February 10, 2015
The subject of insurance seems to be topical within the UAS community right now. After traveling North America and getting to know the community over the last 18 months – I’ve heard a lot of the same questions:
- Do I need insurance for my drone?
- How much does UAV insurance cost?
- Do I need to be approved by the FAA or Transport Canada to obtain UAS insurance?
- What would commercial UAV insurance cover?
As an insurance provider, Global Aerospace has seen a steep uptick in inquiries for coverage of commercial and recreational drone operations recently. As the use of drones become more common, so will the requirement for appropriate levels of insurance. As a commercial UAV operator, your customers will eventually require it of you (even if they don’t currently)
Only about seven insurance carriers in the US are currently active in the UAS space. In Canada, the number is smaller still. All offer different solutions and levels of cover. Some, like Global Aerospace, have drone specific policy forms; most do not.
The insurability of an operation will depend upon a number of factors including:
- choice of platform
- experience of the pilots
- intended use
Perhaps most of all, insurers assess the likelihood of an accident involving any persons, as that is where the possibility of expensive litigation and indemnity payments exists.
If you require limits higher than a few million dollars, the marketplace reduces to just a handful of available carriers. The higher the limit goes, the more questions around safety and operating procedures you can expect. The inexperienced wedding videographer will struggle to get more than a million dollars in limit, if indeed they can find cover at all.
Insurance without FAA approvalLack of FAA approval in the US is not proving to be a barrier to insurance. However, you can expect the investment in a Section 333 to pay dividends on your insurance premium when you get the approval. In Canada, the more open regulatory environment makes the market easier to navigate.
Of critical importance is the professionalism of the UAS operation. Has a Standard Operating Procedure been developed? Are the pilots trained and experienced? Is a spotter employed for all flights? Is a safe distance always maintained from persons and property? All these factors can play into insurability and pricing.
Why buy UAS insurance?
Most commercial insurance policies exclude aviation exposures. If you are a drone operator, manufacturer, dealer or service provider, that includes yours.
Aviation is a litigious environment. You may not consider what you are doing to be dangerous (some don’t consider it to be aviation, but that is for another article) but you can expect the plaintiff lawyers to knock on your door if you ever damage property, let alone injure someone. That is where professional insurers come in to play. At Global Aerospace, we have been insuring aviators for over 90 years. We have experienced enough by now to know that the aftermath of an accident isn’t anything you would want to go through without the backing of professional insurers. Liability insurance doesn’t represent a big cost when you consider that your livelihood and reputation are at stake.
Once you’ve decided you need insurance, contact one of the many aviation insurance brokers (some of whom are specializing in drones) and they will assess your exposure, make recommendations for appropriate cover and limits and invite quotes from a range of insurance carriers. As with everything in life, you get what you pay for so be sure to read the fine print and go with a reputable carrier.
What will my insurance policy cover?
Aviation insurance falls into two basic categories; Legal Liability together with Physical Damage (otherwise known as hull) for the owner / operator; and Product Liability for the service provider.
An operator should consider Liability insurance as a minimum. This covers the cost to repair property you may damage and injury to persons. Additional coverage may include personal injury (invasion of privacy), non-owned (if you crash someone else’s drone), war perils including malicious damage, medical expenses and premises liability.
Additionally, cover is available against physical damage to the UAS system itself. Essentially this covers the cost to repair, or the total loss of either the platform, payload or ground equipment.
For the service provider (i.e. manufacturer, training facility, consultant, dealer, software designer) Product Liability is available. This would cover you in the event your “product” is considered to have caused or contributed to a loss. It doesn’t cover claims that would fall under a warranty type scenario. The situation at the moment is that many such companies don’t purchase insurance. But remember, even if the turnover isn’t paying all the bills just yet, you are still exposed.
The drone insurance market is slowly opening up. Cover is already available and it is not as expensive as you may have heard. Seek professional advice and operate protected against potential financial loss arising from an accident with comprehensive insurance.
I hope you have found this article informative. Global Aerospace is excited to help your business grow through offering creative and competitive solutions for all your insurance needs.
Above all, fly safe!