Understanding Drone Insurance
August 20, 2020
3rd party liability? Premiums? Deductibles? Check out our guide to insurance!

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Understanding Drone Insurance

with help from our friends at SkyWatch

As you begin building your business, drone insurance will become an important asset as it will protect you, your equipment, and your investment. Unlike other types of coverage, activating, and managing drone insurance is easier than ever.

Establishing yourself as a commercial drone pilot means being professional, detail and safety-oriented. After you’ve invested in your training and drone gear, and you will begin getting hired for jobs in which you will have to specifically prepare and plan for each mission. But (as many drone professionals know) no amount of time spent planning a mission can prepare you properly for a drone accident if you don’t have a liability policy to cover you or your customer’s loss. 

Luckily, today more than ever, drone insurance is simple, intuitive, and easy to manage. Before seamlessly activating your drone insurance policy, it is important to first understand the following basic key terms and concepts.

Here are all the important definitions that can help you understand what is included in your insurance policy:

*Please note: the following glossary is according to SkyWatch.AI Drone Insurance Policies.

Coverage Breakdown

Aviation Liability Insurance

A portion of the insurance policy which provides coverage against physical or property damage to a third party entity caused by drone operations.

Hull Insurance

An optional portion of the insurance policy which provides physical damage coverage to the drone in use. Includes drone loss, theft, flyaway, disappearance.

Aviation insurance provides the following types of liability coverages: 

  • Property Damage: Liability protection for physical damage to property caused by a pilot’s operations 
  • Bodily Injury: Liability protection against physical damage or trauma to an individual resulting from an accident by the drone pilot
  • Personal injury: Liability for an injury to an individual arising from libel, slander, invasion of privacy, etc. 

Liability limits range anywhere from $100,000 to $5,000,000. Canadian Drone regulations state that you must be certified for all drone operations, including recreational and commercial flights. When it comes to activating an insurance policy above $2M in liability, you will be asked to confirm that you have the required Pilot certificates for performing commercial RPAS operations. Secondly, while hull insurance is an optional coverage, it is only available for annual insurance policies and cannot be purchased short term, i.e by the hour or month. 

*Note that Aviation Liability insurance includes coverage specifically to your drone operations – which is not always covered by standard General Liability policies.


Certificates and Documentation

After purchasing drone insurance you want to make sure you are provided with two essential documents. First, you need a policy document which declares all the conditions, specific coverages, and exclusions. Secondly, a Certificate of Insurance (COI) will serve as proof of coverage for clients and local authorities. The COI is a flexible working tool that can be modified during the policy period to include your additional insured as well as the specific language required by certain clients.

Coverage Details 

Insurance jargon can be confusing. In order to simplify this, we’ve gathered some of the most frequently used terms in drone insurance policies to make sure you truly understand what it’s all about.

Additional Insured
An individual, business, co-pilot or entity that is added to the policy in order to be protected by the drone pilot’s insurance policy
Certificate of Insurance (COI)
A legal document providing important coverage details and serves as proof of coverage. This document is produced immediately after activating your policy.
An incident submitted by the drone pilot to the insurance company which needs to be covered for a loss.
Your Coverage Duration
The time period in which the policy is active. Hourly policies provide coverage for a given time of day at an hourly rate while monthly/annual policies provide longer coverage periods. While policies can be pre-booked for a future date it is important to make sure that the coverage duration is stated clearly on your policy and COI.
Your Title Deductible
A portion of the loss in which the drone pilot will be expected to pay in the event that a claim is filed.
Upon making changes to an active insurance policy, an endorsement is used as a legal extension to prove that the contract has been amended.  

For example, if you add hull coverage midway through your policy period, a new endorsement with the drone details will be produced and attached to the original policy.

Liability limit
The maximum limit for which an insurance policy will provide liability coverage.

The limit you select should be based on the requirements of your client, or the risk associated for your operation. The bigger the production, the bigger the risk. The most standard liability policy is the $1,000,000 limit; however, it is important that each pilot considers the risk of his/her operations and chooses the liability accordingly.

Name Insured
The person(s) to whom the policy is issued. 

The name insured can also be the name of your business. If the named insured is your company’s name, then any employee of that company will be included under the policy.

On-Demand Policy
A type of policy that can be activated at any time.
A total payment or a periodic portion of it which is used to keep the policy active over time.

For drone insurance policies, there are separate premiums. Every drone insurance policy will include a premium for the liability portion. Other coverages, such as optional hull insurance, will have an additional premium to be paid.

Waiver of Subrogation
A legal waiver that states the name insured has waived the rights of the insurance company to seek compensation for losses paid to the third party.

Often times clients will request that pilots provide this specific waiver when conducting operations on their behalf. This waiver will be required in order to get some operations approved.

Often times clients will request that pilots provide this specific waiver when conducting operations on their behalf. This waiver will be required in order to get some operations approved. 

More definitions can be found online at SkyWatch.AI’s drone insurance dictionary.

When working in a fast-paced environment such as the drone industry, the insurance demands and requirements are ever-changing. For this reason, drone insurance is designed to be flexible. As clients needs’ change, pilots can always modify and manage their insurance.

For more information visit https://www.skywatch.ai/ca/home

The SkyWatch.AI support team is happy to help you get your policy activated and answer any questions you may have at any time.


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