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

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

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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

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5/21/2019 1 Adventures in General Liability: Coverage of FBOs and MROs

John Springrose & Andrea Palmer, JD Higginbotham, Fort Worth, Texas

Goals of the Presentation:

  • Differentiate between FBOs and MROs
  • Identify common risks
  • Identify specialized risks
  • Learn strategies to avoid coverage gaps

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

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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

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.

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)

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Types of Coverages

  • CGL
  • Hanger-Keepers Liability
  • Products/Completed

Operations

  • FBO Liability
  • Pollution
  • WC
  • Non-Owned Aircraft Liability
  • War & Allied Perils vs. TRIA
  • Employee Practices Liability
  • Professional Liability
  • Family Assistance
  • Medical Payments

Common Endorsements

  • Named Pilot vs. Pilot Qualifications
  • Fellow Employee
  • Contractual Liability – Insured Contract
  • Loading/Unloading
  • Transporting Mobile Equipment
  • Property Damage (to personal property

in the CCC of the insured)

  • Property Damage to your product
  • Property Damage to your work
  • Loss of Use
  • HKLL (loss to your work)
  • HKLL (loss to aircraft while in flight)
  • Restaurants operated by the NI
  • Pollution event accidental discharge

Common Risks GL: Premises

  • Slips, Trips, Falls
  • TP service crews
  • TP Businesses located within the operation

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Common Risks

GL: Products and Completed Operations

Services Performed:

  • Lav Dumps
  • Air Carts
  • Air Stairs
  • GPU Hookups
  • Aircraft Cleaning
  • Catering
  • Fueling (Full Serve/Self-Serve)
  • MX

Common Risks:

GL: Hangar Keepers Legal Liability

Aircraft Movement Hangar Stacking

Common Risks: Property

  • Building
  • Structure/Roof/Foundation
  • “Studs In”
  • Tenant Improvements
  • Tenant’s Negligence
  • Indemnification of Landlord
  • Contents
  • Inland Marine

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Common Risks: Workers Compensation

Leased Workers W2 vs. Independent Contractor

Common Risks

  • Auto
  • Crew Cars
  • Owned Auto
  • Pollution
  • Fuel Tank liability
  • Overfills
  • Fuel Truck Spills

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

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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

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

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

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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

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.

Special Situations

Contract Labor Failure to Tighten Hydraulic Lines Hangar Rash

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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?

Questions

jspringrose@higginbotham.net apalmer@higginbotham.net

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