Since the FAA announced regulations for drones in early 2015, the predictions of how unmanned aerial vehicles (UAV) will be used has exploded. Sales for drones have also exploded as have the number of registered drone operators. As with any new technology, insurance companies began responding to how to cover them, how to exclude coverage for them, and what policies are required to get it right. Let’s take a look at what’s evolving with commercial drone insurance.
General Liability Coverage: Some commercial insurers are providing limited drone coverage within their commercial general liability (CGL) policies while others have no intention of doing so. To determine whether or not your CGL policy provides coverage for UAV usage, policy holders should look at two areas of their policies, the “exclusions” and endorsements sections.
The Insurance Services Office (ISO) outlined three exclusionary endorsements in February of this year:
- Complete exclusion in that there’s no coverage at all for bodily injury and property damage (Coverage A) nor any coverage for personal advertising injury (Coverage B) within the CGL policy.
- Partial exclusion applying only to Coverage A meaning if a drone injures someone or damages another person’s property, then it’s not covered. Advertising injury, however, is covered.
- Partial exclusion applying only to Coverage B. Advertising injury claims aren’t covered, however claims for property damage or bodily injury are covered.
The other side of the coin are ISO’s limited coverage endorsements. Keep in mind, endorsements can add or remove coverage, but in this case, I’m referring to coverage that’s being added to the CGL policy.
- Limited coverage for unmanned aircraft where both Coverage A and B are included within the CGL policy.
- Limited coverage for A only means bodily injury and property damage claims are covered but not personal advertising injury claims.
- Limited coverage for B only means all property damage and bodily injury coverage are excluded however personal advertising injury claims are included.
If your CGL policy does provide coverage for Part A, Part B or both, then it is very important to understand what the policy limits are. These may be the same or very different from your CGL limits.
Drone or UAV Policies: If your CGL policy provides either no coverage or very limited coverage, then your best bet is to obtain a drone or UAV policy that provides specific protection for their use. If this is the option you pursue, then the policy should provide both coverage A and B to fully protect you. If it doesn’t, keep looking!
The information needed to obtain a drone policy include make, model, serial number, specifications, and the value of the UAV and its support system equipment. Underwriters require a copy of the FAA certificate to operate a drone and will want to know hours operated, annual hours of operation, speed, means of control, payloads carried, how close to the public it will be flown, pilot name and experience, and more. All of these items will be used to determine the rate or policy cost.
Companies with clear, written usage guidelines, training and safety programs, who use licensed pilots to fly them, and do not rent or lease them to third parties will pay less for their drone insurance! What do you think? Share your questions, comments, and concerns you may have with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!
