Industry question

My civilian employer is paying for me to get an MBA. As part of the
program, we design and evaluate mock business plans. As a pilot and a
builder, I naturally chose to do an airplane company as my project.
Once the other folks in the program realized that there really was such
a thing as a homebuilt airplane (I had to show them websites, they
thought I was making it up) they all got into it.

During the evaluations, some interesting points came up. One of the
most interesting was the issue of insurance, not for the builder but
for the manufacturer. I know that in the eyes of the FAA a kit
manufacturer is not the airplane manufacturer, that is instead the
builder.

But that is the FAA's standpoint, what happens when there is a crash
and the lawyers go after the kit manufacturer anyway? No one in my
program, including the professors, can imagine that kit manufacturers
are able to carry liability insurance--the cost would be astronomical.

So, I guess the meat of the question is-what are kit manufacturers
doing to cover themselves? Do they have liability insurance? Do they
self-insure? Are they just using liability waivers and going naked?

One the one hand, I can see going naked, on the other hand I can't
see an entire mini-industry without liability insurance. Van's maybe
yes, but what about all of the other guys?

I have made a couple of phone calls to a couple of makers, lest anyone
think that I am too lazy to find this out for myself. The two places I
called were not wild about discussing the whole topic, which I can
understand.

I then called a couple of insurance companies (commercial ones that do
high-risk stuff) and they said they probably wouldn't touch it,
although if they did the premium would be "staggering" the actual
word one guy used.

I hope that people will find this an interesting question, thanks for
any information anyone might have.

Matt McCoy