Mechanic’s insurance

[Let'sgoflying!]

On a mechanic’s forum they are talking about liability protection.
(Insurance can be $10K/yr for only $1M protection)

Some are saying ask the owner to put the a&p on the policy as an additional insured.
(I don’t see how that protects from being sued by the wife or kids.)

Another idea thrown out repeatedly is to put your assets in a “closed trust”, and the a&p work in an LLC.
(I was under the impression this made getting your assets more difficult but truly not inaccessible by a claimant)

 

[Bell206]

Some are saying ask the owner to put the a&p on the policy as an additional insured.

In my experience, this will not protect the mechanic as maintenance liability and operational liability are two separate things.

Another idea thrown out repeatedly is to put your assets in a “closed trust”, and the a&p work in an LLC.

A trust or LLC will not protect assets when negligence is involved. It is a very thin veil to pierce. However, living in a state that protects your principal domicile and certain retirement funds from civil judgements is about as far as you can go if a mechanic chooses not to purchase a maintenance liability policy. I know a few of mechanics who practice in this manner to include a one-man turbine overhaul shop.

 

[Silvaire]

I looked at this years ago and maybe I'm wrong but I had come to the conclusion that I could not operate as an LLC if my business involved a government issued license.

 

[Let'sgoflying!]

Other state “i put everything in my wife’s name” (to protect the assets).
This, like the other three tactics, seem unlikely to help.

My conclusion is these mechanics have false hope for adequate protection, using any method.

 

[Checkout_my_Six]

Meh....I just stopped doing things for others. It just wasn't worth the couple hundred bucks.

 

[Bell206]

My conclusion is these mechanics have false hope for adequate protection, using any method.

Short of obtaining insurance that is usually the outcome. However there are mechanics who operate a thriving business without coverage but are very selective in how they offer those services.

I looked at this years ago and maybe I'm wrong but I had come to the conclusion that I could not operate as an LLC if my business involved a government issued license.

Given LLCs are governed at the State level that may have been a local rule. I've had/have several LLCs for my aircraft work with no issue for my A&P. However, I used the LLC more for tax liabilities and professional identity than as a liability shield.

 

[Silvaire]

Given LLCs are governed at the State level that may have been a local rule. I've had/have several LLCs for my aircraft work with no issue for my A&P. However, I used the LLC more for tax liabilities and professional identity than as a liability shield.

Yes, thinking back I seem to remember it was a California thing. I thought about getting it in Nevada but would have had to go through a service that gives you some sort of phony residence status so I just ditched the idea. My liability shield now is - retirement.

 

[Jdm]

This is a subject that has always concerned me. Wonder how often mechanics actually get judgments against them? I’ve been in the business all my life and haven’t known anyone who’s had this sort of problem. Still, it’s very scary to think about what can happen when greedy people see opportunities to collect money.

 

[flyingron]

My insurance policy specifically EXCLUDES the mechanic (unless I'm i the plane). They can cry all they want, but such insurance is part of the cost of doing business, and there's no easy way around it. Sure the airplane owner will end up having to foot the bill in the form of higher maintenance fees.

 

[Doc Holliday]

Aircraft owner: “You charge too much for working on my plane!”

Same owner:”Doesn’t matter I did something stupid, I’m gonna sue you because you worked on my plane!”

 

[Bell206]

Wonder how often mechanics actually get judgments against them?

The old data I've seen indicated <5% of individual mechanics had to pay out of a civil action. Usually they were shown included by name in a list of Defendents. However, after the passage of the GARA Act individual mechanics and their insurance policies moved up in the plaintiff food chain once the OEMs deep pockets were removed from most civil actions by the act.

 

[Jdm]

The old data I've seen indicated <5% of individual mechanics had to pay out of a civil action. Usually they were shown included by name in a list of Defendents. However, after the passage of the GARA Act individual mechanics and their insurance policies moved up in the plaintiff food chain once the OEMs deep pockets were removed from most civil actions by the act.

I would have guessed less than 1%. Much less.

 

[Bell206]

I would have guessed less than 1%. Much less.

Unfortunately its not. Depending on whose reports you look at, maintenance errors can account for anywhere from 7% to 14% of accident and incident probable causes. Most errors are on company aircraft vs private aircraft with the majority of errors being procedural in nature, ie., not following the book.

 

[Silvaire]

Over the past decade I’ve kept my IA current by doing a handful of annual inspections that were pretty much all owner assist for people I know well. There is still an element of risk of course but I felt it was acceptable. The requirement for renewal is four annuals per year and my own airplane takes care of one of them. I also have two project airplanes that I suppose I could log annuals on, though that is sort of skirting the rules. The other option is to attend one of the annual seminars which is probably the route I’ll take going forward. I feel kind of bad for not being able to help people out but this is just the way it is.

 

[Checkout_my_Six]

Over the past decade I’ve kept my IA current by doing a handful of annual inspections that were pretty much all owner assist for people I know well. There is still an element of risk of course but I felt it was acceptable. The requirement for renewal is four annuals per year and my own airplane takes care of one of them. I also have two project airplanes that I suppose I could log annuals on, though that is sort of skirting the rules. The other option is to attend one of the annual seminars which is probably the route I’ll take going forward. I feel kind of bad for not being able to help people out but this is just the way it is.

I take the online Gliem course every year to maintain my IA.... it's like $50 and well worth it. You still need to log maintenance of some kind to show you're actively engaged.

 

[Mikey52]

Over the past decade I’ve kept my IA current by doing a handful of annual inspections that were pretty much all owner assist for people I know well. There is still an element of risk of course but I felt it was acceptable. The requirement for renewal is four annuals per year and my own airplane takes care of one of them. I also have two project airplanes that I suppose I could log annuals on, though that is sort of skirting the rules. The other option is to attend one of the annual seminars which is probably the route I’ll take going forward. I feel kind of bad for not being able to help people out but this is just the way it is.

Just annual your plane every 3 months.

 

[Silvaire]

Just annual your plane every 3 months.

That's not really an option because when you become an A&P and then an AI you didn't form a plan to flirt the rules or disrespect our change them or even question them. That's not your job. There is a system that has been built up and if you think something is stupid well, okay let's look at it but it doesn't mean we have to tear the whole thing down to fix it according to someone's view. It takes time.

 

[Magman]

At one time PAMA had a “Defense Only” insurance Policy.

There was money to pay attorney fees but no pot of gold at the end.

I felt it was well worthwhile.

 

[pfarber]

I would have guessed less than 1%. Much less.

Civil liability has a much lower threshold than a criminal action. You could get sued and be 100% or some other less % of the damages awarded.
Typically bankruptcy will negate a judgement. Sucks but probably the best way forward IF you have a judgement levied against you and you have few State property protections.