Lawyer criticizes lack of insurance requirement for general aviation

Liability insurance is required to drive a car in Hawaii but not to fly an airplane.

Jahn Mueller, the owner of Aircraft Maintenance &Flight School Hawaii, which rented two planes that went down in serious crashes four weeks apart this summer, was not required by federal or state regulatory agencies to insure his planes while in flight. The people who rented or piloted planes from him weren’t required to carry that kind of insurance, either.

The state Department of Transportation, which was Mueller’s hangar landlord, did require him to insure his airport operations, but DOT spokesman Tim Sakahara said it doesn’t have jurisdiction to make requirements of an aircraft once it leaves the ground. While separate insurance is available for air activities, Sakahara said it is not mandated or enforced by the state. It isn’t mandated by the federal government either, said Federal Aviation Administration spokesman Ian Gregor.

Mueller, who paid $10,000 for the Beech 19A and $5,000 for the Piper PA 28-140, declined to say in an Aug. 25 interview whether his insurance went beyond state requirements. He said he didn’t know if the pilots of his downed planes had purchased renter’s insurance.

Pilot Dean Hutton, 29, rented the Beech from Mueller on July 28 to take friends Heather Riley, 27, Alexis Aaron, 32, and Gerrit Evensen, 28, on a sunset pleasure flight. Everyone in that plane was killed when it crashed in a remote section of the state-owned Honouliuli Forest Reserve near Kunia. The FAA and the National Transportation Safety Board are investigating the crash and are not likely to make a probable-cause determination for another 12 to 18 months.

Whether the Beech crash will end in litigation isn’t yet known. But lawyers already are involved in a June 30 crash of the Piper, which also belonged to Mueller.

Honolulu attorney Rick Fried is representing Jason Torikawa-Domingo, 22, of Ewa Beach, who was a passenger in that plane, which crash-landed in a Mapunapuna stream under a Moanalua Freeway bridge. The flight’s pilot, Kenta Kumakura, a 20-year-old from Nagano, Japan, and the plane’s co-pilot, Jueru Higa, 28, of Yokohama, Japan, also were injured. Fried said he has been told that Mueller did not have insurance coverage once his planes left the ground.

The fatal Beech crash coming on the heels of the nonfatal Piper crash has left Fried and other critics questioning whether federal and state insurance requirements for personal general aviation are sufficient. It also has caused some to wonder if there is enough oversight, especially since general aviation accidents comprise the bulk of aviation fatalities nationwide.

The National Transportation Safety Board reported that general aviation incidents made up nearly 91 percent or 376 of the 415 aviation fatalities in 2015.

“Lawmakers should address this,” Fried said. “The obvious harm is people injured or killed will likely have no recovery. This includes the family. If operators such as Mueller are required to have liability insurance, the carrier will look at the safety practices of the company and would likely impose some changes before offering coverage.”

Landlords, loan officers and businesses sometimes require liability coverage or renters insurance on airplanes, said Skip Kudlich, owner of Honolulu-based Kudlich Insurance Services. But often, especially with rental planes, Kudlich said, “it just comes down to personal choice.”

Thirty-nine states don’t require any liability insurance for general aviation aircraft owners and operators, according to a 2015 U.S. Government Accountability Office report. In Hawaii, only general aviation aircraft owners who rent a state hangar as well as air tour operators are required to maintain liability insurance, the report said.

Paul Herbers, president of the Aviation Insurance Association, said wide-ranging debate has prevented his organization from taking a position on whether government should standardize general-aviation insurance requirements.

“We have a broad membership and everyone has a different opinion … It’s very situational. It’s case by case,” Herbers said.

California-based aviation expert and flight instructor Max Trescott said it’s possible that tougher insurance requirements would increase safety, but said, “It has to be balanced with costs.”

Barry Schiff, a retired pilot who has logged 28,000 flight hours in more than 355 types of aircraft, said he believes “all motor vehicles of any kind should have liability whether highway or aircraft.” Schiff said, “It’s a poor decision not to insure an airplane, but it’s an individual thing.”

“If you owned the car and were not making payments, you could choose not to insure the car. However, you wouldn’t want to not have liability; if you kill someone, it could destroy you financially,” he said. “It’s the same with a plane.”

Charles W. “Bill” Arnold, general manager of San Diego, Calif.-based Arnold &Arnold, insurance adjusters and investigators who have examined thousands of airline accidents, agrees.

“I don’t care if you don’t insure your hull, the physical damage part. But you need to take care of the liability part. Why would you expose you and your family and your business to destruction? It just doesn’t make any sense to me. It costs no more to insure than a car does.”

But Arnold stopped short of saying general aviation liability should be a government requirement.

“Tell me one thing that the government has improved. They shouldn’t be in there,” he said.