed, and a passenger was injured. You are absolutely certain the
accident was not your fault. Does your insurance company have to get your permission
to pay a settlement to the injured passenger? - Answers - No, they are prohibited
because that would interfere with effected damages being suffered by the insured.
You are opening an aircraft repair station that will inspect, repair, and modify customer's
aircraft, providing necessary parts in the process. The business has its own hangar,
where the work will be performed, and offices including a reception area and pilot
lounge for customers along one side of the hangar. The business will not own or
operate any aircraft. What insurance coverages will the business need? - Answers - 1.
Product liability insurance
2. hanger keeper unemployment
3. Airport liability policy
4. umbrella policy
