Insurance for a new AP

Discussion in 'Maintenance Bay' started by Morgan3820, Jul 21, 2018.

  1. denverpilot

    denverpilot Ejection Handle Pulled

    Joined:
    Nov 8, 2009
    Messages:
    48,652
    Location:
    Denver, CO
    Display Name:

    Display name:
    DenverPilot
    People who’ve never had to make an honest living. Good luck.

    They’re idiots. Of course everyone in earshot and eyesight is always named in every lawsuit. Nothing new there.

    Their defense is: “The FAA certifies mechanics and oversees their work, and the airport is not involved. In fact the FAA would be quite upset if we involved ourselves. Mechanics are the FAA’s jurisdiction. Perhaps the plaintiff should consider naming FAA in their lawsuit instead of us, Your Honor?”

    And, they’re removed.

    Airport Boards are so often such an amateur hour of wannabe politicians (who can’t hack even basic liability issues, let alone running businesses), this is what you get when the bottom of the political talent barrel holds jobs on them.

    Our airport supposedly has a $200 annual fee for anyone doing business of any kind on the airport. Never seen anyone except businesses with an address on the field, pay it. The vast majority of airport users don’t even know it exists. I’d love to see them try to enforce it on a transient CFI who lands there during training for lunch. Utterly stupid. Just some harebrained fee nobody even knows or cares about.
     
  2. Jsalter

    Jsalter Filing Flight Plan

    Joined:
    Nov 8, 2017
    Messages:
    4
    Display Name:

    Display name:
    Jsalter
    This is a tough subject for me being an A&P and claims adjuster. Trust me, if an A&P incorrectly installs a part that leads to significant damage(100k plus) the insurance company who did pay the loss(usually the aircraft owner's) WILL come after you. If there is a death involved, you are ultimately liabile, and you don't have insurance, even the trailer you live in is fair game. The insurance company might not come after you for 100% of the loss if you don't have it, but they won't walk away from a big claim. The small stuff for $20k, maybe, but not the 6,7 figure claims.

    Sure that chances of that happening are low for any given mechanic, but is DOES happen, I see it every day.
     
  3. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    If you see it every day, there must be a paper trail,, so show us.
     
  4. Clip4

    Clip4 En-Route

    Joined:
    Jun 27, 2013
    Messages:
    2,764
    Location:
    A Rubber Room
    Display Name:

    Display name:
    Cli4ord
    Actually it is not a fear tactic. If you do maintence on aircraft, you have a high risk of being named in a suit. You may be eventually dropped from a suit and not pay a settlement, but it is going to cost you a lot in attorney fees even if you were not liable for anything.
     
  5. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    And remember, you can be sued for anything.
     
  6. Checkout_my_Six

    Checkout_my_Six Final Approach

    Joined:
    Mar 4, 2007
    Messages:
    7,884
    Location:
    Maryland
    Display Name:

    Display name:
    Check_my_Six
    so....what do you do? o_O
     
  7. chemgeek

    chemgeek Pre-takeoff checklist

    Joined:
    Dec 5, 2009
    Messages:
    327
    Display Name:

    Display name:
    chemgeek
    We are actually addressing this contentious issue (yet again) at our airport. There appear to be several areas of potential exposure to consider: (1) bodily injury, (2) property damage, (3) completed operations, and (4) hangar keepers liability.

    The most important of these from an airport operator's perspective is #1 and #2, bodily injury and property damage that occurs as a result of a maintenance operation by a contractor. We require our airport maintenance business to carry this coverage to limit exposure of the airport in the event of an claim. Contractors are expected to abide by the same rules. The issue for us is what amount of coverage and whether or not it is available/affordable. But the airport cannot be exposed. Hangar keepers liability is kept by the airport, and covers the airport in the event of say, a facility maintenance or failure claim resulting in damage to stored aircraft. (Say moving and airplane out of a hanger to make necessary repairs to the building.) Owners are also expected to carry their own liability coverage, and hull coverage is strongly recommended. (I'm not sure why anyone would go bare on hull, but go figure.)

    The completed operations insurance is mainly for the protection of the contractor. That protects the contractor should his/her work result in an aircraft failure. That is of lesser concern to the airport operator.

    If there is an incident of any sort at an airport or involving a plane based at the airport, everyone is likely to be sued, including the airport whether or not it is credibly liable. To be without liability protection would be quite foolish, and not responsible to the taxpayer. 99.99% of the time, everything is fine. Insurance is for the 0.01% of the time something very expensive and/or tragic happens. Everyone who has had an accident or incident thought it couldn't happen to them.
     
  8. chemgeek

    chemgeek Pre-takeoff checklist

    Joined:
    Dec 5, 2009
    Messages:
    327
    Display Name:

    Display name:
    chemgeek
    Airport boards or commissions can be quite variable, for sure. Some can be spectacularly inept. But many go out of their way to involve pilots, lawyers, an other useful experts who have organizational oversight experience from the non-profit, military, or business sector. No one on our airport commission (other than the ex officio municipal official who is responsible for managing the airport on top of her regular municipal job) gets paid a dime to serve. We do it for the love of aviation and the sustainability of an airport in our community. Making it work is a challenge, and the airport has cost the taxpayer hardly a nickel for more than a decade.

    I heartily encourage pilots and those with flying and organizational management experience to get involved in your local airport governance. One can make things better. Such service is both rewarding and revealing...
     
  9. denverpilot

    denverpilot Ejection Handle Pulled

    Joined:
    Nov 8, 2009
    Messages:
    48,652
    Location:
    Denver, CO
    Display Name:

    Display name:
    DenverPilot
    The most inept Boards I’ve ever served on were full of fine upstanding professionals who’d never run a business in their lives. Like your list. Pilots and lawyers? LOL. Seriously. That’s almost a guarantee of death by committee.

    Sounds like politician-speak. I’d love to see the balance sheet on that. Haven’t paved it in a few decades or what? No electric bill for the runway lights? I’m not buying that statement at all.
     
  10. chemgeek

    chemgeek Pre-takeoff checklist

    Joined:
    Dec 5, 2009
    Messages:
    327
    Display Name:

    Display name:
    chemgeek
    Well, In the last decade, we repaved and lengthened a runway, added a taxiway, installed security fencing, added two sets of T-hangars, installed AWOS, commissioned some of the first LPV approaches in our region...I hope I'm not leaving anything out of that list. Scheduled on the AIP is a new GA ramp and a revamped terminal/maintenance building in the next few years. Last fiscal year the balance sheet showed a small surplus. Like almost every year before that in the last decade. Maybe we're doing it all wrong.

    There are problem-finders, and problem-solvers. The world has too many of the former, and not enough of the latter.
     
    Kenny Phillips likes this.
  11. denverpilot

    denverpilot Ejection Handle Pulled

    Joined:
    Nov 8, 2009
    Messages:
    48,652
    Location:
    Denver, CO
    Display Name:

    Display name:
    DenverPilot
    And that was all free to the taxpayer? There was no input from the taxpayer to that balance sheet?
     
  12. chemgeek

    chemgeek Pre-takeoff checklist

    Joined:
    Dec 5, 2009
    Messages:
    327
    Display Name:

    Display name:
    chemgeek
    Yep-per. We are currently generating enough income from fuel sales and hangar rentals, plus some miscellaneous income, to make ends meet and move capital projects forward. I'm looking at the 2018-2019 budget sheet and it shows zero interfund transfers for the last three years, and that has been typical. We are on the razor's edge, but making it work. We are the last, and only public-use airport in our county. All the others have gone belly-up.
     
  13. denverpilot

    denverpilot Ejection Handle Pulled

    Joined:
    Nov 8, 2009
    Messages:
    48,652
    Location:
    Denver, CO
    Display Name:

    Display name:
    DenverPilot
    That’s actually impressive. No Fed grants either?
     
  14. chemgeek

    chemgeek Pre-takeoff checklist

    Joined:
    Dec 5, 2009
    Messages:
    327
    Display Name:

    Display name:
    chemgeek
    Fed and state grants for eligible capital projects. Fed and state grants don't pay for operational or maintenance costs, of course, matching funds come from airport budget. Accumulating matching funds is the rate-limiting step for moving grant-eligible capital projects forward.
     
  15. denverpilot

    denverpilot Ejection Handle Pulled

    Joined:
    Nov 8, 2009
    Messages:
    48,652
    Location:
    Denver, CO
    Display Name:

    Display name:
    DenverPilot
    Well there’s the rub. Grants aren’t free to the taxpayer. I didn’t think that original statement was accurate, and it wasn’t.

    Grants aren’t free money, they’re mostly debt owed by the taxpayer. Tens of trillions of dollars of debt.
     
    Checkout_my_Six likes this.
  16. Checkout_my_Six

    Checkout_my_Six Final Approach

    Joined:
    Mar 4, 2007
    Messages:
    7,884
    Location:
    Maryland
    Display Name:

    Display name:
    Check_my_Six
    ya but....it's OPM. :confused:
     
  17. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    Like you I have nothing, :)
     
  18. Checkout_my_Six

    Checkout_my_Six Final Approach

    Joined:
    Mar 4, 2007
    Messages:
    7,884
    Location:
    Maryland
    Display Name:

    Display name:
    Check_my_Six
    nekid....and alone....:confused:o_O
     
  19. chemgeek

    chemgeek Pre-takeoff checklist

    Joined:
    Dec 5, 2009
    Messages:
    327
    Display Name:

    Display name:
    chemgeek
    So you are saying no one should accept federal or state airport improvement funds? Seriously? Nothing will satisfy you.
     
  20. Bell206

    Bell206 Line Up and Wait

    Joined:
    Oct 6, 2017
    Messages:
    531
    Display Name:

    Display name:
    Bell206
    It depends on a number of things but I would get a copy the airport's policies and read yourself before spending any money. Another item is whether he will be a freelance mechanic or a domiciled mechanic as in has a shop on the airport. Once he figures out where he stands then he can determine what insurance he wants to pursue. To many variables to offer anymore.
     
  21. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    The newest ruling for many airports is, "These are aircraft storage hangars, there will be no maintenance done in these hangars".
     
  22. denverpilot

    denverpilot Ejection Handle Pulled

    Joined:
    Nov 8, 2009
    Messages:
    48,652
    Location:
    Denver, CO
    Display Name:

    Display name:
    DenverPilot
    I didn’t say that. I said you lied when you said no taxpayer funds were utilized. Read carefully.
     
  23. Morgan3820

    Morgan3820 Cleared for Takeoff

    Joined:
    Jun 29, 2013
    Messages:
    1,168
    Location:
    New Bern, NC
    Display Name:

    Display name:
    Reno
    Yes, I heard this too, from the airport manager as he was working on his homebuilt in the hangar next to mine.
     
  24. Morgan3820

    Morgan3820 Cleared for Takeoff

    Joined:
    Jun 29, 2013
    Messages:
    1,168
    Location:
    New Bern, NC
    Display Name:

    Display name:
    Reno
    Actually the airport manager is in a bind, caught between his desire to be one of the guys and the airport BOD. There is an old guy that is bored and just likes to stir the pot. He is an ex fighter jock that used to own the FBO. He likes to show that he was somebody by getting the board stirred up. Some Retired people have lots of time on their hands.
     
  25. Kenny Phillips

    Kenny Phillips Pre-takeoff checklist

    Joined:
    Jul 29, 2018
    Messages:
    117
    Display Name:

    Display name:
    Kenny Phillips
    So an LLC cannot get insurance? Of course they can.
     
  26. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    Who's a LLC. most A&Ps aren't
     
  27. Kenny Phillips

    Kenny Phillips Pre-takeoff checklist

    Joined:
    Jul 29, 2018
    Messages:
    117
    Display Name:

    Display name:
    Kenny Phillips
    I was addressing your "you must be an incorporated company" comment, of course. An LLC is not a corporation. But it takes about fifteen minutes in most states to become one, including getting a federal tax ID. All independents should spend the few bucks and few minutes to do so. The LLC stands for "Limited Liability Company", which may protect your assets if you haven't done anything deliberate that caused the event for which you are being sued. And then you can get liability insurance for your LLC. I'm not sure all insurers would require you to become an LLC, BTW. I know that I can get such insurance on myself, for commercial use of my tractor. But the liability is likely much less than an A&P, where simply not getting the old oil filter gasket off the engine has caused more than one plane to come down prematurely.
     
  28. Topper

    Topper Pre-takeoff checklist

    Joined:
    Nov 18, 2012
    Messages:
    356
    Location:
    Benton
    Display Name:

    Display name:
    Topper
    Everyone makes mistakes occasionally. I think it is extremely irresponsible of an A&P to not carry insurance. Someone that is hurt due to the A&p’s negligence might need the money to achieve a property recovery.

    If your business does not make enough money to buy insurance, it is not a business.

    Jim
     
  29. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    The best insurance any A&P can have is to choose their customers very carefully.
     
  30. Checkout_my_Six

    Checkout_my_Six Final Approach

    Joined:
    Mar 4, 2007
    Messages:
    7,884
    Location:
    Maryland
    Display Name:

    Display name:
    Check_my_Six
    let us know how that works out.....:confused:
     
  31. Kenny Phillips

    Kenny Phillips Pre-takeoff checklist

    Joined:
    Jul 29, 2018
    Messages:
    117
    Display Name:

    Display name:
    Kenny Phillips
    You can believe that all that you want, but that doesn't make it true. If one can pick and choose their customers, one likely makes enough money to buy liability insurance. If the best A&P is sued by the best customer, it will be costly, even if the mechanic is certain that they are not at fault. One can claim "I have no assets" as a reason to go bare, but in most cases, you'll have tools and a truck, and future earnings and assets which can be attached.
    I wonder how many without insurance have actually requested a quote?
     
    flyer770 likes this.
  32. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    My EX-wife got every thing, I own nothing, so sue me. my Ex beat you to it.
     
  33. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    been working :)
     
  34. Checkout_my_Six

    Checkout_my_Six Final Approach

    Joined:
    Mar 4, 2007
    Messages:
    7,884
    Location:
    Maryland
    Display Name:

    Display name:
    Check_my_Six
    well....and never been sued. Not bad. o_O
     
  35. Kenny Phillips

    Kenny Phillips Pre-takeoff checklist

    Joined:
    Jul 29, 2018
    Messages:
    117
    Display Name:

    Display name:
    Kenny Phillips
    So you are an A&P that owns no tools, no car, no truck, no furniture, and no potential of future earnings? Oh, and no insurance?
     
  36. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    Yep, every thing is rented, borrowed, or
     
  37. Bell206

    Bell206 Line Up and Wait

    Joined:
    Oct 6, 2017
    Messages:
    531
    Display Name:

    Display name:
    Bell206
    A couple comments: Considering I purchased freelance mechanic insurance for 30+ years, there a few items a number of people fail to consider or don’t know about this issue.

    First, aviation insurance and general business insurance are two separate markets. I own two entities, one aviation and one non-aviation. I have (had) two separate policies, from two separate underwriters. Prior to my retirement, the aviation policy cost $11,435.00 per year and the non policy cost $1950.00 for the same $1M liability coverage.

    I was fortunate that I had a good day job with a flexible schedule that allowed me to pursue the freelance work and provided a financial cushion. Full-time one man ops weren’t so lucky and increased insurance costs over the years put them out of business as it is hard to turn a profit when one overhead bill consumes 40% of your gross income. And when most mechanics try to charge a livable wage based on 12 to 15% net profit, they get accused of padding the bill or trying to pay for the new boat, as mentioned in a number of posts on this site.

    25 years ago there were 20+ underwriters that wrote freelance mechanic policies, e.g., liability insurance only and it was reasonable. Then in the 90s it started a downturn. That is when you saw the one man shops, machines shops, and mom/pop engine shops close simply because the number of underwriters that wrote aircraft mx policies drop to less than 10 or 12 and the prices went up—double in some cases.

    The remaining shops who could keep above water picked up the new work opportunities and grew. Most grew big enough to self-insurance themselves for the 1st 1M or more.

    The cost increase didn’t hit me right away, but my policy holder reduced the types of maintenance I could perform under the policy. Mainly engine work except for accessory replacement. Guess what most of my work was… As I switched carriers (sometimes with no choice) my insurance options went down and my costs went up to finally on my last policy, my provider could only find 2 underwriters that would write a freelance mechanic policy. One declined coverage but the other offered one provided it was a “hangar keepers” policy which provide coverage for liability, fueling storage/refueling, and aircraft storage. Problem was I could never claim jack on 2/3rds of the coverage I was paying for.

    As for the comments referring to business and insurance, today for a new guy he can see the costs vs profit of insurance going in and decide if he wants to have a go at it. It’s the #1 issue when starting a mechanic business especially out in BFE with limited customers. However, for the guy who’s been in business for 20+ years or took over his dad’s shop what is he going to do? Quit at 50 and work at McD’s. I know a few that I help out when they get swamped. And no I don’t charge them for my time.

    And whether a mechanic can get a policy under his name or if he needs a registered entity like an LLC that is an internal item to the specific underwriter. I’ve done it both ways. The LLCs, INCs are there to provide a barrier for you, not the insurance provider. If you look on any filed claimant the insurance company(s) is always listed as a separate defendant(s).

    On the lawsuit comments, it depends on the State you live in. A number of States do not permit the seizure of a person’s principal domicile, retirement funds, principal means of income, etc from civil actions. Just ask OJ. Also, contrary to what a number of people believe, attorneys follow the big money and not the little guy. There’s no payout. If all you have is a poor mechanic with no insurance to sue, you’ll be amazed how difficult it will be to retain an attorney on contingency. Now if you want to personally shell out $50K+ have at it. But don’t plan to get your investment back.

    Granted, this comment was only about freelance ops. Rates are cheaper if you have a domiciled shop, but with a shop comes another round of overhead costs. However, since I retired I carry no insurance. I still help out some old friends and customers but I select who I do what for, just as was mentioned above. But then again everyone is entitled to their opinion…
     
    brien23 and Tom-D like this.
  38. Checkout_my_Six

    Checkout_my_Six Final Approach

    Joined:
    Mar 4, 2007
    Messages:
    7,884
    Location:
    Maryland
    Display Name:

    Display name:
    Check_my_Six
    that motor home trailer hasta have some value......o_O
     
  39. Tom-D

    Tom-D Taxi to Parking

    Joined:
    Feb 23, 2005
    Messages:
    28,680
    Display Name:

    Display name:
    Tom-D
    To comment on a couple points you've made.

    In the last ten years I've noted that in my immediate area the 5 A&P-IAs working have dropped to 1, reason = start up costs insurance being the biggest.