Getting Insurance for Your Drone Operations
An aviation insurance expert explains why you need insurance & shares tips for getting competitive rates
Part 107, the new FAA regulation that took effect earlier this week, makes it dramatically easier for businesses in the United States to operate drones legally. A pilot’s license and section 333 exemption are no longer required for most commercial drone operations. Instead, commercial operators must simply pass a written test to obtain a remote pilot’s certificate. That said, if you are planning to start a drone business or launch drone operations in your company, you will likely need to go beyond the minimum requirements of Part 107 to set up safe, reliable and effective drone operations.
One of the things you’ll need to think about is insurance. And not just as a potential client segment or use case for drones — even though drones are being used by insurance companies to investigate claims — but as an important step in starting your operations that will help protect you and your business from liability in the face of an accident.
To learn more about how drone insurance works, why you need it, and tips for getting a good policy, we heard from Bryant Dunn, Assistant Vice President and General Aviation Underwriter at Global Aerospace, a worldwide provider of aerospace and aviation insurance.
Global Aerospace focuses exclusively on aviation insurance and insures many major aerospace manufacturers around the world. Global underwrites everything from drone operators, to drone manufacturers, training organizations, and much more. Global developed the first UAS-specific policy form in the marketplace, and for the past five years, has been a market-leader in this new segment, authoring white papers that focus on risk management and forming key relationships with safety experts in training arena.
“Part 107 reduces the barriers to entry for a drone operation to be legally compliant. That being the case, we anticipate that many more operators will be flying and exploring insurance options,” said Bryant.
Why You Need Insurance
There are two primary reasons that your drone operations need to be insured. The first reason is fairly obvious — to protect you and your company from legal liability. If an operator experiences an uninsured accident, they could be held personally liable and face significant financial consequences.
The second reason is that many of your potential clients or partners may require you to have insurance. This is particularly true of large companies.
“Most large companies will not hire a drone operator that is uninsured,” said Bryant.
There are several types of insurance policies relevant for drone operations. Bryant recommends that drone operators should — at a minimum — have a Hull & Liability policy. Hull insurance covers damage to the drone itself, whereas general liability insurance covers damage caused to a third party by drone operations, including bodily injury and property damage.
How Drone Insurance Works
Drone insurance works in much the same way as many other insurance lines, especially aviation. Insurance companies assess risk in a variety of different ways ranging from reviewing applications and industry data, to performing internet searches.
Many of the fundamental underwriting criteria for drone operators are similar to those for manned aircraft, including the type of aircraft, location to be operated, purpose of operations, and the experience of the pilot. One of the key differentiators is that there is substantially less industry data available about drone accident rates than for manned aircraft. This makes it more difficult to assess risk. “In addition, many UAS operators do not come from an aviation background, so we are faced with a knowledge gap that can be addressed with education and training solutions,” said Bryant.
Considerations For Getting Drone Insurance
There are many factors that affect insurance rates. Some are specific to the operations being performed, such as the type of drone being used (is it a proven system, or is it experimental), the area of operations (are they over water or over urban city centers) and the usage of the drone (analysis of agricultural fields is less risky than shooting concert footage). Others include the experience and credentials of the operator, and the limits of insurance requested.
An increasingly important factor is the extent to which the drone operator implements processes to mitigate risk.
“When underwriting a new UAS client, we are looking for professional operators who are operating within the current regulatory framework,” said Bryant. “Operators that have structured standard operating procedures, who regularly engage in training activities, and operate reliable systems will earn the most competitive insurance rates.”
Training is one of the most important ways operators can reduce risk and reduce insurance premiums. “We are interested to see how fully the industry adopts training standards,” said Bryant. “We feel that some of the heightened exposures, such as operating in hazardous areas, will dictate higher levels of flight experience and recurrent training.”
Drone operators can reduce risk of accident and get more competitive insurance rates by implementing safety management systems (SMS) that include such things as pre-flight checklists, logbooks and a Standard Operating Procedure (SOP), which are already established components of manned aviation.
“In addition, maintaining a detailed record of flight activities and hours flown will make it easier to build a case for more competitive rates for experienced operators,” said Bryant. Flight logging can help reduce risk on two fronts. “If a drone operator is accused of invading someone’s privacy even though the drone may have not been in that geographic area at the time, flight logs and GPS telematics would be strong evidence in favor of the drone operator,” said Bryant. Secondly, flight logging can be used to help manage fleet maintenance needs and ensure that all aircraft completing operations are airworthy.
As the commercial drone industry develops more detailed training and risk management standards over time, both insurance companies and technology such as automated flight logging and geofencing are likely to play a role.
In light of the evolving standards, Bryant recommends this guiding principle:
“Treat an unmanned aircraft system the same way you would treat a manned aircraft,” said Bryant. “Give it the same respect and professional dedication.”
Where to Learn More
For more information about Part 107, check out our summary and test prep recommendations. To learn more about Global Aerospace’s perspective on insurance for the commercial drone industry read their white papers here.
Want to learn how DroneDeploy can help your business? Visit www.dronedeploy.com or request a consultation with one of our representatives. The DroneDeploy mobile application is available for free download for both iOS and Android devices.
Just got your Part 107 remote pilot’s certificate? Attach your certificate when you email [email protected] and get 15% off a DroneDeploy Business Annual Plan — our way of celebrating your achievement and thanking new customers.