What You Don’t Know About Commercial Drone Insurance

May 18, 2015

Unmanned aerial vehicles – also known as UAVs or commercial drones – are becoming more and more common. In addition to being used for military purposes, it appears that they will play a big role in business going forward. A prime example of this is Amazon working with the Federal Aviation Administration (FAA) to get clearance to use commercial drones to deliver packages to its millions of customers in the U.S. It’s like a scene out of The Jetsons: hundreds of small vehicles zipping through the air at any given time. While it seems as though the future is here, with it comes a new level of risk that businesses need to account for.

If your company is planning on implementing the use of commercial drones into its day-to-day business operations, more than likely, your general liability policy does not provide you with any coverage for commercial drones. The same goes for your umbrella policy. So, if one of your drones falls out of the sky and hits somebody, you have zero insurance protection for your commercial drones. This is a huge risk that should not be taken lightly.
General liability and umbrella insurance policies don’t cover commercial drones because they have aerial vehicle exclusions. Working with your insurance broker, you can amend these exclusions by modifying the policies with an endorsement that will provide you with the protection you need.

Because commercial drones are an experimental, new area for businesses, insurance companies are doing their due diligence to make sure everything is on the up and up. They want to know how many drones you’re using, what they’re being used for, how they’re being maintained – everything. Knowing this, you should implement the following best practices if you plan on using commercial drones:

Document your commercial drones maintenance and safety procedures
Require that those who operate your commercial drones are UAV certified and that they have multiple years of experience
Keep a log of any commercial drone repairs, including what was repaired, when and by whom
Periodically refresh your commercial drone fleet when necessary to reduce the likelihood of them malfunctioning

Commercial drones are no longer a far-fetched idea. They’re a reality and will eventually become a staple of the modern day business environment. If you plan on using them as part of your operations, be aware of the risks, follow the best practices above and work with your insurance broker to ensure proper coverage for your commercial drones.