Recreational pilots - Avoiding personal litigation

[jethro]

As an adjunct to standard liability insurance policies, does anyone know if you can legitimately fly part 91 (i.e. business travel) under an LLC of yours with minimal assets to protect yourself from personal litigation?

While this may seem excessive for a recreational pilot already covered by the standard 1 million liability renter or owner policies, if you have any modicum of assets to protect, I think 1 million is very inadequate if you're found at fault (forced landing on a busy highway... granny sees your plane, has heart attack, causes 20 car pileup, etc...) since the vultures WILL come after you.

They'll sue Cessna too, of course, but they can't touch the personal assets of employees. It's easy to dismiss the above scenario as a remote possibility, but is it worth risking your family's well-being, or being faced with a last minute quandary over causing a 20 car pileup vs. dying in a fireball as you try to ditch into trees?

Long and short of it, is the LLC viable without running afoul of part 91 regs?

 

[NuGuy]

Jethro,

This is a good question over at the AOPA forums.

This has been beat to death over there. Basically, what it comes down to is if it is your plane, and you are flying it, your assets are at risk. LLCs provide VERY little cover for this.

So, your options...

1. Insure the crap out of yourself.

2. Don't fly.

3. Be poor.

Choose, but choose wisely...

Nu

 

[midlifeflyer]

If you're thinking that =any= form of limited liability entity, whether LLC, corporation, LLP, LLLP, business trust, whatever, will shield you from personal liability for an injury that you cause, think again. It will not.

These entities are designed to shield you from liability for =contracts= that the organization makes, not from your own departures from the standards of avoiding injury to others that the society has (rightly or wrongly) set for you.

Run someone over in the company car while on company business and you (the driver) can still be held personal financially responsible.

It's amazing how many people don't understand this.

So, yes, creating an entity that won't do what you describe does seem a little excessive.

 

[Headwind]

What the LLC will do is shield you from something a partner does in the aircraft.

Example 1: Three people own an aircraft registered to these 3 people. Owner one has expensive fatal accident and has no real assets. Owners 2 and 3 will probably have a bad day.

Example 2: Three people own an LLC that owns an aircraft. Owner one has expensive accident. Owner one will get sued, as operator,along with Cessna and the mechanic, but the aircraft does not belong to owners 2 and 3.

What I'm trying to say is that the LLC will not shield you from what YOU do in the aircraft, but will help shield you from what your partners do.

HEADWIND

 

[midlifeflyer]

Headwind, that is a pretty good explanation.

 

[TDTURBO]

All the above replies are right on, if you are worried about getting sued, insure yourself for the most you can afford. Attorneys hate to go to court and will settle for policy limits in a heart beat if they are adequate. This subject came up on the CPA board a month or so ago, half the pilots are lawyers and said the same things as above.