Commercial Drone Insurance
(Finding the right liability coverage)
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There is a lot of excitement lately about using drones for a wide range of business purposes. From Amazon to local real estate agents, drones can help all kinds of businesses improve efficiency and offer services that were never before possible.
Are you thinking of using a drone for your business? Don’t jump in too quickly; there is a lot to consider.
Imagine you are a realtor who has invested in a drone to take aerial photographs of your listings. After you gather with some employees in the parking lot for a test flight, you lose control and nearly hit an employee during the landing.
Everyone is fine, including the drone, but perhaps you should take a step back before you begin your commercial drone operation. What are the potential consequences of using a drone for your business?
Is it legal? Do you need any special certifications or licenses? Will your business insurance cover you if something goes wrong?
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Are You Flying Your Drone Illegally?
Commercial UAV operators need to understand the rapidly changing regulatory environment to ensure that they are flying their drones legally.
In June 2016 the FAA finalized new regulations for small unmanned aerial vehicles. The new regulations, titled Part 107, create a certification process for commercial drone pilots. You must complete a variety of tasks to be certified, including:
- Pass a basic aeronautical knowledge test (followed by recurrent testing every 24 months)
- Receive clearance from the Transportation Security Administration
- Obtain a Remote Pilot Certificate with a small UAS rating
- Be at least 16 years old
The FAA also put in place additional documentation and preflight safety requirements in order to maintain your Part 107 certification. In order to operate a commercial UAV, any organization or government entity must obtain the Part 107 certification, or must obtain an FAA waiver for flights that meet certain criteria.
In addition to the federal regulations, many states and municipalities are enacting their own drone laws. While the FAA asserts its authority over drones because it regulates all airspace, any smart commercial drone operator should understand and carefully follow local drone regulations as well, in order to avoid fines and other penalties.
You likely will need to provide proof of your FAA certification in order to obtain commercial UAV insurance. What’s more, be prepared for the insurance company to have more stringent safety requirements than those required by the FAA.
Your insurance company may require proof that you use trained and experienced pilots, have implemented standard operating procedures, and regularly use spotters to assist your pilots, and that pilots adhere to all safe distance (from persons and property) recommendations.
Can I Fly My Drone Without Insurance?
Commercial UAV insurance is not required in the U.S. for recreational or commercial drone users. That does not, however, negate the myriad legal and insurance-related concerns you should have if you plan to fly a commercial drone.
Drone operation poses many risks to your business and the general public. Aside from the need to protect your assets if something goes wrong, your customers and business partners will likely require you to have business drone insurance before they will do business with you.
After all, drones can cause serious damage to property and can injure individuals on the ground. Even the best drone operator can run into bad weather or experience a malfunction of the UAV.
What’s more, how you collect and use data with your drone and who has access to that data can be even bigger concerns for commercial drone operators. Invasion of privacy claims are becoming more common and are expected to be even more prevalent as drone use increases.
The insurance industry is responding to the rapid expansion of commercial drone use. While there is no indication that commercial drone insurance will be required by law in the near future, failing to speak to your insurance agent about how to best cover your drone could have devastating consequences for your business.
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What Kind of Drone Business Insurance Do You Need?
Most business owners purchase commercial general liability (CGL) insurance to cover bodily injury and property damage liability claims.
Many businesses also need product liability insurance, advertising liability insurance, and several other types of special liability policies designed to protect their assets when negligent business practices injure other parties.
But your CGL and other liability policies will not cover claims related to aviation. Commercial drone operators need special commercial UAV insurance.
Your drone business insurance should protect your assets if your UAV damages property or injures someone. In addition, it should protect your investment if your drone is damaged and needs to be repaired or replaced.
Here are some common types of coverage included in commercial UAV insurance policies:
- Drone liability coverage: covers costs related to property damage or injuries caused by commercial UAV operation
- Drone hull coverage: covers costs of physical damage to a UAV
- Onboard components coverage: covers costs of physical damage to a drone’s onboard accessories, such as cameras or DSLR
- Ground equipment coverage: covers costs of physical damage to ground equipment used to operate the drone, such as ground stations, laptops, UAV cases, remote controllers
- Non-owned drone liability coverage: optional liability coverage designed for businesses that operate UAVs that they do not own
- Personal injury liability coverage: covers libel, slander, violation of privacy, and copyright infringement claims related to commercial drone operation
The drone insurance market is evolving along with rapid changes in drone technology and how drones are being used. The types and amounts of coverage you need will vary based on a variety of factors such as:
- Your drones. The more expensive your drone or fleet of drones, the more coverage you need to protect your investment. Likewise, more expensive onboard equipment requires more extensive coverage.
- The type of work you do. Businesses that rely heavily on drone operations will need more coverage. A filmmaker, for example, might need more coverage than a real estate firm.
- Customer requirements. Customers often have varying insurance requirements. Some customers or municipalities might require you to have a certain amount of coverage in order to award a contract.
Safety should be top-of-mind for all commercial drone operators. All employees who are involved with drone operation need extensive training and the required certifications.
You and your employees must follow all federal and state laws, and be sure to keep up on regulatory changes in this evolving area. In the future, commercial UAV insurance could be required by law.
Common Business Uses for Drones
Commercial drone operation is varied and new ways of using drones are being explored every day. According to the FAA, commercial drone usage is any flight operation that can be tied to economic benefit. Today, some of the most common uses for commercial UAVs include the following:
- Real estate agents and home inspectors
- Engineering and construction companies
- Commercial photographers and videographers/filmmakers
- Law enforcement, corrections, Border Patrol, and Homeland Security
- Emergency response and damage assessment
- Fire and rescue
- Traffic monitoring and news gathering
- Facilities security (e.g., electrical, nuclear, and water facilities)
- Agriculture and conservation
- Crop dusting
- Line and pipeline inspection
- Railroad and highway maintenance
- Humanitarian aid
- Package delivery
- Archaeology, geology, scientific research, and data collection
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Where to Find Commercial UAV Insurance
A local independent agent experienced in aviation-related insurance for business is the best place to start searching for commercial UAV insurance. In this evolving market, coverage offerings may vary significantly from one carrier to another.
Our independent agents can work with multiple insurance companies, so they can find the right coverage options for your drone operations. Start your search for a local independent agent now.