September 22, 2015 Practice Points

GAO Issues Report on Mandatory GA Liability Insurance Requirements

By Deborah Elsasser

The U.S. Government Accountability Office (GAO) recently issued a report regarding a study that was requested by the U.S. Senate Committee on Commerce, Science, and Transportation relating to a proposal for enacting a federal liability insurance requirement for general-aviation (GA) aircraft owners. The committee requested the study in response to concerns raised about inadequate insurance covering injury, death, and property-damage claims in general-aviation accidents.

The GAO interviewed various stakeholders from the aviation industry, including aviation attorneys, insurance-industry representatives, and governmental officials. The report identifies the following key factors in considering whether to enact a federal GA liability insurance requirement: (1) costs borne by GA aviation accident victims and the public; (2) the extent to which GA aircraft owners or operators do or do not have liability insurance; (3) the cost impact of a federal insurance requirement; (4) issues arising from the implementation and administration of a federal aviation insurance requirement; (5) potential public safety benefits.

In examining the issues, the GAO was unable to collect sufficient data to quantify the extent to which GA aircraft owners and operators have insufficient (or no) insurance, the frequency of accidents with third-party damages or the magnitude of such damages. While such information would be helpful to the analysis, the report concludes that various suggested methods of collecting such information (i.e., through the FAA aircraft registration process, through annual surveys to GA owners/operators, or as part of GA accident investigations), would not be cost-effective or reliable.

In all, the GAO spoke with 73 stakeholders in the GA community. The GAO's report did not make any recommendations but rather simply reported the results of its interviews with GA industry stakeholders. The GAO has sent the report to the Senate Committee on Commerce, Science, and Transportation.

Deborah Elsasser, Clyde & Co US LLP, New York City, NY


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