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Commercial UAS insurance rates have been drastically (about 25% for certain limits) reduced over the past few weeks. If you requested a quote before, and were not satisfied with the price, I recommend that you give it another shot. I have included a link to Global Aerospace's Online UAS Insurance Portal below.

Global Aerospace Portal

Sincerely,

Joe Ernster
[email protected]
 
Hello!

For this post I wanted to create a comprehensive commercial UAS insurance "guide." However, that would be much too long for this forum. Also, I have written tons of content on this topic for other sites and publications. So, I have compiled a list below. You can consider this list "Commercial Drone Insurance 101." If you have any questions at all, please do not hesitate to ask. I am here to help and love commercial UAS insurance.

Insurance for Commercial Operations: Demystifying You Coverage Options - This is an article I authored for RotorDrone Magazine. The article in the physical magazine was much prettier than the digital version. It was the Fall 2017 issue.

What Should I Know About Drone Insurance? - The guys at Drone U interviewed me for their daily podcast.

How to Insure a UAV - An article i wrote and an "infographic" created from the article on coeaerospace.com

Drone Insurance 101 - This is a Facebook Group I created about UAS insurance with about 650 members.

UAV Coach - uavcoach.com used some content that I created for their UAS insurance guide.

Commercial UAS Insurance Portal
- After you learn all you can about commercial UAS insurance from the above resources, feel free to request an insurance quote from Global Aerospace using this link. I am the aviation insurance broker for every policy that gets quoted and bound through this link. I am very hands on and will be able to help you with anything that you may need.

Thank you for reading!

Sincerely,

Joe Ernster
[email protected]
 
Is there an insurance coverage that covers liability for the business and not the ridiculous notion that if I have three aircraft I'm making three times the money?

This has been a very common complaint from UAV operators. However, this is the way that aviation insurance works. You must schedule and pay for each UAV that you would like to insure.

Fortunately, this ridiculous notion that the underwriter needs to be paid the same premium for the back-up uas in it's case as the one flying is beginning to break down.

Verifly (underwritten by Global Aerospace) doesn't care how many uas you bring to the site. You only pay coverage for the one flying.

The AMA now has commercial insurance policies that insure the pilot, not how many uas they own. Hull coverage is 7% of the covered value for each uas covered.

Hopefully, the other underwriters will be pressured to get real. It has amazed me that underwriters want up to 3 times more premium to insure flying a Phantom (3 lbs) than to insure flying a Cessna 172 (2300 lbs). I'm sure they will look back on this time as the "golden years" for being paid so highly relative to the amount of risk.
 
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@Dave Pitman - thank you for your input. The pricing works exactly the same as automobile insurance. I own two cars, can only drive one at a time, but must pay for insurance on each based on their VINs.

The AMA has only offered these commercial policies for a short period of time. I will be interested to see if they are sustainable. Also, I am wondering if their coverage is accepted by the companies that contract with commercial UAS operators.

I personally insure 500+ manned aircraft and 200+ commercial UAS operations. I have yet to see a policy on a P3 that is even close to 3 times the cost of a C-172 policy.

Another thing to consider is the amount of claims with UAS vs. manned aircraft. Over the last year, I have had about 15 manned aircraft claims vs 30-40 unmanned claims. These numbers are despite me insuring twice as many manned aircraft as UAS. Also, the insurance company has paid out on every single claim that I have been involved in. My clients have been very happy with the outcome of every claim. It is nice to pay a low premium with AMA. However, will the pay when you have a claim? Do their policies have many exclusions?
 
Joe,

I don't know about exclusions in the policy.

Regarding comparing the uas coverage model to the automobile model is flawed because the automobile model is also flawed. It makes perfect sense that if you want "hull" coverage on your automobile or uas, you have to pay for it as it is in place all the time.

However, saying that liability risk should be paid for when none exists, (the uas or automobile at home in the garage) is ridiculous and a scam. If your response is "oh well, that's the way it is", fair enough. If however you think that is a fair model, I think most of us here will disagree.

Do you have any comment on why Global Aerospace will underwrite Verifly policies without restriction to serial #. But will not let you write an annual policy doing the same? For example, I would not operate any differently with the Verifly policy than I would with the annual policy. I would have a backup in the case in both instances. With the annual policy, I would have to pay liability on the one flying and the one in the case. But with the Verifly policy, only the one flying. Both underwritten by Global.

What is the typical liability premium on a C-172. The last time I checked it was between $500-$800 depending on limits and owned vs. rented. That was through Avemco. So yes, I did exaggerate a little but not a lot.

What was the $$ cost of the damage (liability not hull) in the 15 manned cases vs the 40 unmanned? In other words, are you seeing the risk as born out by the claims justifying the high liability premium?

I'm not trying to give you personally a hard time. But just because something is "the way it has always been" in no way is justification. The market will likely decide.
 
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@Dave Pitman,

I am very sorry for the delayed reply. I have been out of the office and trying to play catch up.

Without knowing the "guts" of the policy, we cannot even begin to compare the annual policies from AMA to the annual policies offered by Global Aerospace.

If you believe that the way automobiles are insured is flawed, ridiculous and a scam, I am not sure that there is anything that I can say to you that will justify an insurance company's business model. However, I will give it a shot. Annual UAS insurance policies contain what is called an "Open Pilot Warranty." An OPW allows any properly certificated operator to fly a covered aircraft with the permission of the named insured. So, if the insurance company agreed to cover any aircraft that you own, we would run into the situation of one business owner, who owns 150 UAVs, mailing them all over the country and having contractors flying them all the time (even just hire local pilots to fly his fleet under this type of "blanket" coverage). Then, when there is a claim, he would simply say that the aircraft involved in the incident is the one UAV that was in the air at that time. The rest were backups. While this example may seem extreme, I have already seen a VERY similar situation happen under non-owned liability coverage. This is just one example that comes to mind. People take advantage of everything that exists. Insurance companies are simply trying to mitigate their exposure.

Verfily is VERY different than an annual policy. Since the "policies" provided by Verifly last hours, and are location based, it is much more difficult for the insured to take advantage of the coverage provided.

If Verifly works for you, keep on using it.

A typical annual insurance policy on a Cessna 172 will cost you about $800. A typical annual policy on a UAV will cost you about $650. So, the 3 times the premium statement is a pretty large exaggeration.

As you said, the market will decide. As the market has decided on auto, motorcycle, boat, and aircraft insurance. There is a company out there that is backed up by Liberty Mutual that has been trying to launch since the summer. I have been in talks to get appointed with them since May. It is my understanding that their business model was a hybrid of an annual policy and on-demand insurance (like Verifly). However, I have heard that their business model is getting shot down due to regulatory problems related to their model (don't quote me on that. This is simply what I have heard.). I have provided a link to their site below. If I ever hear back from them, I will keep you in the loop.

Drone Insurance

Unfortunately, as of right now, my over-arching answer to all of this will have to be "because that is the way it is." I am merely a lowly broker and a messenger. These are questions for actuaries and insurance executives and are way above my pay grade. I am just here to educate on the way things are and help commercial operators navigate the waters.

I sincerely apologize if any of my answers came off as defensive. My writing style can do that sometimes.

Thanks,

Joe Ernster
 
No problem, Joe. This is just a discussion, I don't take offense. You haven't called me any names..yet!

Regarding the OPW model. That sounds like maybe a good model for a company that has many pilots working for them. But is a terrible model for the single operator. In other words, I would like to see the liability insurance cover the pilot while flying a specified weight/ performance class of UAV. Not based upon how many UAV's are owned. The policy could stipulate that no other pilots are allowed without further coverage. That is why I applaud policies like the one offered by AMA. Do you think that is a bad idea, and if so, why?

It seems far riskier for the underwriter to know nothing about who is going to be flying the craft and subjecting it to risk than it is to insure the known person who's information is contained in the application. Maybe that is why the premium is so high. Don't you agree? What logic is used to require me (for example) to fill out an application about my experience and then I have any number of "unknown contractors" actually being the ones putting aircraft at risk. It may make sense for large companies with fleets and many pilot employees where it might average out...maybe.

Anyway, It is what it is until there is enough market pressure for it to be something else. As you say, you are a broker and not the underwriter. But that doesn't mean you have to drink the kool aid. You can help the community by giving greater support of underwriters that choose the more fair model rather than disparage them because it is uncommon. Interestingly I just heard that Global Aerospace doesn't actually underwrite anything. They are just a middleman and take a cut for binding policies for:

Munich Re (Germany) 44.96%
National Indemnity 23.39%
Tokio Marine and Nichido Fire Insurance Co., Ltd. 12.37%
Mapfre Global Risks 10%
Mitsui Sumitomo Insurance Co., Ltd. 9.28%

Also, you brought up the manned vs unmanned claims while trying to bolster the case for the "insure each drone" model. You should therefore be willing to supply the comparative amounts for the liability damage in the cases you mentioned.
 
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@Dave Pitman

I would like to see that as well. However, all of the long standing, reputable aviation insurance companies use the OPW model. I cannot speak to the superiority of the AMA policy because I have not read one. The policy offered by AMA could be complete junk. Or, it could be a game changer and I should go work for them. As I mentioned before, without reading the policy, we have no idea what is actually in there.

With Global Aerospace, you do not need to enter your pilot exp unless your UAS exceeds 15lbs in weight. Also, it seems to me that policy holders would complain if other pilots could not fly their UAS. They would say "what kind of sense does it make for not allowing another licensed operator to fly my UAS? My car insurance policy allows other drivers to drive my car." The OPW, again, comes from the manned side of aviation insurance. ALL of my manned clients have their buddies fly their aircraft constantly. I will mention your Named Pilots Only model to the insurers.

I am not drinking the Kool Aid. I am simply informing commercial UAS operators about how UAS insurance works. We all have to operate in reality. Also, I am not disparaging the AMA insurance. As I mentioned before, I have never read one of their policies. So, I cannot comment on the quality.

As for your comment about Global not underwriting anything, you are incorrect. Global Aerospace is what is called a "Managing General Agent." Those companies that you listed have given authority, including UNDERWRITING authority, to Global Aerospace. Global Aerospace has hundreds of UNDERWRITERS working for them in the US and thousands around the world. I speak to underwriters at Global every single day. They have the authority to underwrite policies for the companies that you mentioned. These companies give authority to Global because aviation insurance is specialized. Most of the underwriters at Global, if not all, are licensed pilots (many of them are ATP). When you bind, pay, file a claim, get paid on a claim, etc., you only hear from Global Aerospace. Those companies are simply splitting the risk. I have included more information below on MGAs. Also, again, this is simply how aviation insurance works (because it is highly specialized). AIG Aerospace is an MGA (they write on National Union and Fire paper), Aerospace Insurance Managers is an MGA (they write on Hallmark paper), Avemco is an MGA (the write on HCC paper), United States Specialty Insurance Company is an MGA (they ALSO write on HCC paper), London Aviation Underwriters is and MGA (they write on Starstone paper), etc.

Managing General Agent


A specialized type of insurance agent/broker that, unlike traditional agents/brokers, is vested with underwriting authority from an insurer. Accordingly, MGAs perform certain functions ordinarily handled only by insurers, such as binding coverage, underwriting and pricing, appointing retail agents within a particular area, and settling claims.

Typically, MGAs are involved with unusual lines of coverage, such as professional liability and surplus lines of insurance, in which specialized expertise is required to underwrite the policies. However, MGAs also write some personal lines business, especially in geographically isolated areas (e.g., western Oklahoma, North Dakota) where insurers do not want to set up a branch office.

MGAs benefit insurers because the expertise they possess is not always available within the insurer's home or regional offices and would be more expensive to develop on an in-house basis.

I will have to put together those numbers for you. I do not have the claim settlement numbers in front of me.

We can discuss how insurance SHOULD work in a Utopian society until we are blue in the face. However, I would rather focus on discussing/educating how UAS insurance DOES work.

Thanks,

Joe Ernster
[email protected]
 
@Dave Pitman

I would like to see that as well. However, all of the long standing, reputable aviation insurance companies use the OPW model. I cannot speak to the superiority of the AMA policy because I have not read one. The policy offered by AMA could be complete junk. Or, it could be a game changer and I should go work for them. As I mentioned before, without reading the policy, we have no idea what is actually in there.

With Global Aerospace, you do not need to enter your pilot exp unless your UAS exceeds 15lbs in weight. Also, it seems to me that policy holders would complain if other pilots could not fly their UAS. They would say "what kind of sense does it make for not allowing another licensed operator to fly my UAS? My car insurance policy allows other drivers to drive my car." The OPW, again, comes from the manned side of aviation insurance. ALL of my manned clients have their buddies fly their aircraft constantly. I will mention your Named Pilots Only model to the insurers.

I am not drinking the Kool Aid. I am simply informing commercial UAS operators about how UAS insurance works. We all have to operate in reality. Also, I am not disparaging the AMA insurance. As I mentioned before, I have never read one of their policies. So, I cannot comment on the quality.

As for your comment about Global not underwriting anything, you are incorrect. Global Aerospace is what is called a "Managing General Agent." Those companies that you listed have given authority, including UNDERWRITING authority, to Global Aerospace. Global Aerospace has hundreds of UNDERWRITERS working for them in the US and thousands around the world. I speak to underwriters at Global every single day. They have the authority to underwrite policies for the companies that you mentioned. These companies give authority to Global because aviation insurance is specialized. Most of the underwriters at Global, if not all, are licensed pilots (many of them are ATP). When you bind, pay, file a claim, get paid on a claim, etc., you only hear from Global Aerospace. Those companies are simply splitting the risk. I have included more information below on MGAs. Also, again, this is simply how aviation insurance works (because it is highly specialized). AIG Aerospace is an MGA (they write on National Union and Fire paper), Aerospace Insurance Managers is an MGA (they write on Hallmark paper), Avemco is an MGA (the write on HCC paper), United States Specialty Insurance Company is an MGA (they ALSO write on HCC paper), London Aviation Underwriters is and MGA (they write on Starstone paper), etc.

Managing General Agent


A specialized type of insurance agent/broker that, unlike traditional agents/brokers, is vested with underwriting authority from an insurer. Accordingly, MGAs perform certain functions ordinarily handled only by insurers, such as binding coverage, underwriting and pricing, appointing retail agents within a particular area, and settling claims.

Typically, MGAs are involved with unusual lines of coverage, such as professional liability and surplus lines of insurance, in which specialized expertise is required to underwrite the policies. However, MGAs also write some personal lines business, especially in geographically isolated areas (e.g., western Oklahoma, North Dakota) where insurers do not want to set up a branch office.

MGAs benefit insurers because the expertise they possess is not always available within the insurer's home or regional offices and would be more expensive to develop on an in-house basis.

I will have to put together those numbers for you. I do not have the claim settlement numbers in front of me.

We can discuss how insurance SHOULD work in a Utopian society until we are blue in the face. However, I would rather focus on discussing/educating how UAS insurance DOES work.

Thanks,

Joe Ernster
[email protected]
Yes but GA are not on risk for anything.
They simply have the power of the pen up to a certain limit and may (or may not) have claims handling authority or probably handled on a Bordeaux which is referred back to the risk carriers.
 
@The Editor - they handle all claims in house. I have personally been involved in many UAS claims with Global. All of my clients have been paid in a very timely manner and all are happy. I have had theft, robbery, fly-aways, lost in water, regular crash all covered no problem. Also, since this company is used to insuring very expensive manned aircraft, the cost of UAS are a drop in the ocean to them. One of my insureds had money in his bank account 3 days after filing a claim with Global. They spoke to him, asked for any pictures he may have, a copy of his license, then paid the claim.
 
@The Editor - they handle all claims in house. I have personally been involved in many UAS claims with Global. All of my clients have been paid in a very timely manner and all are happy. I have had theft, robbery, fly-aways, lost in water, regular crash all covered no problem. Also, since this company is used to insuring very expensive manned aircraft, the cost of UAS are a drop in the ocean to them. One of my insureds had money in his bank account 3 days after filing a claim with Global. They spoke to him, asked for any pictures he may have, a copy of his license, then paid the claim.
Sorry - I was speaking generically rather than UAV specific.
Depending on the class of business a risk carrier may or may not allow an MGA/Coverholder to have claims settlement authority (or need referral over a certain limit or when litigation is instigated)
The fact still remains, they are not on risk for anything though. :).
Moot since this is a UAV related forum/thread.
 
Joe, thanks for the discussion and taking the time to respond in a thoughtful and knowledgeable manner.

When commercial suas use was brand new a few years ago, we could argue that insurers didn't know much about them and so the relatively few that would underwrite them went in high. That is understandable. However, even though rates have dropped since then, the premiums are still really high vs the risk and only market pressure will push them down. For small ops, Named Insured policies could help a lot. If I can get a hold of the AMA policy, I will let you know.

You are very active and are perfectly positioned to help in this effort. In real estate, there are sellers agents and buyers agents. I think you probably wear both hats well. But I'm hoping to have you more in the buyers camp. I'm not suggesting you don't already do everything you can for buyers. But it seems from your responses you are content with the status quo. I'm just trying to push you out of your comfort zone a bit. :)

Again, thanks. And I'll quit pestering you.
 
What is "Waiver of Subrogation."

Many times when a commercial UAV operator is hired to fly a job, the company hiring them will be ask to be added to the UAV insurance policy as Additional Insured with Waiver of Subrogation. The additional insured part is straight forward enough. However, my clients are often confused by the Waiver of Subrogation. Subrogation is a concept in insurance in which the insurance company "goes after"(subrogates against) a third party in order to recoup the losses they have paid out in a claim. When an insurance company waives their right to subrogate against a specific entity, they cannot "go after" that entity to recoup their losses after a claim. I have provided an example below.

Company A hires Joe's Drone Service to conduct an aerial inspection of an old building. Company A requests that Joe's Drone Service add Company A as an Additional Insured with Waiver of Subrogation to Joe's Drone Service's UAV insurance policy. While performing the inspection, Joe's Drone Service crashes their UAV due to the negligence of Company A. Joe's Drone Service's UAV insurance policy responds to the accident and pays Joe for the loss of his drone. If subrogation had not been waived, Joe's Drone Service's insurance company could have subrogated against Company A due to their negligence in causing the loss of Joe's Drone. However, since subrogation was waived, Company A is protected from subrogation.

I hope this helps!

Thanks,

Joe Ernster
[email protected]
SO SO HELPFUL- Only site and explanation I found after couple hours on Google..ugh! Thank you Joe!
 

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