AIG's recent move to begin insuring unmanned aerial vehicles (UAVs) marked the beginning of the first large, national insurance company to get ahead of (or catch up with) the "drone movement." Like this season's migration of Canadian geese, everyone seems to be flocking in droves, clearly intent on getting to the online shopping outlets and local electronics stores that sell the latest drones. But few actually know about how to use their newly affordable crafts safely and without risking their entire life's savings. A quick phone call with the Hill & Usher insurance agency led us to a few clues about where to start.
The agent I spoke with was originally responding to a request for background information on another story, but the conversation that ensued led to troves of information that too few of us have thought to consider. And that might be a life-changing or deadly mistake.
Don't get me wrong. Drones aren't that unsafe. But then again, in certain instances, they can be. Strike a power line at the wrong angle and cause a fire that burns down a building, and you could be in some fairly hefty legal trouble. Slice through a bridesmaid's cheek on her wedding day? Same story. Not to mention your business' reviews would certainly take a hit for that.
While insurance can't cover your bad business reviews, there's a lot that Hill & Usher has been working on in collaboration with numerous underwriters to help their photographers and production managers find the proper coverage. The biggest takeaway, however, is to know that, as much as you think your current insurance might cover you in the case of an incident with your drone, the odds that you're mistaken are greater than 90 percent. Most insurance companies have exclusions for any type of aircraft. And those that don't could find numerous ways of fighting your claim with their likely-purposefully-vague language on the topic.
To be clear, you don't at all have to insure through a Hill & Usher agent. But they are a well-known company that primarily services those in creative industry, and having an agent is almost a requirement in order to properly navigate what will likely always be a complicated drone aviation insurance market. So go through anyone you can find, but if you're going to do it, do it right.
Types of Coverage for UAVs
Just as you do for any ground activities, there are two main categories of coverage that most concern the drone photographer: liability coverage and equipment coverage (otherwise known as "hull" and "payload" coverage).
Commercial General Liability Coverage
Liability is always a big issue. While beginners might roll their eyes at the idea of having to be covered for knocking over a $10,000 vase on a shoot (which, of course, they would "never" do), the reality is that your business is at incredible risk any time you step onto a set or location. And it doesn't even have to directly be your fault to do serious harm to your life. An assistant could make a mistake running cables or knock over a candle that might burn an entire building down. A guest at a party could be slightly intoxicated and stumble right into the middle of the line you're flying with your drone. Again, not necessarily his fault.
You can blame our legal system, but the reality is that you wouldn't expect to have to pay for a vendor burning your house down when you're hosting your grandparents for their 75th anniversary party. So why should someone else pay for your mistake? Being covered is the ethical thing to do not just because it covers you and your family from a potential catastrophe, but also because it protects everyone we share our world with from the same potential catastrophe should you not be able to afford fixing the damage you or your business cause.
The largest issues with drones come from the facts that they are human health hazards and that they can run into just about anything (and who knows what kind of Rube Goldberg machine nature has cooked up for us out there?). While your standard general liability insurance likely wouldn't cover an incident with an aircraft, policies like AIG's new plans or like those that have been offered through agencies like Hill & Usher can protect you in any of these circumstances.
Hull and Payload Coverage
With respect to coverage for UAVs, insurance that protects your equipment is better and more accurately known as "hull coverage," for covering the actual airframe/drone, and "payload coverage," for covering the equipment attached to the drone (i.e., camera, lens, stabilizing system if not integrated into the drone). I was told that most people self-insure their equipment. Self-insuring is just what it sounds like: you crash it, you replace it (we had a small laugh about that term on the phone, since it's essentially a professional-sounding euphemism for "no insurance"). But those with more expensive equipment will certainly be interested in protecting it.
Hull coverage is the most common type of insurance, and most UAV discussions surrounding equipment insurance seem to primarily refer simply to hull coverage. A small fraction of UAV liability plans will also cover the UAV itself, so you might be able to cost-effectively bundle this in, but don't count on hull coverage being included by default.
Payload coverage, while it can be necessary for more expensive rigs like RED systems or Phantom's famous high-speed cameras, is an extra expense that has to be factored in. Combined with hull insurance, payload insurance for these rigs can easily add thousands to your yearly insurance bill, and rightly so (some of these rigs easily cost around or upwards of $100,000).
General Practices and Considerations in the World of UAV Insurance
Every insurance policy involves a fairly thorough interview to discuss and specifically include or exclude certain line-items or circumstances depending on what you will be using your drone for. Below is a list of things to be aware of and that will help you prepare for your insurance purchase.
- General liability, hull coverage, and payload coverage are all usually priced out on a per-drone basis, where each additional drone and incidents that might involve that drone are covered individually and separately. For some companies that keep extensive records and specifications of drones, your rates might vary depending on the type of drone you plan on insuring. It might cost less to insure a drone with protected propellers, like the Vantage Robotics Snap drone.
- Your liability coverage can cover your pilots (who you have to list specifically) and non-piloting crew in addition to those in the general vicinity of your flight path (i.e., the public). The British apparently and more accurately call general liability, "public liability." For the most part, this refers to loss of human life (scary, I know) or personal injury.
- You register everything with the insurance company: the pilot, the drone, the camera, etc. (Perhaps this would be a good way for the FAA to simplify managing registration, by connecting it through the insurance companies and make the FAA like the DMV of drone ownership, as it essentially already is with all aircraft.)
- General liability coverage has the same standard $1 million figure attached to it that you'll see on the most common ground coverage plans.
- While some will, most insurance companies will not insure your drone activities at, during, surrounding, in the general vicinity of an event or large group of people. Wedding and event photographers operating drones will want to make sure they have specific coverage for their events from one of the companies that offers this.
- Any rates and/or policies that insurance companies put into place now stand an almost certain chance of changing once official rules and regulations come from the FAA and/or as those rules roll out as expected over the next two or so years.
Ah, now I have your attention. Yes, you can get preferred rates if you can show that you have experience flying drones for long periods of time. Additionally, having a pilot's license and/or your Section 333 exemption from the FAA is "like gold" when negotiating your insurance premiums for drone coverage. If you don't have any experience, you won't be "penalized" on your rates. But you could look at the inverse of this and simply say that, yes, it's more expensive for coverage if you do not have experience or any types of licenses.
The cost to insure your drone piloting activities can vary widely, but most plans for liability coverage involving a single drone start at $995 and go up to $1,500. Hull coverage is sometimes extra, and payload coverage is always extra (it just depends so much upon if what you're actually attaching to the drone is something expensive or something cheap). Of course, these costs go up the more expensive your equipment gets.
For answers to any more questions, feel free to contact Hill & Usher directly (some of you likely already have at least a standard general liability policy through them). They were incredibly helpful in answering questions for this article, and we weren't even on the phone discussing the possibility of me becoming a client.