North America is one of the world's largest markets for light aircraft, and while air travel is safer than ever, accidents do occur and this is a busy area for aviation loss adjusters.

Given the relative low cost of light aircraft compared with larger commercial jets, this area of aviation insurance claims requires careful management, particularly when it comes to the cost of recovery.

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The geographic makeup of much of North America (isolated, forested and often covered in ice) means this can be a challenging segment of aviation claims management and potentially costly for insurers if not managed correctly, particularly when it comes to issues such as environmental damage.

Our Canadian team has a unique approach to light aircraft recovery in that we manage much of this process in-house. Though this differs markedly from our U.S. team's approach, (due to differing state regulations they generally work with third-party experts on initiatives such as recovery, cleanup and land remediation) the same issues can arise on any recovery, regardless of where they occur.

So, how does a light aircraft recovery play out and what challenges can arise?

Pre-departure preparation

Usually the team is notified of a claim once insureds have reported it to the broker. Pre-departure preparation is key to a successful recovery and experience and knowledge are critical. Often sites are accessed via seaplane, helicopter, snowmobile or all-terrain vehicles (ATVs). Costs can easily spiral if recoveries are poorly planned or need to be repeated because of issues such as bad weather, lack of access, missing equipment and the like.

It can take several days of planning before we go on site, and identifying the appropriate experts to work with is a key consideration at this stage. Since this is an area where costs can rapidly spiral, using partners that are local to the site of the accident is very important.

In Canada, our adjusting team handles this after discussion with the Transport Safety Board of Canada (TSB). However, in the U.S., the National Transportation Safety Board (NTSB) is typically notified of the loss first, and often hires tried and trusted local recovery companies to avoid any unnecessary delays. Usually, the U.S. team hires these same companies in those regions. Local resources include lumberjacks, divers, heavy machinery operators, barges, sonar operators and environmental firms — whatever is necessary to get the job done.

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Over the past 40 years, the Canadian team has increasingly taken a more hands-on approach to the recovery process, bringing various elements in-house to have greater control over these external costs. In contrast, the U.S. teams have learned that this approach is not cost-effective or appropriate given the regulatory environment.

In the case of the Canadian team, we have acquired a notable range of equipment, which includes our own compressors, generators, salvage lift air bags, ropes, cutting tools, slings for lifting aircraft by helicopter or other means. We have over 750 recovery tools and equipment at our disposal. In the U.S., we would source this equipment on an 'as required' basis.

Water crashes raise the risk of environmental issues, increasing recovery costs. (Photo: McLarens Aviation)

Logistical challenges on-site

Many of the logistical challenges that arise will depend on the specifics of the loss. Generally, arrangements allow the adjusting team to visit the site, often by seaplane or helicopter. If required, a local aircraft maintenance service is engaged to assist with the recovery. This includes disassembling and transporting the aircraft to their facility to evaluate the damage and develop a repair estimate.

If the aircraft is clearly a total loss, they will store the aircraft until the salvage is sold. Depending on the circumstances, the aircraft may require transportation to a laboratory for further investigation.

Mitigating environmental liabilities

Environmental liabilities are a key concern for aviation insurers, particularly since environmental law has become increasingly strict in recent years. Depending on the severity of the claim there will usually be an environmental aspect.

In Canada, we have a large stock of recovery supplies available, which includes spill kits, containment booms and Quatrex bags (designed to hold 5,400 pounds of contaminated soil/debris) to help avoid environmental damage or claims. Being proactive on a fuel or oil spill can mean the difference between no environmental claim to one costing upwards of $50,000.

One incident involved 25 liters of fuel (a relatively small amount) spilling into a canal outside of Montreal and ended up costing around $60,000 to remediate. Sometimes, despite being prepared, cleanup costs — which include soil and water remediation and testing — can add up quickly, so keeping control of the process is key.

In practical terms this can play out in a number of different ways. If an aircraft crashes in water, for example, the first thing, regardless of whether or not the recovery is organized, is to ensure that oil booms are in place to contain any spill that could occur up until the time we recover the aircraft.

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Often, we also need to defuel the aircraft and have even done so in the middle of a lake to prevent spillage during recovery. If there has already been a spill, we may have to bring in equipment to excavate contaminated soil or vacuum contaminants from the surface of the water.

In the U.S., every state has its own regulations in addition to federal regulations, so it is crucial to hire the right companies having the proper experience and knowledge. This includes the site clean up, environmental testing and land remediation. Hiring experienced companies and properly overseeing all aspects of the various projects helps control underwriters' costs and mitigate the possibility of any future problems with the state and federal government or private landowners.

The recovery and transportation of an airplane from a crash site frequently requires multiple experts. (Photo: McLarens Aviation)

Determining clean-up costs

If not managed properly, the costs of the cleanup operation and land remediation can easily spiral upward. For example, the U.S. team recently handled a relatively small incident where an aircraft crashed in a privately owned field used for seasonal farming, causing some environmental damage. The initial cost estimate of the cleanup operation was $150,000; however, the environmental company revised their estimate to more than $500,000.

We met with them at the crash site to discuss their findings and the final cost was revised to just over $300,000. Previously unrelated damage was discovered at the site and was segregated from the final claim costs.

Quick & effective cleanup, land remediation 

When farmland is damaged in the U.S. and there is an environmental claim, landowners can include potential future losses in their claim, which can significantly increase costs. Quick and effective handling of the cleanup and land remediation at the onset of the claim reduces the chance of this occurring.

Another factor that can have a significant bearing on environmental costs in the U.S. is whether the land is state, federal or privately owned. A number of different agencies can be involved with federal land, which can complicate matters. Likewise, if the land is protected under federal law, such as protected wetlands, costs can quickly skyrocket. Insurers may, in some cases, consider hiring outside counsel.

Private landowners are typically, but not always, easier to work with in these claims. Again, the key to controlling costs is a rapid response combined with an honest and genuine interest in restoring the damaged property to the same condition prior to the accident.

Meeting face to face with landowners and establishing a rapport is essential to not only managing their expectations, but in convincing them that everyone has their best interests in mind.