Goals of the Presentation: Differentiate between FBOs and MROs - PDF document

5/21/2019 Adventures in General Liability: Coverage of FBOs and MROs John Springrose & Andrea Palmer, JD Higginbotham, Fort Worth, Texas 1 Goals of the Presentation: • Differentiate between FBOs and MROs • Identify common risks • Identify specialized risks • Learn strategies to avoid coverage gaps 2 What is an FBO? A Fixed-Base Operator is a commercial entity providing aeronautical services such as fueling, maintenance, storage, ground and flight instruction, etc. to the public. * * FAA Airport Compliance Manual – Order 5190.6B www.faa.gov 3 1

5/21/2019 FBO Services • Fueling • Aircraft storage (tie-down or hangar) • Sales, service, repair, and maintenance of aircraft • Line services for general aviation aircraft • Scheduled/nonscheduled air carrier services and support • Air taxi/charter operations, aircraft rental • Pilot training • Sightseeing, advertising, surveying • Crop dusting and aerial applications • Food, showers, lavs, ground transport 4 What is an MRO? A Maintenance, Repair, and Overhaul facility is a company providing aircraft maintenance, overhaul, inspections, replacements, modifications, etc. An MRO performs specialized work necessary to ensure airworthiness. 5 MRO Services • May perform base maintenance (large operations) or line maintenance (minor operations) • Part 145 defines the scope: • A – Aircraft • B – Engines • C – Components • D – Specialized Services (often non-destructive testing) 6 2

5/21/2019 Types of Coverages • • CGL Non-Owned Aircraft Liability • Hanger-Keepers Liability • War & Allied Perils vs. TRIA • • Products/Completed Employee Practices Liability Operations • Professional Liability • FBO Liability • Family Assistance • Pollution • Medical Payments • WC 7 Common Endorsements • Named Pilot vs. Pilot Qualifications • Property Damage to your product • Fellow Employee • Property Damage to your work • Contractual Liability – Insured Contract • Loss of Use • Loading/Unloading • HKLL (loss to your work) • Transporting Mobile Equipment • HKLL (loss to aircraft while in flight) • Property Damage (to personal property • Restaurants operated by the NI in the CCC of the insured) • Pollution event accidental discharge 8 Common Risks GL: Premises • Slips, Trips, Falls • TP service crews • TP Businesses located within the operation 9 3

5/21/2019 Common Risks GL: Products and Completed Operations Services Performed: • Fueling (Full Serve/Self-Serve) • • Lav Dumps MX • Air Carts • Air Stairs • GPU Hookups • Aircraft Cleaning • Catering 10 Common Risks: GL: Hangar Keepers Legal Liability Aircraft Movement Hangar Stacking 11 Common Risks: Property • • Building Contents • Structure/Roof/Foundation • Inland Marine • “Studs In” • Tenant Improvements • Tenant’s Negligence • Indemnification of Landlord 12 4

5/21/2019 Common Risks: Workers Compensation Leased Workers W2 vs. Independent Contractor 13 Common Risks • Auto • Pollution • • Crew Cars Fuel Tank liability • • Owned Auto Overfills • Fuel Truck Spills 14 Unique Risks: FBO • PCO: Fueling – Avoiding Risks • Testing according to schedule • Tank systems kept up to date • Proper fueling techniques to avoid mis-fueling • Purchase from reputable supplier 15 5

5/21/2019 Unique Risks: FBO • HKLL: Movement of Aircraft – Avoiding liability • More risk here than for an MRO • Collisions with people/structures/other aircraft • Securing the aircraft against theft/unauthorized use 16 Unique Risks: MRO • PCO: Maintenance – Avoiding Risks • More risk here than for an FBO • PCO only applies once operation is completed/abandoned • Over-tightening of bolts on windscreen • Improper drilling of holes • Under-tightening of hydraulic pressure hoses 17 Unique Risks: MRO • HKLL: Movement of Aircraft – Avoiding liability • If operation has not been completed/abandoned, risk shifts here • Aircraft are hangared far less time than with an FBO 18 6

5/21/2019 Coverages Driving the GL Premium • Premises • More important for FBO: More people • PCO • More important for MRO: Operations are main focus • HKLL • More important for FBO: Longer times hangared • The middle ground for exposure between Premises and PCO 19 Avoiding Gaps in Coverage • EPL Coverage • Wrongful dismissal • Sexual harassment • Pollution Coverage • Insure sites, not just tank liability • Cyber Coverage • Phishing scams are not covered by crime, CGL, etc. 20 Special Situations Contract Labor Failure to Tighten Hydraulic Lines Hangar Rash 21 7

5/21/2019 Contracts and Insurance Things to check for your FBO/MRO clients: • Do the indemnification and waiver of subrogation agree? • Are the coverages and limits suitable? • If a lease – who is responsible for what, and is it insured? • Is there a liability shift on something that isn’t insurable? • Does this meet the definition of “insured contract”? • Does it need to be scheduled with the carrier? 22 Questions jspringrose@higginbotham.net apalmer@higginbotham.net 23 8