Commercial Drone Insurance Means a Million Dollar Policy


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Use of commercial drones is on the rise, and with that comes a need for more insurance premiums. Commercial drone operators may soon be required to carry at least $1 million in insurance coverage, and with more drones up in the air, more accidents are predicted.

A new risk report “Rise of the Drones: Managing the Unique Risks Associated with Unmanned Aircraft Systems” from Allianz Global Corporate & Specialty (AGCS) from Allianz Global Corporate & Specialty (AGCS), which also works to insure all areas of the aviation industry, shows that new safety concerns have arisen with drones, including collisions, cyber-attacks and possible terrorist activity.The report predicts that commercial use with drones will increase “greatly in the next decade,” with 1.9 million unmanned aircraft systems (UAS) used particularly for menial or dangerous tasks. The Federal Aviation Administration said that by the end of the year, more than 600,000 UAS will be used for commercial activity in the United States alone. The global UAS market could reach 4.7 million units or more by 2020, to the tune of $127 billion.

Registration is not mandatory in many locations, and AGCS noted that in the future this will be key in identifying liability in future incidents. James Van Meter, an aviation practice leader at AGCS, said in the report that “most commercial operators of UAS will require at least $1 million of insurance coverage to protect against risk exposures.” He expects the drone insurance market to be worth more than $500 million in the United States by the end of 2020. Globally, the number could reach $1 billion.

The report noted that drones are becoming smaller, cheaper and easier to use, but the influx of usage also brings more “incidents and near-misses to date involving UAS to generate concern that the likelihood of collisions and other loss events will grow as numbers multiply,” according to Van Meter. AGCS said that new risks with drone usage could include misuse of technology, leading to mid-air collisions or loss of control, with a “number of near-miss incidents around the world … including China, Dubai and the UK.”

Insurers, according to the report, are using UAS “to make risk assessment of construction or infrastructure projects easier and safer. Insurance claims handling can be done via drone to survey loss more effectively. AGCS noted that there is a need for increased training and registration for commercial drone pilots. For instance, if a pilot loses control during a building inspection, a small UAS control loss “could result in a total liability easily in excess of $5 million. If a UAS hits the engine of an airplane, the results could more than double. AGCS said that the industry needs more consistent standards and regulations, and training should include “meteorology, emergency instructions, air traffic law, including flight rules over buildings, system maintenance, flight time calculation and on-board camera image use.”

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