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…
