How to Insure a Commercial Drone

Commercial drones are not “brand-new” technology, but are definitely becoming more popular in usage, becoming more prominent in agriculture, energy, and construction. Finding drone insurance can also be difficult as they are new unique machines used for personal and commercial use. They have even revolutionized the way that energy utility function and are used to safely inspect wind turbines, look at power lines, and assess the health of solar panels. We here at Hitchings Insurance see a lot of drones used in agricultural operations. They are often used to manage the help of crops, whether that’s through the assessment of their well-being or even managing their basic maintenance from a bird’s eye view.

You’ve probably also seen a lot of drones for personal use, like for filming stills and videos. They’re all over – but the main issue we’re starting to see is the risk that commercial drones pose. They can be expensive, and they have the potential to cause damage to property and to individuals.

One solution? Drone insurance for commercial use. Here’s an article on the concerns of commercial drone misuse, how to insure drones, the types of coverage that exist, and a cost breakdown.

Concerns of Commercial Drone Misuse

Since the rise of recreational and commercial drones, there have been a few concerns over the misuse of these “unmanned aircraft.” Some of those include:

• Collisions. The skies aren’t totally hazard-free. Drones can crash into birds, trees, buildings, or people. Collisions with drones are rather common and have the potential to damage both the drone itself and its equipment.
• Cybersecurity. Depending on the usage of the drone, this risk can vary. But since many commercial drones are used to collect data, they are vulnerable to being hacked into by cybercriminals and can be a venue through which data is accessed and stolen.
• Privacy. Drones that fly outside of private commercial areas open up their operators to potential claims alleging privacy breaches. Of course, no policy will cover any intentional privacy breach or illicit activity, so while a privacy breach may be covered, it would have to be proven as unintentional to be insurable.

Drone Insurance for Commercial Use: How to Insure & Types of Coverage

Insuring a drone doesn’t exactly have a “standard” thus far, since the concept of insuring drones and drone usage in the commercial sphere is relatively new still. There are no legal requirements for insuring a drone, either (although this may not technically be true of drones that fly outside of business premises into public “skies.”)

Ultimately, there are a few different types of commercial drone insurance that currently exist. Take a look at the descriptions and breakdown below.

Commercial Drone Liability Insurance

Commercial drone liability insurance is offered similarly in the manner that liability coverage is for vehicles. This policy covers you, the business or farm entity, from any third-party claims of injury or property damage resulting from the use of your commercial drone. If your drone smashed into someone’s car, into a building, or even into a person just passing by, this portion of your commercial drone insurance policy could offer coverage to compensate the injured parties for the damages or medical costs.

Some drone liability limits start at around $500,000 but can reach upwards of $1,000,000 – and should, seeing as the cost of medical coverage or legal defense should a claim arise can be extremely expensive. Liability coverage may even include a portion to include protection should an “invasion of privacy” claim arise against you, the business, or the operator of the drone. This is especially important for those drones that capture information or footage while they fly.

Commercial Drone Physical Damage

The physical damage portion of a commercial drone insurance policy is also referred to as drone hull insurance since what it insures is the physical drone itself. If any damages are made to the drone because of an insurable peril, such as a collision, a faulty landing, or weather calamity, the cost to repair or replace the drone would be covered.

Note, of course, that every drone being used in commercial operations isn’t some multi-thousand-dollar vessel, and physical damage coverage may be unnecessary for lower-cost models. Also, the physical damage component may be subject to a deductible, which could very well be higher or come very close to the cost of replacing the actual drone.

Commercial Drone Cyber-Liability Insurance

One other useful type of drone insurance, which might not be so obviously apparent, is cyber-liability insurance. If a business suffers because of a cyber-attack causing a breach in their data, they might be held responsible for paying any fees or fines associated with the cyber-attack. This coverage can protect the business from having to handle these expenses alone. Which can be crucial for protecting any business that utilizes drones that have an operating system and collect sensitive data.

Commercial Drone Insurance Cost Breakdown:

The cost of drone insurance coverage may vary depending on the number of unmanned aircraft being used by one business, how they are being used, and the risk of loss.

Coverage boils down to the following factors:

• The type of drone
• The number of drones
• Age and condition of drone
• Usage of drone
• If the drone is flown off private property
• If the drown takes any footage or records information
• The value of the drone
• …and more

Policies for professional drones are significantly more expensive than drone insurance for recreational use and can cost upwards of $600/year.

Hitchings Insurance is happy to discuss commercial drone insurance coverage for your unmanned aircraft today. Give us a call to see what we can do for you to receive a free quote.