Fees for aviation loss assessment: what owners can expect to pay

What the fee actually pays for

An aviation claims expert acting for the owner or operator does far more than attend a single inspection. The fee normally covers a review of the hull policy and any warranties, attendance at the underwriters' survey, examination of logbooks and maintenance records, assessment of the repair scheme proposed by the maintenance organisation, and verification of parts pricing, labour hours and associated costs.

It also pays for the preparation of a structured claim submission, negotiation with the underwriters' surveyor or adjuster, and follow-up until the settlement is agreed and paid. On complex losses the expert may coordinate engine shop teardown reports, non-destructive testing results and manufacturer engineering responses. These tasks take time regardless of the final settlement figure, which is why fees on small claims look proportionally higher.

Indicative fee bands by size of loss

There is no official tariff for aviation claims representation in the UK, the United States, Canada, Australia or Ireland. The table below shows an order of magnitude observed in the market for percentage-based engagements, expressed in US dollars or the equivalent in pounds, Canadian or Australian dollars and euros. It is not a regulated scale and actual quotations can fall outside these ranges.

The logic is degressive: the larger the loss, the lower the percentage, because the fixed workload is spread over a larger amount. Many aviation specialists prefer hourly or daily rates for very large hull claims, so the upper bands are often negotiated individually.

Indicative amounts, to be checked with each expert.

Ways of calculating the bill

The headline rate means little without the base to which it applies. Three approaches are common, and the same percentage can produce very different invoices depending on which is used.

• Percentage of the total agreed loss, including amounts the underwriter would have paid anyway
• Percentage of the final settlement paid to the insured, net of the deductible
• Percentage of the additional amount obtained above the underwriter's first offer, sometimes at a higher rate
• Fixed fee for a defined scope, such as reviewing a repair estimate or attending one survey
• Hourly or daily rates for engineering consultants, often with a minimum charge per assignment

Minimum fees, taxes and expenses

Because aircraft are often damaged far from the owner's base, travel and accommodation can be a substantial part of the cost. An engagement letter should state whether travel time is charged, at what rate, and whether expenses are passed on at cost. A minimum fee is common for small losses, so a claim of a few thousand dollars may attract a charge that makes representation uneconomic.

Check whether quotations are shown before or after VAT, GST or sales tax. In the UK and Ireland VAT is usually added to professional fees; in Australia and Canada GST or HST may apply. Specialist third-party reports, such as metallurgical analysis or a second engine shop opinion, are normally billed separately.

Does the hull policy pay for your expert?

The cost of the underwriters' own surveyor is borne by the insurer. The owner's independent expert is a different matter. Most aviation hull wordings do not include a general professional fees or claims preparation extension, although some fleet and business aviation programmes do, often with a monetary cap or a requirement for the insurer's prior written approval.

Reasonable costs incurred to prevent further damage, such as recovery, protection and storage, may be recoverable under the policy's mitigation or sue and labour provisions. Those provisions generally do not extend to the cost of negotiating the claim. Before engaging help, ask your broker to confirm in writing whether any fee cover exists, what limit applies and what conditions must be met.

Small, medium and major aircraft losses

For a light aircraft with a hangar rash repair of around USD 20,000, an independent expert may cost several thousand dollars once the minimum fee and travel are included. Unless the insurer's estimate is clearly inadequate or cover is disputed, the broker and the maintenance organisation can often manage such a claim without outside help.

A mid-sized loss, for example USD 400,000 of damage to a turboprop after a hard landing, is where independent representation is more often considered. Applying an indicative rate of 5 per cent to the whole amount would produce a fee of about USD 20,000 plus expenses and taxes; a fee based only on the additional amount recovered would be lower if the insurer's first assessment was already close to the final figure.

For a major hull loss on a business jet running into several million dollars, percentages fall but the absolute amount remains significant. Here an hourly engagement with a capped budget, or a blended structure combining a modest retainer with a success element, is frequently more appropriate than a flat percentage.

Worked example of a banded calculation

Some experts apply each band only to the slice of the loss within it, as income tax works. On a USD 400,000 loss using the indicative mid-points of the table, the calculation might be 10 per cent of the first USD 50,000, 7.5 per cent of the next USD 200,000 and 5 per cent of the remaining USD 150,000, totalling about USD 27,500. Others apply the single rate for the band in which the total falls. The engagement letter must make the method unambiguous.

Comparing firms and reading the engagement letter

Price is only one element. An expert who knows the aircraft type, the maintenance organisation and the manufacturer's repair processes may secure a better repair scheme or a fairer engine depreciation calculation, which can outweigh a difference of a percentage point. Ask for relevant experience, qualifications and references from similar losses.

Read the engagement letter carefully before signing. It should define the scope of work, the fee base, the rate, any minimum, how expenses are charged, when payment falls due, what happens if the claim is refused, and how the engagement can be ended. Be wary of anyone who promises a specific settlement before the damage has been fully assessed, or who asks for a large non-refundable payment upfront without explaining what it covers.

• Request at least two written proposals with the same scope
• Ask whether the fee applies to amounts the underwriter has already offered
• Confirm who pays for specialist reports and engine teardowns
• Check the policy for any fee cover before agreeing the structure

Aviation claims fees vary with the size, complexity and location of the loss. Compare written proposals, understand the fee base and check your policy before you commit.