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Unmanned Aircraft Insurance And The Federal Aviation Regulations

By Terry Miller An underwriter from an insurance company that insures Unmanned Aerial Systems, Tokio Marine/KIln, asked how we insure Unmanned Aerial Vehicles and Systems when they are not yet fully approved by the FAA. That's the subject of this article. Insurance. Even the word sounds dull doesn’t it? But insurance could be the most important thing in your life should your unmanned aerial vehicle (UAV) hit someone or damage the property of others as a result of your negligence. Whack me in the head with your UAV and I’m going to sue! The type of insurance needed is called Liability. It's much like the liability insurance for operating your car. It affords defense at the expense of the insurance company and if you lose they will also pay up to the limit selected for bodily injury and property damage to others. It is not life or health insurance. No coverage is afforded for your death or injuries. Liability insurance helps protect your assets by spending the insurance company's money for your negligent acts instead of your own. And if you're in business liability insurance can help obtain clients. But how can commercial operators be eligible for insurance when commercial uses are not yet approved by the Federal Aviation Administration (FAA)? That's a question we're frequently asked. While we can't speak for all the insurance policies available, we can say the contracts of the aviation insurance companies we represent have no FAR (Federal Aviation Regulation) exclusions. Like most aviation insurance companies, they discarded FAR exclusions from their policies decades ago. Just as auto insurers have no exclusions in their policies for violating traffic laws, true aviation insurance companies have no exclusions for violating FAR regulations. Consequently, most aviation insurers willing to offer policies for commercial UAV operators may do so without concern for the FAA. How can one obtain liability insurance for the negligent operation of a UAV? Such insurance is not difficult to acquire. Currently, as many as fifteen insurers are willing to consider coverage for UAV operations and are dividing users into two groups---the pleasure user or the commercial user. The pleasure user of UAVs can most easily find liability insurance for personal or non-commercial use with endorsements stating that commercial use is excluded. They must still meet minimum qualifications however the coverage is readily available with lower limits at affordable prices. Other options may also exist such as remote controlled aircraft organizations and associations although with some limitations relative to how

and where the coverage would apply. In the past, commercial operators have found it difficult to find liability insurance. It's understandable. This group is even smaller than that of pleasure operators and represents a more significant risk due to holding themselves out as professionals. Although the standards are higher, coverage remains readily available through Transport Risk Management, Inc. Though the difficulty in finding commercial liability has not been alleviated, it has been lessened to a large degree through the development of commercial unmanned aircraft insurance capacity in the marketplace. Transport Risk Management, Inc. has developed more than fourteen insurance markets to cover commercial UAS operations worldwide including liability and hull physical damage policies. Insurance, though dull, can protect your assets and give you peace of mind. It may be difficult to find but it's worth the effort.