The International Cessna^® 170 Association

Do you care if your maintenance shop has liability insurance?

With the recent talk of some larger facilties refusing to work on older aircraft because of insurance cost/liability concerns, I'm curious about the opinions and concerns of the owners of these older craft. Being a maintenance/repair shop owner, I want to know.

We know the insurance cost is passed on to you in the form of higher shop rates and markup on parts. Everything else being equal, would you take your aircraft to the $55 per hour no insurance or $70 with?

Has liability insurance ever been a factor for you in deciding whether or not to use a shop?

Do you ask if the shop has insurance?

Has a shops liability insurance ever come into play with a maintenance concern of yours?

I've never once been ask by an aircraft owner if I have insurance. We do alot of repair work, being referred and paid by aircraft insurance companies, and they have never ask if we have liability coverage. This is my 22nd year working as mechanic/structural repairman, 16 as A&P, 11 as business owner, 5 as IA, and I,ve never been ask about insurance.

ALL opinions are requested and welcome

Del, I don't think the average owner thinks about it...just assumes a shop has insurance.
Another question to ask (for YOU to answer) is: Can a shop afford to be without insurance? Not just lose the shop, but also cause his family to lose everything personally, as well? Can a shop owner afford to lose everything in a lawsuit? Can a shop owner even afford the lawyer's fee to defend him...even in a suit that the shop successfully DEFENDS? (You can be right....and still lose it all.)
I may not think to ask,...but if I found out a shop had no insurance to protect my investment...or my family against the shop's negligence or error... I'd not only refuse to do business with them, I'd make sure it was common knowlege.
For a shop to have liability insurance is similar to a doctor having malpractice insurance or a driver having auto liability. It's not just a matter of economics for the shop owner's pricing policies. It's a matter of honor and responsibility. IMHO.

Personally I don't care if a shop has insurance. What I DO care about is that they do a good job. Usually you can get a feel for the quality of the work by the appearance of the shop. If it looks clean and professional then in most cases I would tend to trust the quality of the work.

On another note, in today's litigious society, sometimes the fact that you have insurance makes you a target for unscrupulous lawsuits by lawyers with "questionable" ethics. Insurances companies will settle a bogus lawsuit just because it's cheaper for them. Nevermind the fact that the settlement makes it look like you did something wrong; they aren't the least bit concerned about you and your business, only the bottom line.

regards

~Marc

Plummit wrote:... Insurances companies will settle a bogus lawsuit just because it's cheaper for them. Nevermind the fact that the settlement makes it look like you did something wrong; they aren't the least bit concerned about you and your business, only the bottom line.

regards

~Marc

Perhaps you meant to say that ... "Sometimes, insurance companies will settle...." but I think the rest of that statement is not true anyway. "Bogus" lawsuits are not something the insurance company will settle just to get rid of , beause it would lead to other bogus lawsuits. What we anecdotally hear about as "bogus"....is actually a lawsuit with sufficient basis for the insurance lawyers to recognize as a very real possibility of loss. So they might negotiate settlement rather than run the risk of a loss in court.
Rumor is a powerful thing. Insurance companys have some of the best lawyers in the business on retainer and they don't stay on retainer by making settlements on bogus lawsuits. They are not prone to simply giving up and "settling" simply because someone files a "bogus" lawsuit. They settle because there's a real problem of liability being proven against the insured. Just because someone's next-door neighbor's brother-in-law heard of a bogus suit being settled so easily....doesn't meet the criteria of facts. IMHO.

Del, in order to get honest answers to your question, you might have to ask in private, of people who know you. This is too public a forum for a wise person to open up about how they're covered (or not).

We once were a free country with reliance on personal honor and the rule of law; we've become a tightly constrained society ruled by fear of lawsuits.

>>
Perhaps you meant to say that ... "Sometimes, insurance companies will settle...." but I think the rest of that statement is not true anyway.
<<

George, I resent the implication that I'm lieing here. I submit that you either have limited or no first-hand knowledge of the insurance industry.

I'm speaking from both PERSONAL EXPERIENCE and the knowledge that I've gained from a good friend (20 years) who happens to be an attorney employed by AIG. Coincidentally I have the commercial vehicle policy for my business underwritten by AIG, so my comments do not originate from some "friend-of-a-friend", long-lost cousin or internet rumor.

Moreover, my remarks were directed to Del, who posed the question to the members of the Association. In giving the requested feedback to HIM, I don't expect the truthfulness of my comments to be challenged by you - at least not without first being asked about the solidity of the foundation for my knowledge base.

Regardless, insurance companies need to turn a profit. If it cost $5000 to settle a claim vs $25000 to sucessfully defend a suit, heads would roll over a $20000 "loss".

regards

~Marc

What does "IMHO" mean? Does the "H" stand for "Honest" or "Humble"? I've heard both. It's often used as if it were a disclaimer, following something that doesn't sound all that humble. I'm for being honest about whether we're being humble or not!

Dear Marc,
I apologize if I made an unfortunate choice of words. My remark was intended to imply that I believed the statement was not necessarily accurate....not that anyone was lying. (I said I think it's untrue that bogus suits are settled out of court. I didn't say I thought you were lying.)

Your comment, "Insurances companies will settle a bogus lawsuit just because it's cheaper for them." did not strike me as "true" in the sense that it would not be credible that an insurance company with a legal department would simply "settle" or pay money for something bogus. By definition, a "bogus" lawsuit would not require much in the way of defense. If it were patently "bogus" the court would be unlikely even to accept it. It's another common misconception that all one has to do to get money from someone else is dream up a lawsuit, and file it with a court, as if it then becomes obligatory for the court to accept it and process it against a defendant. Yet that untrue belief has become colloquially repeated all the time on the street.
Is the $5000 settlement versus $25000 defense you used, an actual example? Or is it an imaginary one? (My earlier comment was specifically in reference to the imagined examples so publicly and commonly "quoted".)
I believe it to be true that most "out of court" settlements that are reported to be made in order to avoid the expenses of defense, are actually settlements that are made after the facts are made known to the defendant, and those facts tend to prove the liability of the defendant, and the defendant realizes that a great deal of money will be required to defend against those facts. Further, that should the defendant subsequently fail to prevail in court, that the record will then reflect that the defendant has a history of injurious behavior, which will subsequently damage defendant's reputation. It is therefore less damaging to simply settle "out of court" and hopefully it be believed that the suit was bogus, and settled to avoid expenses in a businesslike manner.

I know a few lawyers too. You're incorrect that I have no first-hand knowlege of the insurance industry. My brother in law is a former mid-management type at AIG. His decision to leave that company to work elsewhere (a personal decision partly due to that company's management "style"), was later proven to be correct, and about which he expressed a certain lack of surprise when AIG's legal matters became public.* I'm not sure AIG is the best example for this point.
I appreciate the fact your remarks were directed towards Del. That was in an open forum...as was Del's question. Open forum discussions allow for following comment. This exchange is one such example, no?
In any case, I certainly don't want to cause friction amongst ourselves or mean to quash any discussion among members or forum participants. I'm sorry for my ambiguous word-choice. I meant to say "accurate" in lieu of "true" in the sense you took it, Marc.
John, I didn't realize it meant anything other than "In my honest opinion", in the sense of being sincere or frank (as in honest critique) or plain (as in honest folk.) But I can be humbled when I inadvertently hurt someone's feelings (as I apparently did in this exchange) and they forgive me.
Best regards to all, and again, I apologize Marc.
George

*http://www.oag.state.ny.us/press/2005/m ... 6a_05.html

Del

This is a good question I'd not really thought about. I think also the answer might depend on what part of the country your from. I think there are many parts of the country that lots of people still operate on a handshake and don't think much of law suits. From my perspective in eastern PA these places are few and far in between.

I have a few friends who with my assistance work on my airplane. My IA for example I'm sure has no specific insurance while he is working on my airplane because it's done on the side with a handshake. I don't expect him to have insurance. And I don't pay him nor does he ask for shop rate.
We have a relationship. He knows I wouldn't sue him nor will my family on my behalf. That is part of the deal. I know of lots of relationships like mine that others have.

On the other hand I have two friends who have their own repair shops. while my philosophy on law suits wouldn't change if they worked on my plane in their shop, I would expect that they are covered under some sort of insurance policy. In my neck of the woods to operate a business without insurance, while not legally required, would be considered negligence. No different than working on aircraft without the proper licenses or tools. It is understood the shop rate is what it is because of the cost of dong business which INCLUDES insurance.

I would think that where ever you are located, if the norm is to have insurance and you don't and you don't inform your customers, that could be considered less that honorable. If there is no norm and you have insurance informing your customers of that fact might be a selling point you can use to your advantage when comparing your service with your competitors.

So to sum it up. If you think your customers have an expectation you have insurance and you don't, you better get it or inform them. The fact you have no insurance wouldn't necessarily stop me from using your services. Finding out you didn't have insurance and I expected you had it, would.

gahorn wrote:Del, I don't think the average owner thinks about it...just assumes a shop has insurance.
Another question to ask (for YOU to answer) is: Can a shop afford to be without insurance? Not just lose the shop, but also cause his family to lose everything personally, as well? Can a shop owner afford to lose everything in a lawsuit? Can a shop owner even afford the lawyer's fee to defend him...even in a suit that the shop successfully DEFENDS? (You can be right....and still lose it all.)
I may not think to ask,...but if I found out a shop had no insurance to protect my investment...or my family against the shop's negligence or error... I'd not only refuse to do business with them, I'd make sure it was common knowlege.
For a shop to have liability insurance is similar to a doctor having malpractice insurance or a driver having auto liability. It's not just a matter of economics for the shop owner's pricing policies. It's a matter of honor and responsibility. IMHO.

George, I agree. But consider this trend. If the insurance companies are going to offer reduced premiums to maintenance shops who refuse to work on older craft, and the smaller shops certainly can't afford to retain that liability coverage and stay competitive, WHO is going to work on your planes?

I'm just looking for a way to stay in the game, in this uncertain future. I may have to keep on paying, but I still like options and it doesn't hurt to ask.

"Those who would sacrifice liberty for the sake of security, deserve neither liberty nor security". Ben Franklin

Insurance is just temporary security. Yes? No? And has really screwed this country

N9149A,
Thanks for your view.
I would like to clarify something; I'm not necessarily digging for opinions on honor and ethics. Owners of older general aviation aircraft, especially in the more populated areas of our country may soon find themselves looking for a new hobby. General aviation is being attacked from several angles right now. I believe this particular front is the most overlooked threat, a sneak attack. Remember what liabilty did to the manufacturers back in the 80's. Same game, different generation. Didn't learn, doomed to repeat.

Del writes:

>>
I'm just looking for a way to stay in the game, in this uncertain future. I may have to keep on paying, but I still like options and it doesn't hurt to ask.
<<

Hi Del. Remember that having insurance is no guarantee that you won't be sued. In addition, if you are sued and the award is greater than the amount of your insurance, you could still lose everything you have worked for.

As a small business owner I share your concerns about staying in business and remaining competitive. It's tough to make a living as a self-employed entitiy, but I believe that honesty and quality of work go a long way towards making that happen.

The fact that you cared enough to ask tells me that you are a concerned individual who has traits I admire related to working in today's world.

regards

~Marc

[quote="gahorn"]Dear Marc,
I apologize if I made an unfortunate choice of words. My remark was intended to imply that I believed the statement was not necessarily accurate....not that anyone was lying. (I said I think it's untrue that bogus suits are settled out of court. I didn't say I thought you were lying.)

George, what got to me was your comment: "but I think the rest of that statement is not true anyway."

In any event, I was giving Del my take on balancing the need/desire to be insured while remaining competitive in a world where we too often see shoddy work by uninsured people who having nothing to lose.

For the record thanks, your apology is of course accepted, and i'm sorry if I took your comments the wrong way.

regards

~Marc

IMHO in this day and age it would be foolish to take on a business as fraught with liability as aircraft repair (for all of the reasons mentioned above), and I would not want a fool working on my airplane. A few years back when insurance went through the roof one of the most respected mechanics on the field let everyone know he was going to have to give it up (he was full time at United and part time at our airport). The result was that all the people that used him took up a collection and paid his insurance that year as a gift. He is a great guy and always ready with free advice and quick to loan out that specialized tool you need. We are lucky to have him full time on the field now, and when I do pay him I know I am saving money at $75 hour. He always has more work than he can handle. Moral- do good work, be honest and treat customers fairly and they will be happy to pay a little more by the hour.

Hey Del, I think you're correct in that most of us don't think about whether a shop has liability insurance or not. My guess is most people in our country simply expect that a shop will have it.

I'd want to see both liability and hangerkeepers from my shop.

I don't ask locally because I know that they have it.

Having insurance does matter to me. For a couple of reasons. The first is obvious - to me as an owner for all the obvious reasons.

The second is to the FBO. Our city requires the FBO and anyone on the field to have liability insurance. It's one of the things that protects the on- field legitimate businesses from a guy pulling in and wrenching from their trunk. Won't stop an owner from flying to another field and having that uninsured individual from doing the work. But it does protect the city as well as the FBO who is trying to make a living.

I know it's not cheap. But no different than the auto dealer, contractor, etc. It is a cost of doing busines. (Doesn't mean that I like the cost).

Knowing what our local guys pay (we've got 2 on the field and I'm on the airport commission) I can't imagine it would add to the hourly rate as much as you say, though I don't know what your quote or expense might be.