Do You Need Insurance for Your Commercial Drone Operations?

03/21/2016

Editor at Skyward

The easy answer to that question is: Yes, absolutely. But operators in some jurisdictions are required to have it.

For example, if you’re flying commercially in Canada, you must have insurance—even if your company is based in the U.S. Transport Canada requires all commercial drone operators to carry at least $100,000 in liability insurance.

As of now, the FAA doesn’t require commercial drone operators flying in the U.S. to carry insurance.

300x250This is just one of the ways in which flying in Canada is different than the U.S. At Skyward, we’ve helped dozens of Canadian and U.S. operators obtain SFOCs from Transport Canada and 333 Exemptions from the FAA.

If you’re flying in Canada, or plan to, don’t miss the next Skyward Roundtable on March 29. The Skyward team and Canadian industry experts will be talking about insurance, regulatory requirements, flight logging, business processes, and more.

No matter where you fly, and whether or not it’s required by regulators, UAV insurance is essential for commercial operators.

Insurance is a sign that you’re a UAV professional

Getting insurance may seem like a hassle, but for most business owners, it’s simply a part of doing business. In Canada and the U.S., most businesses carry insurance of some kind.

If you hire a contractor to work on your house, or a trucking company to transport freight, or a surgeon to replace your knee, you expect that these individuals or companies have insurance. If they didn’t, it would be a red flag that they may not be qualified to do the job. Even restaurants and retail stores have insurance.

It’s reasonable for customers and clients to expect a service provider to have insurance. And it’s reasonable for customers to require it before they hire you.

Protect your aircraft

Even though Transport Canada requires commercial operators have at least $100,000 in insurance, it only requires liability insurance for damage arising from the operation of drones.

Liability insurance doesn’t cover damage to the drone itself.

Insurance that covers physical damage to a UAV costs extra. But for a sole proprietor or small business, a single $20,000 drone amounts to a major investment—one that you probably want to protect.

Having insurance means that a flyaway or unexpected battery failure won’t be a business disaster.

So, how much drone insurance is enough?

The amount of coverage that you need depends on a number of factors, including:

  • your business—some industries, such as film, require higher insurance coverage than others as a matter of course
  • your customers—if your customers tend to be major corporations, they may have different insurance requirements than small businesses or sole proprietors
  • your assets—if you’re flying a $100,000 UAV, you likely want more insurance coverage than if you’re flying a $1500 UAV

Asking your customers or prospective customers about their insurance requirements is a good place to start. Currently, insurance providers are insuring commercial drone companies for up to $500 million in liability and up to $10 million in hull damage. Our insurance partners offer the highest coverage to the most professional operations. Businesses that can’t prove consistent, safe, well-tested operating procedures, policies, and controls aren’t eligible for as much coverage.

The cost of commercial drone insurance

Your rates will depend on your situation, but the industry experts we’ve spoken to say that rates currently range from about $900 per drone per year on the low end to $10,000 per drone per year on the high end.

Rates are affected by several factors, including:

  • The processes & systems you use to manage your drones & pilots
  • Your general operating manual & checklists
  • Documented training
  • Preflight & safety checklists
  • Proof of maintenance

Companies that can prove high standards for training, operations, and management will qualify for more coverage at better rates.

Note: Skyward does not sell, broker, or underwrite insurance. Insurance-related content on our website merely represents our understanding of best practices and the state of the UAV insurance industry. We do not offer legal advice, and we encourage operators to comply with all state, local, and federal laws.

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