As the demand for commercial drones continues to increase across industries, so does the need for drone insurance. While the Federal Aviation Administration (FAA) does not require insurance to operate commercially in the U.S., most companies require that drone operators provide proof of coverage through a valid Certificate of Insurance (COI) to demonstrate that the pilot has coverage that protects both them and their clients.With insurance becoming standard among commercial UAV pilots and the companies that employ them, it’s vital to get a sense of the risks you, your company, or your drone program might face – and how to mitigate them.
The world of drone insurance is full of nuances and can be difficult to navigate, which is why we’ve compiled a list of commonly asked questions on the topic. Before you set out to do your own research, be sure to read the following tips surrounding drone insurance for commercial pilots, small businesses, large enterprises, and everything in between.
Here's everything you need to know about commercial drone insurance:
1. How does commercial drone insurance differ from personal drone insurance?
“As the tactics and purposes behind commercial drone operations and personal drone use differ, so does the level and type of risks you could encounter,” says Will Newton, EVP of Product at REIN Connected Insurance Agency, LLC, which provides drone insurance services via DroneInsurance.com.
Both commercial and personal drone insurance policies need to be assessed for areas of overlap; for example, some homeowner insurance policies provide sufficient liability coverage for personal or hobby drone use.
Another difference between commercial and personal drone use lies in the need to distinguish between insurance coverage for the pilots versus coverage for the drones themselves. Once you are able to assess your needs, you’ll have a much better understanding of the level and type of insurance policies to pursue.
2. Does my business need drone insurance?
“Aside from enabling your pilots to fly with peace of mind, commercial drone insurance is a great way to protect and scale your business,” said Newton. “Most clients require drone operators to provide a valid Certificate of Insurance (COI) to demonstrate that the pilot has coverage that protects both them and their clients. The more quickly a pilot can provide this insurance information to a client, the more likely they are to land new jobs.”
Is drone insurance required where I live?
If the above reasons weren’t enough to sell you on the benefits of drone insurance, consider this factor: as drone technology continues to evolve, so do the various laws and regulations that govern them. While it’s smart to stay on top of the regulations in your area (this handy global directory from UAV coach makes it easy with a list of drone laws, organized by state and by country), it’s much safer to assume you need commercial drone insurance than it is to be caught without it.
Which industries can benefit the most from drone insurance?
“While use of drones is exploding within commercial agriculture, telecommunications, energy production, government services, construction, and film, every day more industries are employing drones to carry out key functions,” says Newton. “If your company is flying a drone, drone insurance can help protect your business.”
The recommended level of insurance depends on the specific job at hand. Flight liability limits of $1M, for example, may be sufficient for jobs with a low level of risk, whereas higher risk jobs such as drone surveys around cell phone towers, power plants and utility lines often require higher liability limits ($5 - $10M).
3. What does drone insurance cover?
“Those of us at DroneInsurance.com find it’s beneficial to use a tiered approach, says Newton. “A tiered approach enables you to protect your inventory even when you’re not flying, while providing the option to add flight coverage as needed.”
For example, Droneinsurance.com Base Coverage (billed monthly) protects businesses from ground-based risks such as:
- Liability for personal and advertising injury, including various privacy-related claims
- Liability for 3rd-party bodily injuries and property damage claims arising from ground-based operations
- Premises liability
On-demand flight coverage can then be added when you’re ready to fly, for as little as a day, or in customizable periods up to a year. Learn more about DroneInsurance.com products and availability here.
When assessing options for insurance coverage, be sure to consider the size of your company as well.
“While we’ve designed DroneInsurance.com to suit small to medium-sized drone businesses, we also work closely with drone businesses of all sizes to create the right drone insurance solution that fits their unique needs,” says Newton. “Similarly, we understand high upfront costs can be a dealbreaker for smaller teams of drone service providers. To help address that, we’ve designed DroneInsurance.com with flexibility in mind -- including monthly payments for 24/7 base/hull coverage and on-demand flight liability coverage, allowing you to protect your business without hurting your bottom line.”
How common are drone accidents?
While the language and definition of “accidents” and “incidents” vary among sources, the following statistics provide a closer look at the frequency of mishaps involving drones:
- According to DroneLife, the FAA reported 385 Near Mid Air Collisions (NMACs) in 2017, and drones were responsible for more than half of these occurrences.
- An article in DroneDJ references FAA data citing more than 100 documented incidents of drones interfering with firefighters, with 21 such incursions taking place in 2019.
4. I’m the drone champion within my organization. Who within my organization should I talk to and make sure I set up the right insurance?
Check with the individual that handles the company's current insurance needs and/or risk management program.
“It’s common that businesses with traditional Commercial General Liability or Business Owner policies will have exclusions for losses involving drones,” says Newton. “Your risk manager should conduct an in-depth review of the company’s current policies. This includes potentially consulting the company’s agent or broker where appropriate, in order to determine whether the company’s current policies cover its drone operations.”
According to Newton, your risk manager will also need to consider what drone risks you need coverage for.
“Will you just need flight liability coverage? What about physical damage coverage for the drone itself, or any expensive sensors you may have attached? What about the ground equipment used with the drone? Answers to the above questions will be key in ensuring you are setting up the right coverage tailored for your business’ unique needs.”
5. Can you lose your drone insurance coverage?
While the reasons will depend on various factors, such as your insurance policy and provider, there are instances where your commercial drone insurance provider can refuse to provide coverage. UAV Coach has compiled a list of reasons why you might lose drone insurance coverage. Below is a list of what they’ve observed based on their experience in the field.
Reasons for losing drone insurance coverage (from UAV Coach)
- Not logging your flights and being able to prove what happened during an accident with flight log data.
- Not registering your serial number and putting proper identification numbers on your drone.
- Not logging all battery cycles and maintenance changes.
- Not practicing ethical flight.
6. What do I do if I have an accident with my drone?
“As soon as you have an accident, if you have insurance for your drone, you should call your insurance company. The insurance company should have 24-hour loss reporting capabilities,” says Newton. “In addition, they should provide you with a dedicated claim representative to work with you through the process.”
The FAA provides several resources for reporting incidents and accidents involving drones, however the general rule of thumb for incident reporting is “the more information, the better.” For drone operators and overseers who want to save time on such reports and avoid the headache of tracking down every last detail involving the incident, programs such as Measure Ground Control make incident reporting as easy as the click of a button. Features including detailed flight logs, screen shots, flight playback, and incident flagging provide reliable and accurate accounts, leading to swifter resolutions.
7. What red flags should drone operators look for when choosing an insurance policy?
“Insurance policies differ in their coverage types, exclusions, limits, terms and conditions, so we recommend always reviewing your policy with a fine-tooth comb,” says Newton.
According to Newton, a few key items to focus on include:
- Who is the carrier? Are they a reputable company? (For example, do they have an AM Best Rating)?
- When you fly, does your coverage only extend to a predetermined area?
- Does the policy include any sub-limits of key coverages?
- Can you get a sample policy?
At the end of the day, it’s imperative to ensure that your drone insurance coverage protects your business’ unique risks and aligns with your core operational workflow. If you’d like to learn more about DroneInsurance.com, visit their website, or schedule time to chat with their customer support team about your drone needs and the best coverage for your business.