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Aircraft Project Risks and Solutions

By Bob Mackey, representative for the EAA Aircraft Insurance Plan, Administered by Falcon Insurance Agency

February 18, 2010 - You should only buy insurance when you need insurance…but how do you know when you need insurance? Many EAA members take on the challenge of building an airplane without considering whether or not their airplane project is insured. This isn’t surprising because there’s a lot involved in getting ready to build an airplane, like determining which airplane to build; making sure you have the tools and skills; figuring out how much the airplane will cost; securing a location to build your airplane…and the list goes on. Insurance doesn’t immediately come to mind.

Let’s explore project insurance and what risk management steps you should consider when getting ready to build and airplane. I like to use the following risk management formula:

Risk Analysis + Risk Mitigation + Risk Financing = Risk Management

Risk Analysis is simply figuring out what might go wrong. What could happen that might cause injury to someone, damage to someone’s property, or damage to the airplane project? List all of the things that might happen and what the results might be. Here are few examples:

You get hurt working on the airplane project; someone gets hurt when they come to see your airplane project; a fire occurs damaging your workshop and/or your project. Try to include all of the possible things you can think of - even if they may be far-fetched.

The next step is Risk Mitigation, or “What can be done to prevent or reduce the likelihood of bad things happening.” Next to each item you identified above that might go wrong, write down what you might do to mitigate them. For example “Have proper safety equipment”…“ensure visitors wear safety equipment”…“keep shop clean and safe”…“have proper fire extinguishers, fire-safe cabinet for flammables, etc.”

Lastly, consider Risk Financing, in other words insurance. What kinds of insurance do you need or have that would help offset the economic impact of a loss? Assuming you have some form of medical insurance, does it protect you for injury to yourself while building an airplane? If you are building your airplane in a shop in your home or garage, will your homeowners insurance cover a loss? You’ll want to check with your health plan and homeowners insurance agent to get these answers.

If you’re building in a hangar or a shop away from your home, you’ll need to consider purchasing separate liability insurance because your homeowners insurance will very likely not extend to these locations. But what about your airplane project itself? This you can handle with aircraft project insurance to insure the value of project materials, and you can also add liability insurance if you need it.

The EAA Aircraft Insurance Plan has a special line of affordable insurance just for airplane projects, designed especially for EAA members. All you need to do is visit and you can submit an online quote request. Or call 866-647-4EAA (4322) and talk directly to one of the EAA plan specialists. Either way, make sure to consider the potential risks and the solutions.

Have fun building with the peace of mind that you have considered all the risks and reduced the possibility of something bad happening. But if something does, you and your airplane project are protected.

Happy flying…I mean happy building!

If you would like to know more about EAA Insurance Solutions, or find the right insurance for the type of flying you do, call 866-647-4EAA (4322), or complete an online quote request form. When you insure your airplane through EAA Insurance Solutions you’re helping support EAA member programs for safety, advocacy and youth education.

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