It’s a bird. It’s a plane. No, it’s a drone!
Businesses are discovering many uses for drones – also known as unmanned aircraft systems (UAS). In fact, total spending for military and commercial drones is expected to reach $89.1 billion over the next ten years. This translates into approximately 30,000 small commercial drones in use by 2020, according to the Federal Aviation Administration (FAA).
Commercial Application of Drones: Implications for Commercial Insurance
Drones are already being used by real estate brokers to get images of properties from the air, by farmers to monitor crops, by insurance claims adjusters to view damaged property, by the Forest Services to monitor fires, and by movie companies in film production.
Almost any job that currently requires an aircraft is a good candidate for a drone, since drones are considerably less expensive to operate. Major online retailers are already planning on using drones to deliver packages. Plus, drones can provide safer options and prevent worker injuries in many cases. For example, if you own a construction company and you need the top beams of a building inspected, would you rather send a man several hundred feet off the ground or a drone? The bottom line is that if you are operating drones for business purposes then it's critically important to add drone insurance to your business insurance policy.
Other potential uses for drones include:
- News: aerial reporting
- Insurance: claims and underwriting operations
- Service: table service at restaurants and bars!
Commercial Insurance Implications for Businesses Operating Drones: A Closer Look
This proliferation of drones increases the need to address commercial insurance liability and coverage issues, most notably - personal injury and invasion of privacy. Drones are excluded in about 99 percent of Commercial General Liability policies available today. Legal issues include “trespassing” drones; airspace ownership laws; and the question of federal aviation laws vs. state laws. In addition, many drones have high-powered cameras, infrared sensors, facial recognition technology, and license plate readers, which also brings up concerns regarding invasion of privacy, spying, stalking, and harassment.
Insurance Companies Scrambling to Supply Drone Insurance Coverage
In February 2012, congress mandated that the Federal Aviation Administration (FAA) find a way to integrate drones into U.S. airspace by September 2015. With that deadline looming, the FAA is nowhere close to finalizing its plans. This lack of regulation and the fact that there is very little loss history available at this point makes it challenging for insurance companies to develop policies. It's therefore likely that drone insurance rates may vary widely among insurance providers. Therefore, it's helpful to acquire drone insurance protection from an indepdent insurance agency who is free to shop around among competing brands of insurance providers in order to help you obtain the proper coverage at a fair price.
Drone Insurance Risk Factors - Similar to Aircraft Insurance Risks
Since drones are regulated by the FAA, many of the same questions that an underwriter looks at with an aircraft will also apply to a drone, such as its function or intent, its takeoff and landing location, whether it will be operating over a populated area, and its flying altitude. However, a drone is not a manned aircraft. Underwriters will need to look at liability, personal injury, and invasion of privacy, property and workers’ compensation when creating insurance policies for commercial drones.
Currently there are about 21 insurance companies that write aircraft product liability policies – up from just nine a few years ago. Someday requesting insurance for drones and drone-related operations will become routine, but for now we’re faced with the challenge of keeping up with the issues that come along with quickly advancing technology.
For more information about drone insurance and other commercial insurance needs, contact American Insuring Group at (800)947-1270 or (610)775-3848. As an independent insurance agency, we're postitioned to help you save on insurance by shopping your needs among many competing insurance providers. Call today.