Congratulations on starting a new venture as a remote pilot. These are exciting times to jump into the industry and start capturing the profits and savings that utilizing drone technology can bring.
This new technology and business structure is not without some amount of risk to your business or personal assets. Understanding how to manage the risk can mean the difference between creating a successful business or having to file bankruptcy for an accident, you or your employee caused involving a drone. Knowing what to look for when shopping for insurance can save you a lot of time and in some cases, your clients as well.
Aviation insurance has been around almost as long as the aircraft with the first policy underwritten by Lloyds of London in 1911. There are many aviation focused insurance carriers on the market today that underwrite large international commercial airlines to your friend down the street that flies a Cessna or other single engine aircraft. As drones occupy the national airspace, these insurance carriers are accustomed to the regulations, risks, and lawsuits that come with the aviation industry and have adapted the aviation policies to fit the needs of drone operators.
The common drone policy on the market today will cover first and third party claims involving the drone operations with Part one of a policy covering liability claims and Part two of the policy covering the actual drone, payload, and/ or ground equipment.
Unfortunately, a drone insurance policy is just one piece of the or all insurance puzzle and not a turn-key solution like many brokers would have you think. The fact of the matter is that a drone policy is no different than an aircraft policy and relates to much to how your vehicle insurance only covers the liability your car cause and not if someone slips and falls in your home like a standard homeowner policy would cover.
A commercial general liability policy helps cover the gaps that a drone policy may not cover should you expand your business services to include ground photography and videography, or even if you rent a location to expect clients.
The good news is that there are starting to be more and more carriers that can write general liability policies, but many may not cover the actual drone operations. A good rule of thumb for full time drone operators is to purchase a separate UAV policy and a separate commercial general liability policy. For operations with less drone exposure, there are commercial general liability policies coming to the market that will have some coverage available for drone liability. Coverage on the actual unit may be harder to come by with this option though especially for more expensive units of $20,000 and up.
The beautiful thing about the drone policies is that the hull and payload values can be as high as the units you are looking to cover with liability limits capable of $100,000,000 to $300,000,000 with the right drone insurer.
Drone pilots are viewed as subcontractors by many in the construction, utility, communication, mining, and in some cases the governmental contracting industries. This means that many new ventures looking to fly for these large companies will have the same contract requirements as the other subcontractors that work for them must provide.
When boiler-plate contracts are used for large jobs, chances are the insurance requirement section will contain a clause about needing commercial general liability, owned, hired & non-owned automobile liability, worker’s compensation, and umbrella polices. More often than not, a drone liability policy will not be stated unless the company understands the industry and knows that the standard commercial general liability policy will not cover the drone exposure.
This amount of policy requirements can be a bit of a wake-up call to many operators that were able to land a meeting with a big company just to find out they have to reevaluate their pricing structure to accommodate three to four additional policies all costing as much in cases as their drone policy.
In the right situations, the automobile requirement can be bundled in with the right commercial general liability policy if your business does not own or lease a vehicle.
To know what you are going to pay is question that involves looking at your operations and what you have to insure as well as what insurance requirements you are being asked to provide.
Rates for liability coverage on drones has dropped dramatically since the time Part 107 rolled out in 2016 with some carriers seeing rates decrease by as much as 30-40%. At the time of writing, an average UAV policy underwritten with a leading drone insurer may be as much as $600 a year for $1,000,000 of liability coverage on a single drone. Some drone insurance providers are starting to see price variations dependent on the businesses intended use of the drone with operations for agriculture, mapping/geophysical, and other low risk operations giving some credit back to the annual premium. Higher risk intended uses will cause the premiums to increase above the average like events, fire/fighting, commercial cinematography, and other similar operations involving work over or around a great deal of people.
As mentioned above, coverage on your drone equipment is referred to as hull insurance or physical damage insurance on a drone policy. There is a trend across the industry emerging where rates to cover the drone and payload are trending up due to the likelihood of the carriers paying out a total loss for drones and payloads in many cases. Pricing can average around 10% of the value of the drone and equipment across the industry with the most competitive carriers having a sliding scale pricing that cuts a break for more expensive drones and payloads, but the most competitive rates coming in around 7% of the value of the drone for those value $15,000 and up and 6.5% of the value for expensive payload over $25,000. Expect to pay about $150 a year for a $1500 drone as prices increase. Most deductibles on the hull coverage and payload wil range from 5% to 10% of the insurable value and not off the repair cost. In some cases, insuring a drone of $2,000 value or less may mean more cost filing a claim than if you would have just replaced the drone after factoring in the increased rates at renewal for filing a claim and adding a new unit to the policy.
Many in the insurance industry will have the ability to write policies that can cover drone operation as more and more insurance carriers start to evaluate the risk drones pose on their overall book of business. Remote pilots across the United States have had trouble working with agents and brokers that are less familiar with the drone industry due to insurance carriers still hesitant to underwrite operations.
When in doubt, perform a search online of drone insurance providers and when you speak with them simply ask if they can cover all of your potential policies requirements for the industries you plan to work with and if they can only provide a drone policy, look for another agent. This may come off harsh, but when operators go to an insurance agent just to find out that a policy other than the drone policy could not be provided to complete a contract requirement, it will create more work for you down the road, than if you would have known the agent could offer more from the start.