How to salvage auction?

JimNtexas

JimNtexas

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Jim - In Texas!
My club's CardinalRG, has suffered a nose gear up landing at Dallas Exec. Because of prior claims on this aircraft our insurance agent advises that if we make a claim on this incident our club, which has existed since 1980, may well become unnsureable.

I'd like to learn how salvage auctions work. Can private parties participate, or they for insurance companies only?

We are heartbroken about this, but we need to bite the bullet to dispose of this aircraft and still keep our club going.
 
I have a list of about eight salvage sites that I occasionally look at. Yes, a private party can bid, no problem. I bid on a couple of Citabria and due to a mix-up in how I placed my bids, I won the one I didn't really want for the price of the better one I did want but they let me off the hook without a black mark. They have like three strikes (or maybe only one strike) and you're out rule if you don't honor your bid.
 
JimNtexas said:
I'd like to learn how salvage auctions work.
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In my experience, once the insurance company retains ownership of the aircraft it may go to a public auction or straight to salvage company depending on the situation. Anybody can participate in the public auctions. But usually the more valuable models get gobbled up by salvage yards that buy a number of airframes with the "outsiders" getting the crumbs. If you want to get that particular aircraft, then contact the insurer directly and plead your case. But just be sure to verify any logbook entries made by the insurer/underwriter before talking money. Lately a lot of insurers have been making "aircraft destroyed/salvage" write ups which can be a deal breaker in some cases if you want to make the aircraft airworthy again. There is a recent FAA Order on this that can shed more light on this issue. Good luck.
 
Y’all are missing the point. He’s trying to liquidate the aircraft via auction. Basically get what they can for it without involving the insurance company.
 
Bill Jennings said:
Y’all are missing the point. He’s trying to liquidate the aircraft via auction. Basically get what they can for it without involving the insurance company.
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My bad. Then list it on Ebay.
 
Bill Jennings said:
Y’all are missing the point. He’s trying to liquidate the aircraft via auction. Basically get what they can for it without involving the insurance company.
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In that case, he should just put it on eBay. That's the ultimate salvage auction site. Just make sure to put in the log books that the aircraft is not airworthy.
 
alfadog said:
In that case, he should just put it on eBay. That's the ultimate salvage auction site. Also consider surrendering the airworthiness certificate? Just make sure to put in the log books that the aircraft is not airworthy.
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Wouldn't the Long EZ parking posture pictures make that self-evident? but good pro-tip nonetheless....
 
hindsight2020 said:
Wouldn't the Long EZ parking posture pictures make that self-evident? but good pro-tip nonetheless....
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I had meant to delete the bit about surrendering the airworthiness certificate. I don't think that's necessary. I would make a logbook entry for CYA in case someone repairs it without making any logbook entry and then there are subsequent issues. I would want a clean break and no question as to whether or not I sold an airworthy airplane when the airplane leaves my hands.
 
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alfadog said:
I want want a clean break and no question as to whether or not I sold an airworthy airplane when the airplane leaves my hands.
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FWIW: Never seen where that was an issue. Airworthiness dwells only in future ops. But if you need to make an entry, keep it simple, "aircraft suffered nose wheel up landing." And definitely keep the AWC, but you can cancel the registration. All this affects price. If they want top dollar, AWC and no "destroyed" write up make a huge difference. Have been wheeling/dealing aircraft/parts on ebay since day one. Don't see the deals like back then, but still a great outlet for parts, etc.
 
Just for the record, I looked at the airplane yesterday and it looks like a nose gear collapse, not a failure to put the gear down. Too bad!
 
RyanShort1 said:
Just for the record, I looked at the airplane yesterday and it looks like a nose gear collapse, not a failure to put the gear down. Too bad!
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So? According to his insurance, that's a distinction without difference. They told him they will remove coverage for his club if he makes another claim on the Cardinal period dot. "Culpability" when it comes to gear related claims is of much less importance than pilots often imagine. I think pilots obsess over that distinction because they FAA may go 709 over one and not the other on the enforcement side. But from an insurance/financial pov it's a non-difference, as the OP is finding out the hard way.
 
alfadog said:
I have a list of about eight salvage sites that I occasionally look at. Yes, a private party can bid, no problem. I bid on a couple of Citabria and due to a mix-up in how I placed my bids, I won the one I didn't really want for the price of the better one I did want but they let me off the hook without a black mark. They have like three strikes (or maybe only one strike) and you're out rule if you don't honor your bid.
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Would you mind sharing the sites? Just what I need, more aviation crap to follow on the internet! :p
 
hindsight2020 said:
So? According to his insurance, that's a distinction without difference. They told him they will remove coverage for his club if he makes another claim on the Cardinal period dot. "Culpability" when it comes to gear related claims is of much less importance than pilots often imagine. I think pilots obsess over that distinction because they FAA may go 709 over one and not the other on the enforcement side. But from an insurance/financial pov it's a non-difference, as the OP is finding out the hard way.
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I know that full well. That said, I'd appreciate if another pilot said publicly that they could tell it wasn't my fault that the gear collapsed, and I just thought it was worth saying, regardless of how the insurance treats them.
 
455 Bravo Uniform said:
Then of what use was the insurance to begin with?

Claim it. Then dissolve the club. Reorganize the club.

I haven’t thought this through, but that’s my first off the cuff reaction.
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We don't know the math. The RG may be a liability for whatever use the club sees among the three airplanes, so it may end up being easier to take a bath on the carcass than compromise the insurability of the entire club going forward, especially if the club is pretty much tired of the retract hassle. I don't know any of this, I'm just positing that there might be some calculus we're not privy to. Essentially the OP is suggesting the value of not having another claim against the club might be of higher value than the loss they're gonna take by selling the airplane with a prop strike/engine teardown and collapsed nose gear component/cowl damage.
 
JimNtexas said:
My club's CardinalRG, has suffered a nose gear up landing at Dallas Exec. Because of prior claims on this aircraft our insurance agent advises that if we make a claim on this incident our club, which has existed since 1980, may well become unnsureable.

I'd like to learn how salvage auctions work. Can private parties participate, or they for insurance companies only?

We are heartbroken about this, but we need to bite the bullet to dispose of this aircraft and still keep our club going.
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I don't know anything about salvage, but have a question. Did your agent assure you that your coverage won't be cancelled without a claim? The insurance company will know of the incident, and it would suck to absorb the loss and still get cancelled.
 
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Lindberg said:
I don't know anything about salvage, but have a question. Did your affect assure you that your coverage won't be cancelled without a claim? The insurance company will know of the incident, and it would suck to absorb the loss and still get cancelled.
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I don't see how that could be a thing, especially since the club is getting rid of the airplane. That would be cold move on the part of the insurance. After all, it is the insurance that advised him in the first place not to make a claim in order to maintain insurability at-large for the club going forward.
 
455 Bravo Uniform said:
Then of what use was the insurance to begin with?

Claim it. Then dissolve the club. Reorganize the club.

I haven’t thought this through, but that’s my first off the cuff reaction.
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I agree, unless the plane was a pile of poo before the accident, make the insurance fulfill cover the loss.
 
hindsight2020 said:
I don't see how that could be a thing, especially since the club is getting rid of the airplane. That would be cold move on the part of the insurance. After all, it is the insurance that advised him in the first place not to make a claim in order to maintain insurability at-large for the club going forward.
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The insurance agent is not the insurance company. And this sort of thing is usually in the nature of "friendly advice" as regulators would frown on insurance companies discouraging insureds from filing meritorious claims. My last renewal application had six questions. The first was whether the named insured or any named pilot had any accidents or incidents in the prior five years. This is a factor in underwriting whether or not a claim is filed. The question is how much impact.
 
455 Bravo Uniform said:
Then of what use was the insurance to begin with?

Claim it. Then dissolve the club. Reorganize the club.

I haven’t thought this through, but that’s my first off the cuff reaction.
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We've looked into that. Our agent says trying to reform with the same airplanes at the same base with the same people won't fool the insurance compaines.
 
JimNtexas said:
We've looked into that. Our agent says trying to reform with the same airplanes at the same base with the same people won't fool the insurance compaines.
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I don't get it... So you pay for insurance and you can't use it? That is the dumbest thing I ever heard of.
So why even have insurance? Just to pay it and not use it? Why not just have liability if you can't file a claim on a wrecked plane?
I choose to fly my airplanes uninsured because I do not want to pay or deal with insurance companies.
I know a club with lots of people is a different situation.
 
This sounds like a load of crap to me, on the part of the insurance agent. If you can't make a claim, why have you been paying them? I would make the claim, and if they drop you, find someone else.

If you're actually uninsurable, making the claim won't change that. Applications don't ask how many claims you've made, they ask how many accidents or incidents you've had.
 
flyingcheesehead said:
This sounds like a load of crap to me, on the part of the insurance agent. If you can't make a claim, why have you been paying them? I would make the claim, and if they drop you, find someone else.

If you're actually uninsurable, making the claim won't change that. Applications don't ask how many claims you've made, they ask how many accidents or incidents you've had.
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They kinda have asked for both ime. They use semantics ("if yes, state date and amount paid by the insurance") in the case of new quotes, otherwise the renewals have asked the question as an all-inclusive. So technically they track claim count by proxy. Maybe the insurance critters that lurk on this board can clarify this issue, though I doubt they'd be willing to divulge their little middle man secret sauce.

All that said, I'm with ya, it is certainly facts not in evidence that the club would be uninsurable going forward based on this claim (noted, not the first time for this aircraft). At the same time, I understand the concern of the OP wrt getting himself into a Pyrrhic victory, especially if the cardinal is on its way out of favor with the club anyways. It would suck to lose the entire insurance viability for the fixed gear fleet on account of the squeaky wheel they intend to remove. there is a poker element to this. Do you believe the agent is outright lying in asserting an additional claim on this aircraft would render them un-renewable? If you don't believe the position to be true, then perhaps the OP should pull the trigger on the claim. Then again, why would I patronize the business of someone who is overtly trying to bluff me like that in the first place? (if I believe he is in fact doing this).

If he is not merely calling a bluff, then the OP certainly has some math to do for the sake of the club going forward.

I would seek clarification from the insurance company. Specifically their attitude towards moving the club into a fixed gear only club. This might be a simpler solution than currently presented. Again, I don't know what the usage breakdown among these three airplanes is in this club, and how the members feels towards eliminating the squeaky wheel going forward.
 
hindsight2020 said:
All that said, I'm with ya, it is certainly facts not in evidence that the club would be uninsurable going forward based on this claim (noted, not the first time for this aircraft). At the same time, I understand the concern of the OP wrt getting himself into a Pyrrhic victory, especially if the cardinal is on its way out of favor with the club anyways. It would suck to lose the entire insurance viability for the fixed gear fleet on account of the squeaky wheel they intend to remove. there is a poker element to this. Do you believe the agent is outright lying in asserting an additional claim on this aircraft would render them un-renewable? If you don't believe the position to be true, then perhaps the OP should pull the trigger on the claim. Then again, why would I patronize the business of someone who is overtly trying to bluff me like that in the first place? (if I believe he is in fact doing this).
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FWIW, our club also has two fixed-gear aircraft and a Cessna retract. Despite having had TWO retract-related claims, both of which involved engine teardowns and new props, they haven't said a thing about us becoming uninsurable. We merely lose our "no claim discount" (15%?) for a year or two. (Yes, steps have been taken to try to keep it from happening again.)
 
JimNtexas said:
We've looked into that. Our agent says trying to reform with the same airplanes at the same base with the same people won't fool the insurance compaines.
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When we sold our flight school, our agent said the EXACT same thing to us. We were facing our last (and one of the ugliest) in a line of rotten claims and bad luck.

Our premium at the time was in excess of $75,000 per year and I agree, unlikely to renew after the fresh claim tapped out another million.

Our agent quoted this $75K figure to the new buyer, and nearly ruined the sale, which would have left us holding a very ugly bag, and probably pushed the corp into bankruptcy and liquidation when the non-renewal stopped operations cold.

My buyer, thankfully, quoted with a different agent. (Falcon) His "new school" rate was circa $22,000. He kept the same business name, although created a new corporation. The broker apologized that it was so high, but explained it would drift down over the coming years.


That first agent and I were friends (stayed in one anothers' homes level friends). He didn't speak to me again after that renewal and sale completed, I never did understand why, but the loss of the friend was the last cherry on top of an ugly business ownership sundae.



Anyway, you may need to reorganize "ownership" of the club, but you'll reset your rates. Your agent may need to be swapped out as part of the deal. Senseless to eat the 30K or so on your crash just to limp along on high insurance rates.

$0.02. Good luck with the re-org. Sounds like you're at a "come to jebus" moment like we were. It sucks.
 
Lindberg said:
I don't know anything about salvage, but have a question. Did your agent assure you that your coverage won't be cancelled without a claim? The insurance company will know of the incident, and it would suck to absorb the loss and still get cancelled.
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Yes. This would be the fifth claim in five years, four of which were on this airplane.
 
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