How can a drone affect my business insurance coverage?
By: Nancy Nicklow, CPCU
Are you using a drone in your business?
I was speaking with a flooring company about their upcoming general liability insurance renewal, and in conversation I reminded them that there is an Unmanned Aircraft exclusion on their policy. I explained that this means that there is no liability or property coverage by a drone. The client says “Really?” and gave me a smirk. Oh, NO! I thought, he used a drone. The client proceeds to tell me that they were thinking of renting a drone because they had installed tile in a school and put the school’s logo on the floor. They had taken pictures, but they were not showing the full scope of the project. So, they were going to rent a drone for the day to take pictures from above. The client asked, what would happen if we hit someone with the drone in the hallway or if they had broke the drone they rented.
Well, the standard general liability insurance policy is not providing coverage for liability or property covered for an unmanned aircraft. Most insurance carriers were using the aircraft exclusion on the general liability insurance policy for their position, but many companies are coming out with an unmanned aircraft exclusion to be sure their liability policy is specific and there is no room for different interpretation. This is why you need an insurance policy designed specifically to cover the drone.
You will need liability insurance coverage in the event someone is hit by the drone or if the drone causes property damage to someone else. You need hull coverage to cover the drone itself and its payload in the event it is damaged by a covered peril. A payload can be a camera or a package carried by the drone.
The Aviation Administration is expecting 600,000 drones to be used commercially by October 2017. It is now less cumbersome to become a commercial drone operator. The FAA is the government body that will set the rules and regulations for commercial drones in national airspace Drone operators will need to pass a certification test and abide by various flying restrictions.
So, what do you do if you need to use a drone in your business, you need a specific policy designed to cover the drone. An insurance policy can be issued for the drone operator to cover both physical damage to the drone and it’s payload, as well as liability exposures coming from a 3rd party bodily injury and property damage. In addition, you can get insurance coverage to cover the privacy issues of using the drone and non-owned aviation liability, for drones that you rent or borrow. It is important that if you are signing a contract to rent a drone or to hire a pilot, that you and your attorney review the contract. Since this industry is infancy, most of the contracts and language are not standardized. In order to be sure that you know what your responsibilities are you need to have the contract reviewed and read.
The cost of drone insurance policies can range from several hundred dollars to several thousand dollars per year. The cost depends on the type of the drone, the scope of the drone use, the experience of the operator and the desired liability coverage.
Before any activity occurs on the job site, an Unmanned Aircraft Systems (UAS) should have a safety procedure developed. At the minimum it should include the safe use of the UAS, pre-planning and risk assessment activities. It is important that the pilot is certified and has experience as an unmanned aircraft pilot.
Drones are being used in a variety of businesses including real estate, photography, agriculture, entertainment, construction, and inspection companies, to name a few. Drones are being used today in lieu of helicopters for various types of jobs. The cost of a helicopter can be a few thousand dollars and hour, compared to owning a drone with a camera which can be purchased for under $5000. Drones are being used by all types of businesses and not limited to big business.
Nancy Nicklow is the owner President of Huff Insurance,a full service Independent Insurance Agent . We have been dedicated to Protecting Lifestyles™ since 1960. We offer a full array of Personal Insurance, Commercial Insurance and Life Insurance products. Call us at 410-647-1111