What will happen if an agent submits an application to an insurance company to which he is not appointed?

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“I've just bought an airplane. What is the cost of insuring it?” This question is frequently asked and can only be answered from this angle, “What do you want to insure against?”

Insurance is a contract for financial protection against the many perils that beset either persons or property. In the case of an airplane, the property--the airplane---can be damaged or destroyed by fire, wind, or other hazard. On it can damage the property of other people. Or it can injure people in the airplane or on the ground. Insofar as the pocketbook is concerned, all these risks, as they are called by the insurance underwriters, can be provided against in the insurance policy.

A price--known as a premium-is charged periodically for each risk the insurance company agrees in the policy, or contract, to assume.

When losses due to the perils insured against occur, the insurance company pays in accordance with the terms of the contract. The premium must be high enough to cover the cost to the insurance company of the losses and of adınınistration and still leave a profit for the company.

Any prudent owner of an airplane obviously is well advised to purchase financial protection against the risks to which he is exposed in the possession and operation of his ship. To put it another way, every owner should buy insurance; consequently he should be easy to sell. The field of aviation insurance, therefore, is one which should extend and develop almost in direct proportion to the growth in ownership and operation of aircraft.

The Insurance Agent An insurance agency may handle just one type of insurance, such as life insurance, or it may handle several types, including aviation insurance. The insurance agency may be a one-man affair or it may employ a number of insurance agents, one of whom may specialize on aviation insurance.

What he does. -- The insurance agent is the man who goes out and sells insurance to the public. This insurance is evidenced in the policy issued hy the insurance company.

He is paid a commission for selling insurance and keeping it sold, so the amount he makes is limited only by his ability to sell. He is not emploved by an insurance company although he may have a tie-in with an agency which handles general insurance

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One form of hull insurance—all risks—is pretty much what its name implies. It covers all risks except wear and tear, deterioration, theft by a person in possession of the aircraft, mechanical breakage, or structural failure. The risks insured against include damage by collision or fire which results from mechanical breakage or structural failure.

As of this date, the risks while the plane is on the ground run from $3 to $5.75 per $100 of insured value; the rates for risks while the plane is in fight as well as on the ground run from $8 to $17.50 per $100 of insured value.

The other form of hull insurance--named perils--names the perils insured against. These are the perils which may be named in the policy:

1. Fire. This includes fire under all circumstances, lightning, explosion, self-ignition (excluding fire following crash), and damage caused by an accident to any conveyance carrying the plane when the plane is dismantled.

2. Windstorm. This covers damage by windstorm while the plane is not in flight, including damage caused by collapse of hangar, shop, or other structure. Damage caused by hail, rain, sleet, snow, earthquake, flood, or water is included but not damage while the aircraft is in flight.

3. Land damage. This is damage, other than by windstorm, caused by collision while the aircraft is on land, or by breakage, denting, marring, or scratching while the craft is in the custody of a hangar keeper or repair shop.

4. Mooring. This is damage to seaplanes or amphibious aircraft while moored, which is caused by windstorm, stranding, sinking, or collision,

5. Theft, robbery, or pilferage.

6. Crash damage. This includes damage from hail, sleet, or snow while in flight.

The present yearly rates for the named-perils ground risks run from $2.75 to $5 per $100 of insured value. Crash damage ranges from $7.50 to $17 per $100.

To bring the cost of insurance of the flight or crash risk down to a reasonable price, it is the practice to impose part of the risk on the insured person. This is done by deducting either 5 percent or 10 percent of the amount of the insurance or by making the insured person pay from 20 percent to 3313 percent of the loss himself.

For rating purposes aircraft are divided into two broad classes-private business and pleasure, and commercial. After determining its class, the type of aircraft to be insured is then considered. The types are those under 2,000 pounds gross weight when fully loaded (light planes) and those weighing more. The rates for the lighter aircraft are higher because these are usually flown by beginners.

The rates for hull insurance are based on the assumption that the aircraft is insured for full value; the basic rates are, consequently, established for new aircraft. If the aircraft is insured for less than its full value or if it is a used one, then the rate must be raised because partial losses are paid without any deduction for depreciation.

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Underwriters, 111 John Street, New York 7, N. Y.; Associated Aviation Underwriters. 90 John Street, New York 7, N. Y.; and United States Aviation Underwriters, 111 John Street, New York 7, N. Y. You might write, stating that you are thinking of establishing an agency or acting as agent for a general agency and that you would like to discuss the possibility with someone in the company. Ask if there is an office of the company

located somewhere near you.

Explain to the people with whom you talk in the aviation insurance company just why you feel you are qualified for the business, and check the company's opinion with yours. Explain also the findings of your survey and ask the company for its judgment of the market.

Learn just how you should go about acquainting yourself with aviation insurance so as to be able to go out and sell it. The company may suggest a series of conferences extending over several days or weeks between yourselt and various members of the company. It may suggest conferences with an insurance agency already handling aviation insurance. It may specify courses for you to take either before going into the business or while setting up your business, or it may recommend correspondence courses.

You should be coached in the fundamentals of insurance, but beyond this instruction the best teacher of all is experience. Whatever training you undertake, you

should at the same time go out and try to sell aviation insurance.

Even though you may make a few mistakes you will learn far better and more quickly by actual practice, and the mistakes, insofar as the insurance is concerned, will be remedied by the company.

The insurance company will further advise you on setting up your own business--as to whether you should establish an independent office or attempt to tie in with an already established agency. The latter course is probably best for a man with a fairly small amount of capital.

The insurance company will give you an idea of the types of risk it likes to insure and those it doesn't. This is a matter of underwriting judgment and varies from time to time as conditions change.

Finally, the company can advise you with respect to the legal requirements to be complied with in order to sell insurance. You will probably have to obtain a State license to practice as an aviation insurance agent, and you will have to state what companies you are representing. A general insurance agency in your city can advise you further along this line.

Starting and Developing the Business Setting up your office. If you set up an independent office, where you set up—whether at the airport or at a downtown location--is important. The location will depend on conditions in the particular city. In a town of 25,000, with an airport two or three miles from the center of the town, you would probably have an office in the city. You would probably sell other

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CIVIL AERONAUTICS ADMINISTRATION, (Continued) Aircraft Recordation Section (for aircraft licensing information).

Certificate and Records Section (for personal licensing information). Civil Aeronautics Board, Washington, D. C.

Docket Section (for information on how to apply for an air route,

and for information on existing air services and qualifications of

applicants for new routes). Economic Bureau (for a number of reports of guidance in applying

for new air routes). Public Information Section (for late studies and reports of the Board

having to do with scheduled air service). Department of Commerce Field Cffices (listed in this appendix)

General business information on your city and region and on mar

ket research organizations which would be of help in estimating

your market. Aeronautical Training Society, 1025 Connecticut Ave., Washington, D. C.

Information on fixed-base operations, particularly on flying schools

and mechanics' training schools. Aircraft Industries Association of America, Inc., Shoreham Building, Washington, D. C.

Information on setting up an airport. Air Transport Association of America, 1515 Massachusetts Ave., N. W., Washington, D. C.

Information on scheduled air service. American Association of Airport Executives, Box 734, Peoria, Ill.

Information on airports and establishing new airports. Aviation Distributors and Manufacturers Association, 505 Arch Street, Philadelphia, Pa.

Information on selling planes, parts, and equipment. Feeder Airlines Association, 1010 Vermont Ave., Washington, D. C.

Information on setting up a short-haul airline. National Aeronautic Association, 1025 Conn. Ave., Washington, D. C.

Information on airport development and fixed-base operations. National Aviation Tradeg Association, 1010 Vermont Ave., Washington, D. C.

Information on fixed-base operations.

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Postal receipts can be obtained from the Post Office Department in Wash. ington, D. C. Other economic facts can be put in here as well, provided they have a bearing on what business the applicant expects will develop on his line as a result of them.

The community of interest between each city on the proposed route is considered useful evidence. This community of interest may be shown in part hy hotel counts (discussed in ch. XIV). Long-distance telephone calls beIween the towns as well as telegrams may be used for the same purpose. These may be obtained from the telephone and telegraph companies, although these companies are not obliged to give out the figures. Travel figures also are useful.

The applicant is not required to submit any of this evidence. He should submit what he considers important.

(2) Is the public better served by the proposed service than by the existing services? The applicant should make a comparison of his service with the already existing services, showing fares, travel times, and mileages.

Often the analysis of this information will reveal many interesting facts on how the proposed service will meet deficiencies of the present services, air lines, railroads, busses, and trucks.

(3) Will the public interest be served by the applicant without weakening the present air services? If the applicant's route will compete with already established air carriers, then he will have to show that the amount of traffic which he will divert from them will not seriously hurt them or cause the quality of the service they give to deteriorate. The Board will weigh the need for his proposed service against the injury which is caused any of the present air services. If he can show that he will strengthen these other services by feeding passengers into them who would otherwise not fly, or supply air mail and express to them which would otherwise not be sent, then such evidence is particularly useful.

(4) Will the cost of the applicant's proposed service to the Government from air-mail payments be so great as to outweigh the benefits of his service to the public? If the cost of his service is too great in terms of its benefit, the Board is likely not to favor his application.

The new route may require additional air-navigation facilities. This is another item of cost to the government. If these are required, the applicant should submit exhibits showing the existing air-navigation facilities and the new ones required by his route, with an estimate of the cost of these new facilities. He can get information on existing facilities from the Director of Federal Airways, Civil Aeronautics Administration, Washington 25, D. C.

The Hearing Before the Examiner

At the hearing the applicant's attorney offers the exhibits in evidence. Witnesses then take the stand in order to testify in support of the exhibits that

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