Drone Insurance – Who We Are, What It Is And How To Get It

Terry Miller

Unmanned Risk Management is a wholly owned subsidiary and dba of Transport Risk Management, Inc. (Transport Risk) that focuses on the marketing, development and placement of unmanned insurance products on behalf of Transport Risk and its clients.

Transport Risk is an independent specialty aviation insurance brokerage firm based in Colorado, USA. All of Transport Risk’s policies are individual primary placements that insure Unmanned Aerial Systems (UAS) and the operator of the UAS for liability and/or property damage arising from the operation of the insured and scheduled UAS or manufacturers and services providers for liability arising from the sale of those products or services.

Insurance Companies We Work With

Transport Risk Management and Unmanned Risk Management only work with Admitted Insurers on all Unmanned Aviation Risks.

Transport Risk Management and Unmanned Risk Management only provide comprehensive “All-Risk” policy forms that assure the broadest coverage available including Commercial General Liability (CGL) coverage’s on nearly all policies we provide.

Coverage is quoted through aviation insurers that are all A+ rated by A.M. Best or higher. The policies are very broad commercial aviation policies that cover most liability exposures of a commercial aviation operator and all uses and exposures outlined in the application, quote and eventual policy. The coverage provided can be liability-only or full hull and liability coverage. The policies are individually written and placed and not a master excess or contingent program placement that you would see through the AMA or similar program such as rental car coverage through your American Express card. That type of program simply does not exist in the aviation industry due to the limits and catastrophic nature of aviation.

Why Unmanned Risk Management Was Developed

On November 18, 2014, the NTSB ruled, under Herta v. Pirker, that UAS are “Aircraft” and subject to FAA authority and regulation. Nearly all business Commercial General Liability (CGL) and Homeowner policies exclude aviation and aircraft exposures from coverage provided under the policy. Before assuming that your policy will cover you for UAS operations, you should consult your agent or underwriter to confirm that coverage is actually provided under the policy.

The easiest way to describe our coverage is that it would be nearly identical to that which would be carried by a commercial manned helicopter operator for specific uses outlined in the application. We can provide liability limits up to $500,000,000 and hull values up to $10,000,000. Yes, we currently insure UAS in those value and limit ranges; several in fact.

FAR Violations and Civil Sanctions

Coverage applies to all losses that occur from operations and uses described in the policy. FAR Violations resulting from the loss would not result in a denial of coverage provided the use was approved under the policy. This includes commercial operations. Aviation insurance policies do not deny coverage for FAR Violations with a few exceptions and none of which CURRENTLY apply to UAS or exposures outlined in the application. Those FARs would typically be associated with a current airworthiness certificate, current medical and pilots certificate. Insurance would cover the loss that is accompanied by an FAR violation but it would not defend the sanction or pay the fine.

Criminal Violations

Statutory violations (breaking the law usually with intent) can result in a denial of coverage. If you have a loss while intentionally breaking the law and you are arrested in the process or charged with a crime, you should expect a denial of coverage. If you unintentionally break the law for example unintentionally filming something through a window while filming the property next door and have a loss, you would most likely be covered even if you are charged. YOU MUST KNOW THE LAW HOWEVER and make every effort to operate within the law.

Who We Insure

All of the above said, we are VERY selective in the risks we insure. We value an aviation background, quality equipment, training and a professional attitude toward operations and safety. In reality, we will only accept about 1 out of 20 applications we receive from operators seeking coverage.

What We Cover And How To Apply

Unmanned Risk Management offers fleet discounts with broad coverage expansions along with high limits and per job limit changes as needed and 24/7 certificate issuance. We are also working through our telematics pay per use insurance program for enterprise customers as well.

We are able to insure all types of UAS for all uses worldwide. We also provide CGL coverage for non-aircraft operators in the business of manufacturing and services.

The application for aircraft/UAS operator coverage is: www.UAVAssure.com

The application for manufacturer and service provider CGL is: www.UASAssure.com

Insurance carriers are aerospace insurers with A to A++XV AM Best Ratings

Coverage is for all risks of ground and flight and CGL policies provide comprehensive general liability including products and completed operations liability.

Territory is Worldwide

Uses are “all uses of the Named Insured”

Pilots are “as approved by the Named Insured”

The aircraft operations exposure would be under an aircraft policy. The aircraft policy covers you, or other named insured, for liability arising from operations of aircraft. That liability includes bodily injury, property damage, personal injury and war risk liability (hijacking). The coverage also includes CGL coverage’s and follows the aircraft worldwide. Each aircraft carries its own coverage under the policy and that coverage follows the aircraft anywhere in the world. Likewise, each aircraft carries its own premium. We can cover your company’s aircraft operations and provide coverage for all of your customers on an individual basis.

We can include finance companies as loss payees and unlimited numbers of additional insured customers and other third parties as well.

Limits of liability are available from $1,000,000 to $500,000,000 per occurrence. Premiums range from $700 per year for $1,000,000 and up from there.

Aircraft hull physical damage coverage is also available and ranges from about 8% of the insured value to 12% of the insured value with a 5% deductible. That coverage is for all risks of ground and flight. Coverage can be included for payload and ground equipment.

As respects, sales, training and other similar exposures, we can provide complete worldwide products liability and CGL coverage for all locations under a single policy. This coverage is essentially liability for products liability and business liability associated with UAS/UAV sales, distribution and training activities separate from the aircraft operations.

Finally, we can provide your customers with non-owned liability to protect them from liability arising from your, or other aircraft operators negligence while performing UAS/UAV operations on their behalf.

TYPICAL COVERAGE SUMMARY – SOME COVERAGE ‘S ADDITIONAL PREMIUM

NAMED INSURED

Named Insured and all affiliated, owned, managed or controlled organizations or entities now in existence or hereafter formed.

RISK DESCRIPTION

Commercial aerial sensing video and photography. All operations are conducted under principal supervision.

MAINTENANCE

Maintenance is conducted in house in most cases however the manufacturer and builders are available to assist for more complex repairs and maintenance.

EXPOSURES

Annual flight hours, uses, locations and types of aircraft

PILOTS

All operations are conducted with Named Pilots acting as pilot in command who is trained, professional and works within a culture of safety.

All pilots will be approved by the Named Insured and Insurer If Indicated

USE

All Uses of the Named Insured – Otherwise Indicated In Policy

TERRITORY

Worldwide – Anywhere In The World

AIRCRAFT LIABILITY

To pay on behalf of the Insured all sums the Insured should become legally obligated to pay for Bodily Injury and Property Damage arising out of the ownership, maintenance or use of any aircraft specifically scheduled and/or reported to the Insurance Company.

CONTRACTUAL LIABILITY

To pay on behalf of the Insured all sums the Insured should become legally obligated to pay by reason of liability assumed by the Insured under a written contract designated by the policy schedule or reported to the Insurance Company within 30 days after its formation and not rejected by the Insurance Company.

FIRE LEGAL LIABILITY

To pay on behalf of the Insured all sums the Insured should become legally obligated to pay for Property Damage caused by fire to the premises rented or leased to the Insured.

PREMISES LIABILITY

To pay on behalf of the Insured all sums the Insured should become legally obligated to pay for Bodily Injury and Property Damage arising out of the aviation operations of the facility described in the policy and all aviation operations away from the premises which are necessary or incidental to such operations.

PREMISES MEDICAL PAYMENTS

To pay on behalf of the Insured all reasonable medical expense to persons who sustain Bodily Injury caused by an accident arising from a condition of the insured premises or aviation operations of the Insured.

NON-OWNERSHIP LIABILITY

To pay on behalf of the Insured all sums the Insured should become legally obligated to pay for Bodily Injury or Property Damage (EXCLUDING damage to the non-owned aircraft) arising from the use of any non-owned or non-leased/non-managed, UAS or UAV while being utilized by or on behalf of the Insured in its operations.

FELLOW EMPLOYEE COVERAGE

To insure for employee suits against another employee for Bodily Injury and Property Damage if an accident occurs in the course and scope of the employment of the claimant.

PRODUCTS LIABILITY FOR THE SALE OF THE INSURED UAS

To pay on behalf of the Insured all sums the Insured should become legally obligated to pay for Bodily Injury and Property Damage arising out of insured aircraft that has relinquished to others and the accident occurs away from the premises of the Insured.

The Limit of Liability with respect to this coverage is $ 1,000,000 each occurrence and aggregate and such limit is in addition to the limits for aircraft liability.

RIGHT OF FIRST REFUSAL

Allows the Insured to have the right of first refusal to purchase aircraft Salvage. Physical damage coverage must be purchased. – Included if hull coverage purchased

SEARCH AND RESCUE / WRECK REMOVAL AND RECOVERY EXPENSES

Adds coverage for Search and Rescue Operations and for wreck Removal Expenses following a loss. Physical damage coverage must be purchased.

AIRWORTHINESS EXCLUSION ENDORSEMENT

Deleted

PERSONAL INJURY LIABILITY – Additional Premium

To pay on behalf of the Insured all sums the Insured should become legally obligated to pay as damages for injury sustained by any person (excluding employees) or organization relating to the aviation operations of the Insured arising out of false arrest, detention or imprisonment, malicious prosecution, libel or slander, wrongful entry or eviction, or other invasion of the right of private occupancy.

ADVERTISING LIABILITY – Additional Premium

To pay on behalf of the Insured all sums the Insured should become legally obligated to pay for injury sustained by any person or organization relating to the aviation operations of the Insured arising out of libel, slander, defamation, violation of privacy, piracy, unfair competition or infringement of copyright, title or slogan which occurs in the course of the Named Insured’s aviation advertising activities.

WAR RISKS LIABILITY AND *HULL COVERAGE

To insure against UAS liability, premises liability and physical damage (hull) claims (If hull coverage purchased) arising from the normally excluded exposures of hi-jacking, war risk and confiscation. This coverage is included for all scheduled aircraft. -*Hull coverage must be purchased for War Risk Hull coverage.

TERRORISM REINSURANCE ACT – TRIA LIABILITY – INCLUDED

Solely while the Terrorism Risk Insurance Act, as amended, is in force, this policy is amended to provide such coverage as is set forth below:

Liability coverage as provided under this policy shall be extended to include any accident, incident, occurrence, act or event during the policy period arising out of the following peril:

An “Act of Terrorism” as defined within the United States Terrorism Risk Insurance Act, as amended, with respect to any one or more “Acts of Terrorism.” The Company will not pay any amounts for which the Company is not responsible under the terms of the Terrorism Risk Insurance Act, as amended, due to the application of any clause which results in a cap on our liability for payments for terrorism losses.

The limit of the Company’s liability for the coverage provided by this endorsement shall be included within and not in addition to the limits of liability provided under this policy.

OPERATING CIVIL AIRCRAFT ON U.S. MILITARY AVIATION FACILITIES

In order to operate a civil aircraft, manned or unmanned on a U.S. Military aviation facility, you will be required to provide a DD2400 Certificate. Transport Risk Management can issue this certificate at policy inception for no additional premium.

FIRST AID TO OTHERS EXPENSES

Coverage for expenses incurred by the Insured for first aid to others at the time of an accident for Bodily Injury to which this policy applies.

BAIL BONDS

The company will pay the cost of Bail Bonds required of the Named Insured because of an Occurrence or violation of law or a regulation for civil aviation arising out of the use of the scheduled aircraft not to exceed $5,000

FULLY EARNED PREMIUM PROVISION

In the event of a loss, The Company shall not be liable for any return Physical Damage premium in respect to any aircraft on which a total loss has been paid.

POLICY TERMS

All policies are issued on an annual basis. Each policy incepts and expires on the same date 12 months from policy inception. All premiums are annual and due in full.

POLICY PREMIUM PAYMENT

All policy premiums must be paid prior to binding. All policy changes resulting in additional premium must be paid prior to making the policy change.

REQUIREMENTS TO BIND

Prior to binding coverage and for coverage to apply, the insured agrees that:

1.) Full Payment of Premium must be received by Transport Risk Management

2.) A copy of original invoice(s), title transfer or bill of sale in the name of the insured or principal will be provided for each aircraft.

3.) The vinyl asset label (example below) is required to be affixed to the aircraft frame as follows:

On “Liability-Only” policies: Only the large asset label is required to be affixed to the frame of the aircraft.

On Hull and Liability Policies: The large asset label is required to be affixed to the frame of the aircraft and;

One small label affixed to the Gimbal and;

One small label affixed to the Base Control Station and;

One small label affixed to the Remote.