Page 10 - Volume 12 Number 2

Minimizing the Risks of Selling your Aircraft or Spare Partsby Kyle White
General aviation has had a great tailwind lately. 17 and oblivious to “the real world.” I’ll never forget the
Fuel prices have been low and stable, insurance
premiums continue to be at historic lows, avionics manufacturers are developing new products, and there seems to be enthusiasm to upgrade cockpits in conjunction with ADS-B installations. There also appears to be quite a bit of action for people entering, or trading up in, aircraft ownership.
Engaging in commerce does come with risk. Thankfully, the perils can be covered in your aircraft insurance policy, provided you have it customized to your needs. During aircraft ownership, there are ways to manage your current and future risks. Like most things in aviation, it is always a good idea to have a plan, be proactive and prepared. While we all hope we never have one, airplanes have claims filed every day. Thankfully what you read in the NTSB reports does not paint an accurate portrait of what the insurance industry sees on a daily basis. Most claims never make it to the highlights that appear in your social media feeds or make the news.
Do you remember what happened to golfer Payne Stewart? In 1999, the Learjet he was a passenger on crashed, and many businesses and people were initially named in lawsuits. They all had to plead their case of what they did or didn’t do to the aircraft wasn’t contributory to the accident. If your name is in the log book, if you were an owner of the aircraft at one time, or involved in the transaction of selling/purchasing the aircraft, odds are you will be brought into the action, just like many were during that high profile loss. Allegations can be as simple as, you, the aircraft owner, didn’t properly maintain it. Or, the shop you had perform the maintenance did “cheap” work and you should have known better than to take it to them.
During one of my first jobs in aviation, I was an aircraft maintenance assistant for a Fortune 500 company. I was
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moment when the director of maintenance gave me a hammer and told me to destroy an old delaminating windshield we had taken out of the King Air. He could see the look of confusion on my face, “Why on earth do I need to beat the old windshield to a pulp?”
He wanted to ensure it would not be “recycled” on to another King Air, where it could be involved in an accident, and then be traced back to our company. That experience stayed with me, and I now fully understand the risk with aircraft ownership and used/spare parts. Our flight department was also insistent on using new parts when repairing the aircraft. There were two reasons for this, liability and resale value. We kept many spare parts in our inventory. When the flight department closed, all of the new parts were sold, and some parts were destroyed. Your aircraft policy protects you for “aircraft ownership, use, and maintenance.” However, you may not want to take the “off the shelf” policy. Consider customization; there are many ways to do this, but the following are two for consideration:
1) Have the time frame for “liability for sale of aircraft and aircraft parts” extended beyond the cancelation date of your aircraft policy, perhaps you can get one additional year, or more. This is a complex request and isn’t as simple as it seems on the surface, but it is possible. The wording and situation needs to be right for your exposure and situation.
2) Purchase a tail policy for a set amount of time, maybe three years, or longer.
Another consideration should be the maintenance shops you use for your aircraft maintenance. As discussed, YOU have coverage if you are sued as it relates to the “ownership, use, or maintenance” of your aircraft. When working with service providers,
FEBRUARY 2018