Latest / VREF | The Truth About the Aviation Market / The $2 Million Loss Your Insurance May Never Mention | EP 52
Transcript
- Addison: An $8 million airplane is sitting on a ramp. Late model CJ4. It's clean, it's been beautifully kept. It's the kind of airplane somebody worked 30 years to be able to buy, and then spent every year since taking care of it properly. But nobody's flying it today. The owner isn't even in the country. And the line guy hooks up a tug, and he's not paying attention. Maybe it's his fourth airplane that hour. Maybe nobody ever trained him on this type of aircraft. Maybe he's thinking about lunch. Maybe he's checking text messages, but he toes it into the hangarong. And that's the whole event. There's no flight, there's no weather, there's no mechanical failure, no pilot error, nobody got hurt, nobody even raised their voice. 40 seconds of somebody not looking where he was going. I appraised that airplane. It had major damage. It goes to a shop, it gets repaired, it gets repaired properly, completely, by a good shop. With the proper parts, and it was signed off and it's airworthy, and now it's back in service. Everything done the way it should be done. And when it comes out the other side, it's worth 25% less than it was that morning. $1,975,000 less. Gone. And understand, this is not the repair bill. The repair bill is somebody else's problem. This number sits on top of the repair. This is the money that does not come back no matter how perfect the work is. Two million dollars because a guy with a tug wasn't looking. Think about that ratio for a second. Somebody earning maybe $20 an hour has a 40 second lapse, the kind of lapse every human being on Earth has four times a day, but the consequence is two million dollars. And it lands entirely on a man who wasn't there, didn't do anything wrong, and won't find out what it really cost him for years. Well, that's aircraft ownership. That's the actual actual risk. It's not weather, it's not mechanicals, it's a tug. Now, here's the part I need you to hear, and it's the reason I do this work. I can't unwind that. Nobody can. There is no shop on the planet, no amount of money, no quality of workmanship that takes that entry back out of the logbook. The airplane carries it now to every pre-buy, every appraisal, every negotiation. For the rest of its life. Twenty years from now, somebody's tech rep is going to find it and ask what happened, and the answer will still be the answer because the damage is permanent. I can't fix it. Nobody can fix it. But I can make you financially whole. That's the job. That is the entire job. I can put a number on what that carelessness actually costs you. A real number. Documented, defensible, use PAP compliant, built on comparable closings. The kind of number that holds up across a settlement table and holds up in front of a judge, and then somebody writes a check for it. That's why you hire the best. Not to undo it, nobody can undo it, but to make damn sure you're not the one who eats it. Because here's what happens to the owner who doesn't know how to make the call. The airplane gets repaired. It looks perfect. Everybody shakes hands, the file closes, the carrier moves on, and life goes back to normal for them. And four years later, the owner goes to sell it. And he discovers he's been quietly carrying a two million dollar hole in his balance sheet that not one person in that entire process ever mentioned to him. By the way, that loss has a name. It's called diminution of value. And in 20 plus years of doing this, it's the single most expensive thing in aviation that almost nobody explains to owners in plain language. Most owners have never heard the term. Until they're already on the wrong side of it. Most never file for it. A lot don't know what they're allowed to. Today we're gonna fix that because we're gonna walk the whole pipeline. What counts as damage and what the FAA doesn't even want to hear about, what your insurer is really calculating when they decide to repair instead of total, what makes it into the records, and what quietly doesn't, how the market actually prices damage history, when to stop negotiating, and when to call an attorney. And the big one, what diminution of value is, why your own policy probably won't pay for it, and why the same claim against somebody else's insurance often will. This is the episode I want handed to me before I ever needed it. So, welcome to the truth about the aviation market. I am Jason Zilberbrand. If you're new here, the short version of Who's Talking, I put numbers on airplanes, valuations, appraisals, I do expert witness work, and I do more of it than anyone. I appraise more aircraft in a year than every other appraiser in his business combined. But the volume isn't the interesting part. The range is. In any given month, I'm valuing aircraft for people whose last names you would absolutely recognize, celebrities, the largest fleet operators on the planet, and in that same month, I'm valuing a 172 for somebody who saved 11 years to buy it. An A36 Bonanza, a couple SR22s, same methodology, same standard, same hours at work. The banana o bonanza owner gets exactly what the movie star gets. Why? Because a number either holds up or it doesn't, and the airplane has no idea who owns it. And I'm the only appraiser I'm aware of who covers the entire spectrum. Experimental aircraft through wide-body commercial, home built, airliners, and everything stacked in between. Which is why I get the hard ones. The airplanes with no comparables. The one already headed for a courtroom. The two other people looked at and handed back. Here's why any of that matters to you today. When you watch damage get priced across every category: a hail dimpled Skyhawk, a global express with a repaired pressure vessel, a freighter carrying a history, you stop seeing separate markets and start seeing the mechanism underneath. And the mechanism is the same at every altitude and every price point. The zeros change, nothing else does. Most people in this business only ever see one slice. But I get to see the whole enchilada all at once, which means I live in the gap between what people think an aircraft is worth and what it actually transacts for, what it actually sells for. Those two numbers are never the same, and the space between them is where this show lives. And today's gap is the widest one there is. One thing before we start, and I mean it. I'm a valuation professional. I am not your attorney. I am not your insurance broker, and I don't know what's in your policy. Everything here is general information about how this market works. Your claim turns on your facts, your policy wording, and your jurisdiction. So take this as background, not advice about your airplane. All right, let's get into it. Let's start with the thing most owners get wrong on day one. There's a legal definition of damage, and there's a market definition. And they aren't close. Almost every expensive surprise in this business lives in the space between them. On the regulatory side, there's a hierarchy. An accident, serious injury, or what the NTSB calls substantial damage. An incident a notch below, and then the enormous category of everything else reportable to nobody. Here's the part worth knowing. The NTSB's definition of substantial damage comes with an explicit exclusion list. Things that by rule don't count. And I'm paraphr paraphrasing here, but things like dented skin and landing gear and wheels, tires, brakes. Bent fairings, collings, small punctures, ground damage to prop blades, ground damage to wingtips, engine damage confined to the engine. Read that list from a buyer's perspective. Gear, prop, skin, wingtips. Every one of those can be a legal non-event, but a six figure hit to the resale. A prop strike isn't substantial damage. A prop strike typically means a teardown, and a teardown follows that engine forever. Gear damage isn't substantial. It's one of the first things a buyer's tech rep asks about. The regulation was never designed to protect your resale value. It was built for safety investigation. And it's doing its job just fine. It's just it isn't doing your job. See, and the other thing that nobody puts on a podcast, because it isn't dramatic. Most damage is boring. It's a tug, a hanger door, hail on a ramp in Texas in April. Maybe it was a bird strike or A hard landing nobody wants to call a hard landing. Maybe a lav truck backing into a horizontal stabilizer at three miles an hour. It's actually more common than you think. That's the real population. Not the NTSB report, the tug. And I'm not theorizing. Let me tell you about the three most recent diminution of value files on my desk. A citation CJ four. The one from the top of the show, towed into a hangar improperly. A Falcon 50 that was struck by a car while it sat parked on an FBO ramp. And then I got a G five fifty that was struck by a commercial charter bus while it sat parked on an FBO ramp. Three airplanes, a tug, a car, and a bus. Not one of them was flying. Not one of them even had a pilot in it. Not one of them is an NTSB accident or an incident. Or a story anybody would ever put in a magazine. Combined, these three events destroyed roughly four point seven million dollars of aircraft value on the ground, while they were parked, doing nothing, minding their own business. That's the real risk profile of aircraft ownership, and nobody talks about it. Because a bus hitting a parked airplane isn't a story, it's just expensive. And the boring stuff is precisely what goes undocumented. For an understandable human reason. It's small enough that somebody thinks they can just handle it. So the deductible is $25,000. Estimate comes in at $32. Filing nets you $7,000 and a permanent searchable record of damage event on that tail number. Paying out of pocket costs you 32 and creates in your mind nothing. There are legitimate reasons not to file. Small claims affect your renewal, and an owner weighing that is being a responsible steward of their own costs, but that's not what I'm talking about. I'm talking about declining to file specifically to manage the paper trail. And here's the practical trap, entirely separate from the ethics of it. Paying cash doesn't make damage invisible, it makes it undocumented. Those are opposite things. See, a documented repair with an estimate, shop, parts, sign-offs, photos is something a buyer can evaluate. An undocumented repair is a mystery, and mysteries price worse than facts every single time. I've watched owners spend 30 grand of their own money to avoid a record, then take a far bigger discount at sale because a pre-buy found evidence of a repair with no story attached, no paperwork. They pay twice, once to fix it, once for not being able to explain it. So, document everything. Even when you pay yourself, especially if you self-pay guys. So say it's big enough to file. Now you're in the machine. And that's really what we're going to talk about. The central question is repair versus what a total loss is. And I want to demystify how that decision actually gets made. Because owners tend to imagine it's some kind of engineering judgment about whether the airplane can be made right, whether it can fly again. But it isn't. It's pure arithmetic. Roughly This is what happens. The adjuster compares the projected cost of the repair plus any betterment plus the cost of getting the aircraft to a shop plus storage plus the tail of the claim against the insured value. See if repair comes in comfortably under they repair. If it approaches or even exceeds that, they will total it and they'll take the salvage value. That's the model. And notice what is completely absent from it. Well, I'm going to tell you. Your resale value in five years. It isn't there. Not because anyone's hiding it, because it is genuinely not the insurer's job. They are indemnifying you against physical loss under the terms of a contract you both signed. They are not underwriting your exit strategy. So when the number comes back repairable, understand what that word means. It means the repair was cheaper for them today. It does not mean the repair is the outcome that leaves you whole. Everybody in the room has a different incentive. The shop would like to do the repair. That's their revenue. And most shops are honest. But we can fix that is the answer their entire business is built around. The adjuster the adjuster for the insurance company would like to close the file at the lowest defensible number. Guys, that's not sinister. That's what an adjuster is there for. That's his job. The broker wants the renewal and the relationship intact on both ends. And the owner? Is the only person in that conversation who will be holding this asset in four years trying to sell it. Everybody else's involvement ends when the claim closes. Yours is just starting. If nobody in that room is thinking about residual value, it's because the only person who's supposed to is you. So first party versus third party, and why it changes everything. Now the distinction that I think is the most practical, valuable thing in this whole segment. First party is your own whole policy, your carrier, your adjuster, your deductible, contractual relationship, duty of good faith in most jurisdictions. These are the terms that are whatever the policy says. Third party means somebody else did this and their insurance is on the hook. The FBO's tug, the other operator, that contractor. Owners assume third party is easier because somebody else is at fault, which means somebody else pays. It's frequently the harder one. For a structural reason. That carrier has no relationship with you. You're not their insured. They owe you nothing contractually. They owe their insured a defense. From their side of the desk, you're a claimant to be resolved as economically as possible. But the measure of what you can recover is different and often better. First party, you're recovering under a policy, and most whole policies pay for physical damage repair, full stop. Third party, you're You're seeking damages, being made whole for a loss somebody else caused. And in many jurisdictions, the market value that doesn't come back after the repair is a recognized part of that. Hold on to this because it's the most important asymmetry in this episode. The same dollar of lost value is often uncollectible from your own carrier and collectible from theirs. Whether that's true in your case depends on your jurisdiction and your facts. Which is exactly the kind of sentence that means ask a lawyer, not a podcast host. What the other side is doing while you wait. Well, one more thing about third-party claims because owners get caught flat here. While you're waiting, the other carrier isn't they're building a file. Frequently with their own repair estimate and their own valuation, sometimes before your airplane has even reached a shop. By the time you get a number, that number is the output of weeks of supported work. And it's supported by documentation you've never seen. And you're expected to respond with what? A feeling that it seems low? See, that's the asymmetry, and it's the whole ballgame. The Ed Adjuster has handed thousands of these cases. You've handled one. They know what claims like yours settle for, you don't. They have a valuation, you have a number somebody said on a phone. That's where an enormous amount of money quietly stays on the table. Which brings me to the most useful advice in this episode, and it costs almost nothing. Get your own number before you respond to theirs, not after. Before. An independent valuation does two things. It tells you what you're actually holding. So you're not negotiating on instinct. And it changes the conversation on the other side, because now there are two documented opinions in the file instead of just one. Adjusters settle differently when the number they're arguing against was written down by somebody who does this for a living. That's a part of what we do at VREF We do independent valuations. We specialize in damage and diminution of value assessments. We do expert work when a claim goes sideways. We're not on the carrier side of the table, and we're not on the shop side either. We put a defensible number on the airplane and we can support it. If you're in a claim now or about to be, get the valuation early. Go to VREF.com. The cost of an independent opinion is trivial against the delta you're arguing about. All right. Back to it because now we have to talk about records and logbooks. Here's a number I want to put in front of you. I we recently went through a dataset of 475 closed business aircraft transactions across 70 models, real closings. And that data set has a field for damage history. Damage was recorded on three of them. Three out of four hundred and seventy-five. Now, either the entire business aviation fleet has a damage incidence rate of six-tenths of one percent. which anyone who has ever walked a ramp knows is not true, or that field simply does not get filled filled in, and we know which one it is. And I want to be fair about what that number does and doesn't prove. It's not evidence that 472 sellers concealed something. Plenty of those aircraft are genuinely clean with no damage history. Data fields go unpopulated for a hundred boring reasons that have nothing to do with anybody hiding anything. Number one being laziness. But that's almost the worst finding, isn't it? Because it means the absence of a damage record tells you nothing at all. Which means it's not a signal because it's blank. And blanks get read as clean by buyers every single day. See that's the paper trail problem and one statistic. In theory, the system is decent. Maintenance gets recorded, major repairs require a form 337, which then gets filed with the FAA with a copy in the aircraft records. There is a designated paper trail, and it's designed. In practice, it has gaps you can fly through, because 337s get filed and never make it into the records that travel with the airplane. Repairs get classified as minor when another mechanic might have called them major. That line is a genuine judgment call, and you've heard the term pencil whipped. That is it. And logbook entries get written to satisfy the regulation, which is a much lower bar. Then explaining to a future buyer what actually happened here. A compliant entry can be one line. It doesn't have to say what caused it, how far it went, or what got inspected and found. See, records simply get lost, airplanes change hands, they change countries, they change management companies, boxes go missing constantly, and usually it's nobody's fault. See, records services a floor, not a ceiling, so people run damage history services, do that. Always, but understand what they are. They're aggregators. They surface what got reported into a system somewhere, which makes them excellent at catching properly documented events and structurally blind to everything else. The tug incident, somebody paid for in cash, is not in any database on Earth, guys. A clean report is meaningful. It's just not proof. It's not a floor, it's not a ceiling. Which leaves the pre-buy carrying more weight than more most buyers realize. On this question, it's not a checklist, it's a physical hunt. Paint thickness that doesn't match panel to panel. Fastener patterns that aren't factory. You can see replaced rivets, filler where there shouldn't be filler, doubler plates, sealant newer than the airframe. And on the record side, does the history have a shape that makes sense? Is there a gap? A month where the airplane went somewhere, came back, nothing got written down? Honest assessment. Most pre buys are competent at telling you whether the airplane is airworthy and what it'll cost you next year. Far fewer are built to answer has this airframe been hurt? And did anyone tell me? They're different inspections. If damage history matters to you, especially on a large cammon airplane, it should matter enormously. Say so in writing when you scope the pre buy. Guys, don't assume. Ask what specifically they're gonna look for. Okay. The main event. Your airplane got damaged. It got repaired. Let's say correctly. And let's stipulate a perfect repair. I want to say factory authorized. OEM parts. Everything got signed off. Everything documented. The airplane is exactly as airworthy as it was the day before the event. Your airplane is still worth less, guys. Permanently. That loss is demmunition available. And it is separate from and in addition to the cost of the repair. Let me say it the other way because this sentence people need the repair bill is what it costs to fix the airplane. Diminution of value is what it costs to have needed fixing. Two different losses, usually only one of them gets paid. So why does the market do this? Because a buyer facing two otherwise identical aircraft, one with a damage history, one without, takes the clean one at the same price always. So the damaged one has to be cheaper to sell. That's the mechanism. But why? Well, there's three reasons, and none of them are irrational. The first, repair quality is unknowable from the outside. The buyer can verify the repair was perfect. They can read the paperwork, guys. They have professionals, they have tech reps looking at it, but they cannot get to the certainty. So they price the uncertainty. That's not superstition. That's what you're supposed to do. Two, the buyer pool shrinks. Some buyers have a hard no. Some flight departments have it in their policy. Some international buyers won't touch it. A lot of family members won't. So it's a smaller pool. It's a lower price. That's just liquidity. Three, the one nobody thinks about. The next buyer asks the same question. Your buyer knows they inherit the disclosure when they sell. So they're not only discounting their own risk, they're pre-discounting for the discount they're gonna have to give in the future. It compounds. That's why I call it. The stigma tax. It isn't about whether the airplane is good. It's a tax on a sentence and a logbook, and the sentence is permanent. And I want to be emphatic about something, because this is exactly where seeing the whole spectrum pays off. This mechanism does not care what your airplane costs. I've watched the stigma tax operate on a 172 that got hangar rash and on a wide-body freighter in the same week. Same three forces. Unverifiable repair quality. A smaller buyer pool and a buyer pre-discounting for the discount they'll have to give later. That percentage moves, the zeros move, the mechanism is identical. So if you're sitting there thinking this is a big iron problem, this is for big jets, who cares? Well, I own a bonanza, no? It's proportionally the same problem. On a smaller airplane, it's often a larger share of your equity. The guy with the SR-22 or the A36. Loses a bigger slice of his net worth to this than the fleet operator does. He doesn't just have to have a team of people whose job it is to notice. Guys, this is not a business jet issue. Why your policy probably doesn't pay it is the big one. And here's where owners get hurt. Most first-party hull policies are written to cover physical damage, to repair it or replace. That is the promise. See, the carrier fixes your airplane, and by the terms of the contract. They've performed. The value that evaporated on the way through generally not covered loss under a standard hole policy. Not because somebody's cheating you, because the policy was never written to cover it. So the sequence goes like this your airplane gets damaged, your carrier pays for a beautiful repair, you get the plane back, everybody shakes hand, the file closes. And you are out, I don't know, two million dollars that nobody ever mentioned. And there is no claim number attached to it. There never was. Now hold that against what I said in segment two. Third party. Somebody else caused this. It's not your fault. You're not claiming under a policy. You're seeking damages for a loss they caused. And in many jurisdictions, the diminished market value of your property is a recognized element of those damages. That is the asymmetry, same airplane, same dent, same repair, same loss value. Uncollectible one way, frequently collectible the other. And I guess a meaningful number of people listening have been on the third party side of an event and have settled for the repair cost, because that is what offered, and nobody told them there was ever a second number. Whether this applies to you depends on your jurisdiction, the facts, and the policy language. I can't tell you it applies to your claim. I can tell you it exists, that it's real money. And that if nobody has said the words diminishing of value to you during your claim, that is not because it didn't happen. Because the market discounts it. Isn't a number, and a number is what you need. Matched pairs, that's the backbone. You find transactions of the same make, model, and vintage, similar hours, equipment, program status, where the only meaningful variables damage history. Then you look at what they actually closed for. Not the asking price, but the closed sale price. Enough pairs across enough time, and the discount stops being an opinion and becomes an observation. That's the work. It's on glamorous. It's data intensive. And the reason this is hard to do credibly off the cuff. Then you adjust for severity, because the market does. Cosmetic, properly repaired, well documented, that's the light end. And on some airframes, it can nearly wash out, given enough time and hours. I always say time can mitigate it. Structural is a different tier. Spar, pressure vessel, primary structure, that's the heavy end. And it doesn't go away. What about fire and water immersion? They're their own categories, and the market treats them brutally because the failure modes are latent and can surface years later. Repair quality is a real variable, and it's not a talking point. There's a big difference between OEM and PMA parts or factory authorized facility versus a good field repair, and the complete list completeness of the documentation, the photographs, estimate, parts list, inspection findings, not just a sign-off. Two identical events priced differently based on who did the work and how well it's evidenced. That's one of the few parts of this an owner can still control after the fact. Let's talk about financing, which owners never see coming. Damage history doesn't just move the sales price, it moves the loan. There's a lot of lenders that'll adjust the loan to value and require additional inspections. Some won't lend on a certain damage category at all. If part of your buyer pool can't finance your airplane, That's not a pricing problem. That's a demand problem. And it shows up as time on the market before it ever shows up as a discount. Does it ever fully recover? Is a big question I get. And it's the question I get the most. And the honest answer? Minor, cosmetic, well documented long ago on a high-time airframe where the event is a small fraction of the story, and the airplane's gone through a long list of Annual inspections and has been operating consistently for a long period of time, then yes, that can and often does decay toward nothing. Time will mitigate damage. Hours do mitigate damage. A long clean record afterward helps a lot. But if it's structural, recent, poorly documented, or on a relatively new low-time airplane, then no, not fully, probably not ever. And if it's heavy, been major. Damage, then probably never. And I wouldn't say essentially never, but I think it's going to be pretty darn close because here's the cool geometry. The newer and better your airplane, the more this really hurts. A three-year-old aircraft of 400 hours has no other story. There's nothing else to look at. The damage is on the first page or the second page or the third page of the logbooks. A 20-year-old airframe with 9,000 hours has been around. And one repair is a paragraph in a long book. Same event, but it's a very different tax. So here's my three files that I wanted to use for this episode. And let me put real numbers on all of this. Same three aircraft from earlier, my appraisals, my signature. If you remember, it was a CJ4. The value before was about 7.9 million. It had a 25% DOV, which was about $1.975 million. The Falcon 50. It had a $2.1 million value before the damage occurred, which resulted in a 15% DOV, or about $315,000 in damage. And that G550, it was a big one. $27 million aircraft, 9% DOV, $2.4 million in damage. Now, let's look at what that table is telling you because these are the three lessons in it, and they're all counterintuitive. First, the percentage and the dollars move in opposite directions. The CJ4 took the worst percentage into the three, 25%, a quarter of the airplane gone. The G five fifty, it took the smallest percentage, 9%, and the largest check, $2.4 million. So if you're an owner asking how bad is this, percentage and dollars are often two different questions with two different answers. And which one matters depends entirely on whether you're financing it or selling it. Second, and sit with this one, the G five fifty's diminution of value, the invisible loss, the money that isn't the repair bill, almost two and a half million dollars. The Falcon 50's entire value before it was ever damaged, $2.1 million. A bus hit a parked airplane, and the loss that nobody can see that isn't the repair that most owners never file for, that number was larger than the total worth of another business jet sitting on the same ramp. Third, the newest airplane took the worst percentage. Look at that order. The CJ4 is the newest of the three and it lost about 25% in value. The G five fifty lost nine. It's cruel. I know. The geometry, it really is cruel. And I mentioned it. A new airplane has no other story, so the damage becomes the story. An older airframe with a long history absorbs it better. And that's it. The event is one paragraph and a much longer book. Newer aircraft, bigger relative hit. That is the opposite of what most every owner assumes. And now the one thing I noticed pulling these three files? I pulled these three reports to give you concrete numbers. And going through them together, I noticed something I never quite put in a row before. All three were caused by somebody else. The tug was the FBO's, the car was somebody else's car. The bus was a charter company's bus? Every single one is a third party claim. And I don't think that's a coincidence. I think that's the entire thesis of this episode showing up in my own filing cabinet. Because think about two commissions of a diminution of value appraisal. It's the owner who has somewhere to take it. Somebody who can actually recover the number, which means, and I want to say this carefully, the first party cases largely don't generate reports, not because those airplanes didn't lose value. They lost exactly the same value. The physics of the market don't care whose fault it was. They don't generate reports because there's often nowhere to send the bill. So there is an entire population of owners out there, I'd guess a relatively large one, who took a real permanent five or six or even seven figure loss on their own whole claim. Got a beautifully repaired aircraft back and never knew there was a second number. Because nobody appraised it. Nobody called me. Nobody filed it. It just quietly came out of their equity. And that's the part that actually bothers me the most. Not that carriers don't pay it. That's the contract, and I get it. I understand the contract. It's that most owners finish the entire process without ever being told the loss existed in the first place. If you're sitting there doing the math on your own airplane right now, that's the reason I made this episode. Diminution of value is quantifiable. It isn't a feeling. It's not a negotiating posture. It's defensible, number produced from comparable closings. And it holds up because it's built on what the market actually did. And that's the work we do at VREF every week. Diminution assessments for owners and active claims, for attorneys who need an expert opinion that will survive scrutiny. For buyers trying to price an airplane that has a story. If you've had an event, even one that closed years ago, even one that you already settled, it's worth finding out what the number is. Go to VREF.com or reach out to us directly. If you're in a third party claim right now, do it before you sign anything. That's the last time I'll mention it. Now let's talk about lawyers. Standard caveat, and I mean this one. I am not an attorney. Nothing here is legal advice. Every claim turns on its own facts, its own policy language, and the law varies by jurisdiction. What I can give you is a pattern recognition from the valuation seat. What the claims look like, when they're about to go wrong. Most claims, they just don't need a lawyer. Most are relatively routine because the carrier behaves. The airplane gets fixed, and lawyering up a clean claim will waste your money and potentially slow it down. But There are five triggers where I'd stop and make the call. One, repaira versus total loss when the numbers are close. If the estimate is bumping up against the insured value, that decision is worth a lot, and the incentives aren't yours. Two, any denial of a diminution of value claim, particularly third party. People accept this one too easily. It started with total confidence, and they have no basis to push back. Three, a third party carrier slow walking you. Delay is a strategy. It's cheap for them. It's expensive for you, especially if you're buying lift. Four, your valuation and their number are far apart. And I'm not talking 10%. I'm talking far, far apart. That gap closes when somebody credible documents it, not because you're annoyed. Five, any hint of a coverage dispute, reservation or rights, questions about maintenance status or pilot qualification. That's not a negotiation anymore. And get Someone aviation specific. A good commercial litigator understands insurance. They won't necessarily know what a 337 is, why a prop strike triggers a teardown, or what a matched pair analysis looks like. This is a small world with a small number of carriers who all know each other, and an attorney who works in it knows what these claims settle for. That's most of the value. Weigh the fee against the Delta, honestly. Guys fighting over $15,000, a bad trade and knowing a go in. Fighting over $2 million on a CJ4, it's not even close. Hire the lawyer. And one sequencing note. Do the valuation first. An attorney walking in with a documented number is something to work with on day one. One walking in with my client feels the offer is low or feels the damage is a bigger part of the value than he thinks, has to go get that number anyway, on the clock. At their rates under time pressure. The valuation is the evidence. Everything else is argument about the evidence. Last piece. And it brings us back to where we started because everything we talked about, the undocumented tug incident, the blank field in the database, the repair somebody paid cash for, all of it eventually arrives at a transaction. And at that transaction, somebody either says something or doesn't. Nondisclosure is rarely a villain in a room deciding to lie. It's far more mundane, which is exactly why it's common. It's a seller who genuinely forgot something from six years ago, and one management company ago. An owner who bought the airplane with the damage already on it and was never told about it. A broker who asked any damage history, got a no, wrote it down, and moved on. Because asking twice feels like calling your client a liar. Records may be vanished in a transfer, and sometimes no That's exactly what it looks like. But here's the point. The industry has built a system where the honest failure and the dishonest one produce an identical document. A blank is a blank. The buyer can't tell them apart. That's a system problem, not a character problem. So what can buyers do right now? Well, you can ask for it in writing. Specifically, not any damage history. That gets a reflective no. Ask, has this aircraft ever sustained damage from any cause, including ground handling? Weather, bird strikes, hard landings, foreign object damage. Regardless of whether an insurance claim was filed or whether it was reported, much harder to answer wrongly by accident. The regardless of whether a claim was filed clause is what does the work. Get it in the purchase agreement as representation that survives closing. A rep that dies at closing protects you for about zero minutes. Run the record services floor to ceiling. Scope the pre-by explicitly for damage detection in writing. And read the maintenance history as a narrative, not a checklist. Does the story make sense? Where are the quiet months? Did the aircraft sit for prolonged periods of time? What the industry should standardize since this is my show and I get to say what I think? Well We should have a standard damage disclosure form, not a yes or a no box, a structured document, date, nature, cause, extent, repair facility, parts, sign off. Whether a claim was filed. It should travel with the airplane like the logbooks, and handing it over unprompted becomes normal. And here's what would surprise people. That helps sellers more than buyers. Right now a clean aircraft and one with an undisclosed history look identical on paper, so the market discounts everybody a little. For the uncertainty. Make disclosure standard, and the genuinely clean airplanes can finally prove it. Documented damage prices better than mystery damage every single time. The people fighting hardest against transparency are usually the ones it would pay best. Let me put the whole arc back together because it's a chain and every link costs money. Guys, damage happens, and most of it is boring, and much of it is legally invisible. The insurance math kicks in and that math is not neutral, it was never designed to protect your resale. A paper trail forms or it doesn't, and the version where it doesn't is worse for you, not better. Then the airplane gets fixed and the money that's still missing has a name almost nobody says out loud. And years later, somebody sits across a table from you and asks a question, and everything upstream of that moment decides how it gets answered. If you take one thing out of this episode, take this. Damage history is not a footnote on an aircraft. It's a permanent line item on its value. And diminution of value, or as you're going to hear a lot, DOV, the loss that survives the repair is the part almost nobody files for, because almost nobody knows to. See the repair bill is what it costs to fix the airplane. Diminution of value is what it costs to have needed fixing. One of those gets paid automatically. The other one you have to go get. If you're in mid claim right now, get your own number before you respond to theirs. If you had an event years ago and it never came up, it's still worth knowing what it did to your position. And if you're buying, ask the long version of the question, get it in writing. And remember that a blank space on a database is not the same thing as a clean aircraft. Forward this one, send it to your AMP, your broker, your insurance agent, and if you're currently in a claim, send this one to your attorney. This is the episode I wish somebody handed me the first time I watched an owner leave six figures on a table because nobody told them there was a second number. I'm Jason Zilberbrand. This has been the truth about the aviation market. Know what you own. Until next time, fly safe and stay smart.