Miguel_Santos_4.3.docx - Running head INSURANCE POLICY ANALYSIS 1 Insurance Policy Analysis Miguel Andrew F Santos Embry-Riddle Aeronautical University

Miguel_Santos_4.3.docx - Running head INSURANCE POLICY...

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Running head: INSURANCE POLICY ANALYSIS 1 Insurance Policy Analysis Miguel Andrew F. Santos Embry-Riddle Aeronautical University
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INSURANCE POLICY ANALYSIS 2 Insurance Policy Analysis Assuming that I purchased the following limits: - Coverage A : $1 million per occurrence, $100,000 per passenger - Coverage B : $200,000 1. The aircraft is damaged beyond economical repair (it would cost $120,000 to repair the damages, but an identical replacement aircraft can be purchased for $105,000). Based on Part One – Insuring Agreements, of the Non-Owned Aircraft Insurance Policy Provisions, item two (2), which is the Liability Insurance for Physical Damage to your Non- Owned Aircraft, that includes Coverage B – Non-Owned Aircraft Physical Damage, states that the insurance company “will pay for physical damages to your non-owned aircraft for which you are legally liable, caused by an occurrence arising from your use of a non-owned aircraft” (“Non- Owned Aircraft Insurance Policy Sample”, n.d., p. 4). Therefore, according to the insurance policy, the insurance company will pay for the damages that have a coverage limiting to $200,000 via the purchased Coverage B (Part Three – Limits to the Company’s Liability) . But since repairing the damages ($120,000) is more expensive than purchasing an identical replacement aircraft ($105,000), the payment would be $105,000 in this scenario. This is because this scenario would be considered a “total loss” of the aircraft, according to the principles of valuation, as this is when it is more economical for the insurance company to pay the entire value of the hull insurance and then sell the wreckage for salvage than to pay the cost to repair the aircraft” (Hamilton, 2015, p. 143).
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INSURANCE POLICY ANALYSIS 3 2. Your passenger, a friend who was along for this recreational flight, is injured, and incurs $20,000 in medical expenses as a result. Based on Part One – Insuring Agreements, under Liability Insurance for your Non- Owned Aircraft, which includes Coverage A – Bodily Injury and Property Damage Liability Insurance, this states that the insurance company “will pay for bodily injury and property damage for which I am legally liable, caused by an occurrence arising from your use of non- owned aircraft but excluding physical damage to the non-owned aircraft used by you” (“Non- Owned Aircraft Insurance Policy Sample”, n.d., p. 4). Also, since this was a recreational flight, the flight is in accordance with Item four (4), where the flight used a non-owned aircraft and was used for non-commercial use where no reward or compensation was made (“Non-Owned Aircraft Insurance Policy Sample”, n.d., p. 1). The insurance company will be liable for paying the medical expenses. Now, since the insurance policy has Coverage A and the limit that I have purchased covers $100,000 per passenger, the insurance company will be liable for paying my friend’s $20,000 medical expenses fully (Part Three – Limits to the Company’s Liability).
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