I've seen figures putting the cost of manufacturer's liability insurance at anywhere from $30,000 to $100,000 per aircraft for new certified single-engine piston airplanes. Considering the selling price of such airplanes ranges from well over $100,000 for entry-level VFR-equipped 2-seat trainers to over $500,000 for a loaded Mooney or Bonanza, that cost may not be half the price in all cases, but it's certainly very significant.
Furthermore, it's not just the manufacturer's insurance. Anyone who sells parts to the manufacturer or as replacements/upgrades has to have their own insurance; not only is Cessna paying tens of thousands of dollars because of liability lawsuits, but anyone who sells them an engine, propeller, attitude indicator, or even seat fabric has to pass their insurance cost on, which also gets added to the final sale price.
Anyone who's taken basic economics understands that as the price of a good increases, fewer of that good are demanded. It's also true that the unit cost to build an item increases as the number of items built decreases. So the large increase to the sale price of an airplane caused by liability insurance reduces the number of people who can or will spend the money to buy the airplane, which lessens efficiency and raises unit prices, which makes the airplane even more expensive to make and to buy.
|Quoting N1120A (Reply 21):|
The point is, that we in the United States choose private market based action over intense regulation to deal with these kinds of issues, and it has worked very well.
We have both - aircraft manufacturing is very intensely regulated. We don't throw people in jail for simple negligence because in the U.S. and other countries whose legal system is based in English common law, there is a bright line between criminal law (which is when the state acts on the people's behalf to penalize a person for having broken a law and thus injured society) and civil law (which is when the state acts as an arbiter of fact and law in a dispute between private parties). The state can only punish a losing defendant in a criminal case, because the state is not considered a party in a civil case. I understand in countries such as France with a civil law (as opposed to common law) system, that distinction may not be so clear.
But a private, market-based action would be a person seeing that an airplane had unfavorable accident statistics and choosing to buy a different model. Strict liability lawsuits use the government (the court is neither "private" nor "market-based") to act as an insurance adjuster, redistributing private funds both as a means to make the damaged person "whole" even when the cause of the person's damage is not in fact the owner of those funds - as though millions of dollars can bring back a grieving family's dead relative.
|Quoting N1120A (Reply 21):|
It isn't at the expense of their vocation or even their recreation.
False. Note all the costs I mentioned above? There are more. Once the airplane has gone out the door, its new owner needs his own liability insurance. If he wants to rent the airplane, or use it for flight training, he has to insure those activities at an increasingly high cost. He needs yet more insurance if he actually wants to be the one to instruct students in his airplane, or to fly it for any commercial purpose. His student should have renter's insurance because all of the above policies only cover the airplane and its owner - not the person flying.
So when the student goes to take a one-hour lesson, the price of the airplane per hour includes the amortized purchase price of the airplane, which is higher because fewer could be built and sold and also includes liability insurance costs from the manufacturer and from any part vendor. It includes an averaged hourly maintenance cost, which has to cover more part vendor liability, as well as the liability policy of the mechanic. Any money set aside for an engine/prop rebuild will include costs for that shop's liability costs. Some of the hourly costs will be the insurance on the airplane itself; some more will be the FBO's policy, and the student will be paying extra out of his own pocket for renter's insurance. The instructor's hourly fee will have to include his own commercial policy. Adding all these costs up is going to drastically raise the price of that one-hour lesson.
The more expensive flying is, the fewer who can or want to pay for it. As I mentioned, that increases the unit costs for those who can afford it, and reduces the political impact pilots can have to fight government restrictions on aviation. Fewer airplanes, fewer pilots, more danger from government controls, and less money to make real advances in aviation means that these junk lawsuits are absolutely at the expense of pilots' vocation or sport.