Well the liability issue does worry me, plain and simple. I have a successful business and am responsible for protecting more than just myself and family. Having experienced up close and personal the havoc and heartache aviation accidents can create within families and their businesses, going thru life with my head in the sand or believing it only happens to the other guy is simply not an option for me. Neither is just staying on the ground. I recognize others may have differing opinions and priorities, my goal is to do anything and everything I can to offset the inadequate liability insurance coverage availability.
At first blush, structuring E-AB aircraft ownership thru an LLC in an attempt to minimize liability exposure made sense. A large percentage of certified GA planes used for non-business purposes are LLC registered by their owners, but it seems much more rare in the world of Experimental aircraft. Why is that? Makes me wonder whether LLC ownership of experimental aircraft, but E-AB aircraft in particular, is all it's cracked up to be. Perhaps the discrepancy is because:
1.) Civil law in the U.S. supports a remedy for every wrong and full compensation to tort victims. If adequate compensation cannot be recovered from the LLC owner, the lack of resources to compensate victims typically results in 'shotgun lawsuits' against peripheral defendants who may have deep pockets. This problem is exacerbated by the fact that many E-AB pilots and operators carry insurance with per victim limits of only $100,000 per occupant/passenger. A middle class passenger who supports a family may have a wrongful death case worth over $1 million. In these cases, I suspect the operator is very likely to face a personal lawsuit in spite of the LLC ownership veil.
2.) In the context of aircraft ownership, limited liability protection is not absolute. Ie., if an individual, who may be a sole member or manager of the LLC, is operating an aircraft owned by the LLC and that individual is involved in an accident or incident that results in damage to property or personal injury, that individual could still be held personally responsible for his or her negligence etc. That is in addition to the LLC. So, if the individual operator has collectible assets of substantial value, the cynic in me thinks claims of negligence... negligent pilot actions, negligent self-maintenance, yada, yada... will almost certainly be alleged due to the nature of the E-AB vs. certified aircraft (and presented to an uneducated and likely unsympathetic jury) in an attempt to collect something. Whether that is a load of baloney in your mind, it may well be sufficient cause in the court's opinion to render the 'inability to pierce the corporate or LLC veil' philosophy a moot issue.
Hey, I wish higher liability coverage limits were available from the carriers for E-AB owners. Until then, I'd sleep better knowing I've done everything possible. An LLC is cheap and can provide a measure of protection for an owner's vicarious liability. But, it might be very difficult for the sole member of a single member LLC (which has as it's only asset an E-AB aircraft) acting as PIC to avoid individual liability by simply operating through a LLC shell. In fact, I have a sneaking suspicion that LLC ownership may actually increase probability of a suit in such instances. Make sense?
Not trying to get paranoid or heady here, just trying to understand the +/- of LLC ownership for E-AB planes vs. certified. Can't believe I'm the first person to wonder about the discrepancy. In any event, if anyone knows good reason legal or otherwise why it is advisable NOT to hold ownership of your E-AB in a single member LLC, please stand and be heard...
thanks