Commercial Drone Insurance: Liability, Hull Coverage, and FAA Part 107 Operations

Does general liability insurance cover commercial drone operations?

General liability insurance usually does not cover commercial drone operations, because the standard commercial general liability form excludes injury and damage arising from the ownership, maintenance or use of any aircraft you own, operate or rent, and drones are aircraft. Some carriers offer limited drone endorsements to a general liability policy, but most aerial work businesses need a standalone drone (unmanned aircraft system, or UAS) policy. This surprises many photographers and engineering firms that added drones to an existing service. If a drone falls on a parked car and your carrier applies the aircraft exclusion, you may be paying that claim yourself.

What does drone liability insurance cover?

Drone liability insurance covers third-party bodily injury and property damage caused by your unmanned aircraft operations, including legal defense, and commercial operators commonly carry limits of $1 million per occurrence, with higher limits for larger jobs. It is the core of any drone program and the coverage clients ask about first. Typical claims include a drone striking a person at an event, damaging a roof or solar array during an inspection, or causing a vehicle accident when it falls near a road. Many drone policies can also add personal injury coverage, which in insurance terms means claims like invasion of privacy, trespass and defamation. For photography, real estate and mapping work that captures images of neighboring properties, that coverage is well worth asking about.

• Third-party bodily injury and property damage from drone operations.
• Legal defense costs, often in addition to the limit depending on the policy.
• Optional personal injury coverage for invasion of privacy and trespass claims.
• Coverage for named or approved pilots who meet the policy's certification requirements.

What is hull coverage on a drone insurance policy?

Hull coverage on a drone insurance policy is physical damage insurance that pays to repair or replace your drone if it is damaged, destroyed or lost, and it can be extended to payload equipment such as cameras, LiDAR units, thermal sensors and spray systems. Coverage is usually written on an agreed value basis, meaning you and the carrier set the insured value of each aircraft up front. Pay close attention to payload. A mid-range airframe may carry a sensor worth several times its own value, and some policies cover payload only when it is scheduled separately. Ground equipment, including controllers, tablets, batteries and base stations, may also need to be listed.

• Schedule every aircraft and payload item with an accurate agreed value.
• Confirm coverage both in flight and on the ground, including in transit to job sites.
• Check the deductible, which is often a percentage of the insured value for in-flight losses.
• Ask how flyaways and lost aircraft are handled if the drone is never recovered.

How does FAA Part 107 certification affect drone insurance?

FAA Part 107 certification affects drone insurance because most commercial drone policies require that every pilot hold a current Part 107 remote pilot certificate and fly within FAA rules, and a claim from an uncertified pilot or a non-compliant flight may not be covered. Part 107 is the FAA rule for commercial small unmanned aircraft, and it sets requirements for pilot certification, aircraft registration, altitude, visual line of sight and operations over people. Some operations require an FAA waiver, such as flying beyond visual line of sight, so share any waivers with your underwriter. Agricultural spraying brings additional FAA requirements for dispensing chemicals, and chemical drift or crop damage may need specific coverage, so disclose that work clearly.

• Keep each pilot's Part 107 certificate and recurrent training current.
• Register aircraft as required and keep flight logs.
• Disclose waivers, night work and operations over people to your carrier.
• Tell the carrier about any spraying or dispensing work before you start.

Should an aerial work business buy on-demand or annual drone insurance?

An aerial work business flying regularly is usually better served by an annual drone insurance policy, while on-demand policies that cover a single flight, day or job can fit occasional operators. On-demand coverage is convenient and inexpensive per use, but it is easy to forget to activate, and it rarely gives you continuous hull coverage for equipment sitting in your truck or office. Annual policies also make client requirements easier. Commercial clients, utilities, general contractors and property owners commonly ask to be named as additional insured, request a waiver of subrogation, and want a certificate of insurance on file before your crew arrives.

Ready to build your drone insurance program?

If you are adding drones to your services or bidding on work that requires specific limits, we would be glad to help you build a drone program that fits your fleet and your contracts. Schedule a conversation at calendly.com/grandbayfinancial.