UPS Cargo Jet Crashes Near Birmingham Shuttlesworth International Airport

[Evan]

Well, physically speaking. And the plane takes it. But later, when the finances get settled, does the insurance company open its checkbook to compensate the operator for the value of the lost plane?

I imagine you have quite a few things to insure against here. There's the airplane (owned or leased). There's the engines if they're leased. There's the cargo. There's the next of kin. There's the emergency services and scrap/salvage removal/transportation/disposal. There's the damage to the landscape. There's the environmental cleanup. There might be public relations expenses. There's the cost of the disruption, both to your operations and the operations of the airport. There may be fines resulting from the investigation. There might even be compensations to businesses for collateral damages resulting from the lost cargo (though I doubt that). I imagine the cost is quite high. Typically businesses carry insurance that diminishes the costs and write off the rest, but I have no idea what the percentages are.

[EconomyClass]

I'm just saying a company flying planes in one way or another sustains a loss when a crash makes the plane useless for its purpose. Who forks over money for that loss? Does it just go on the books as an expense?

[phoneman]

I'm just saying a company flying planes in one way or another sustains a loss when a crash makes the plane useless for its purpose. Who forks over money for that loss? Does it just go on the books as an expense?

The insurance co. pays for the plane depending on the level of insurance. They usually payoff in about a week. When American flt. 191 crashed, the airline actually made money because the plane was insured for full replacement value, even though it was one of the oldest DC10's in their fleet.

[Leftseat86]

The insurance co. pays for the plane depending on the level of insurance. They usually payoff in about a week. When American flt. 191 crashed, the airline actually made money because the plane was insured for full replacement value, even though it was one of the oldest DC10's in their fleet.

They were also fined $500,000 by the FAA for the improper maintenance techniques, and I believe a few wrongful death court cases were brought against AA, not sure exactly what the outcome or payments were, if any.

[EconomyClass]

The insurance co. pays for the plane depending on the level of insurance. They usually payoff in about a week. When American flt. 191 crashed, the airline actually made money because the plane was insured for full replacement value, even though it was one of the oldest DC10's in their fleet.

Don't know the aftermath of the case, but I'm guessing there were some lawsuit settlements that ate up this profit.

[TeeVee]

Don't know the aftermath of the case, but I'm guessing there were some lawsuit settlements that ate up this profit.

Profit? getting a payment from an insurer for a loss cannot be a profit unless there is fraud. if your insurer pays you replacement value of an item you have lost, there is no profit.

as for this RUMOR that AA's dc-10 was insured for replacement value, aside from a few uncorroborated "i think i read somewhere..." statements on various web fora, i've found nothing to support this. further, knowing what i know about insurance companies, i doubt very much they would've insured an aging aircraft for replacement value.

[EconomyClass]

Profit? getting a payment from an insurer for a loss cannot be a profit unless there is fraud. if your insurer pays you replacement value of an item you have lost, there is no profit.

as for this RUMOR that AA's dc-10 was insured for replacement value, aside from a few uncorroborated "i think i read somewhere..." statements on various web fora, i've found nothing to support this. further, knowing what i know about insurance companies, i doubt very much they would've insured an aging aircraft for replacement value.

I thought a previous message said they came out ahead. Maybe its "gross profit", but like I say, it is one transaction among many around a crash. Hard to tell the final net for the airline without looking at all payments received and handed out.

One way it might be "profitable" is to provide an opportunity to buy a more advanced plane.

[flight191]

Profit? getting a payment from an insurer for a loss cannot be a profit unless there is fraud. if your insurer pays you replacement value of an item you have lost, there is no profit.

as for this RUMOR that AA's dc-10 was insured for replacement value, aside from a few uncorroborated "i think i read somewhere..." statements on various web fora, i've found nothing to support this. further, knowing what i know about insurance companies, i doubt very much they would've insured an aging aircraft for replacement value.

From the Boston Globe (7/24/1979) quote directly from an AA spokesperson:

"A company spokesman explained that unlike the average automobile, planes are insured for the cost of buying a new one, not for what they are worth at the time of the loss."

[EconomyClass]

From the Boston Globe (7/24/1979) quote directly from an AA spokesperson:

"A company spokesman explained that unlike the average automobile, planes are insured for the cost of buying a new one, not for what they are worth at the time of the loss."

Given the dynamic nature of airplane manufacture, a "new one" might not even be the same model. I'm not sure how the insurers handle it, but I'm guessing there is some sort of standard that gives the insured a plane with roughly equivalent capabilities, though it may have more safety features and may use less fuel than the crashed plane. I'm sure if my house burned down and I built a new one, it wouldn't be a duplicate of what burned down. For one, it would definitely have central air which is impossible in the present house.

[flight191]

Given the dynamic nature of airplane manufacture, a "new one" might not even be the same model. I'm not sure how the insurers handle it, but I'm guessing there is some sort of standard that gives the insured a plane with roughly equivalent capabilities, though it may have more safety features and may use less fuel than the crashed plane. I'm sure if my house burned down and I built a new one, it wouldn't be a duplicate of what burned down. For one, it would definitely have central air which is impossible in the present house.

Agreed, but phoneman's original statement is spot on correct. It is not a rumor. This is what actually happened.

[EconomyClass]

The insurance co. pays for the plane depending on the level of insurance. They usually payoff in about a week. When American flt. 191 crashed, the airline actually made money because the plane was insured for full replacement value, even though it was one of the oldest DC10's in their fleet.

OK, I can see how the underwriter wrote it that way. Maybe a mistake for the insurer. But what dollar figure is "full replacement value"? My house insurance is like that, but the dollars are not fixed forever.

[flight191]

OK, I can see how the underwriter wrote it that way. Maybe a mistake for the insurer. But what dollar figure is "full replacement value"? My house insurance is like that, but the dollars are not fixed forever.

"The US government fined American Airlines $500,000 for improper maintenance procedures, but the insurance settlement for the replacement of the aircraft gave American Airlines $25,000,000 beyond the amount of the fine." - "Seconds from disaster"

[EconomyClass]

"The US government fined American Airlines $500,000 for improper maintenance procedures, but the insurance settlement for the replacement of the aircraft gave American Airlines $25,000,000 beyond the amount of the fine." - "Seconds from disaster"

Ouch! That sounds terrible! You know this is one of the reasons that lawyers insist on large settlements (the other being filling their pockets). They point out egregious examples like this and allege that corporate boards can actually plan to have accidents for the financial gain. I mean, not PLAN them, just avoid preventive actions that may be too expensive.

[brianw999]

It sounds like the insurance was much the same as that which my wife bought for her brand new car.
Basically, if the car is written off in the first 3 years of ownership she gets a brand new replacement car of the same make and model or equivalent. Obviously the premium is higher for those 3 years ( it drops significantly after 3 years ) and if a write off does not occur in that time span then the insurance company does quite well from all the policies of this type that they sell but if there is a write off then the Missus gets a brand new car to replace one worth around one third of the new price. Obviously there are certain caveats that apply to protect the insurance company in preventing, for instance, the policy holder from stuffing it into bridge to make a false claim !

[TeeVee]

"The US government fined American Airlines $500,000 for improper maintenance procedures, but the insurance settlement for the replacement of the aircraft gave American Airlines $25,000,000 beyond the amount of the fine." - "Seconds from disaster"

right! so replacing a DC-10 will cost $25,000,000.00??? not a snowball's chance in hell. not even in 1979.

the dc-10 carried over 300 pax. so in 1979 the choices were what? dc-10, 747, and L-1011?

couldn't find pricing for the dc-10 but a dc-9 costs about $41,000,000.