Coverage for drones ahead of FAA move

Coverage for drones ahead of FAA move | Insurance Business America

Coverage for drones ahead of FAA move
The Federal Aviation Authority (FAA) on Saturday announced the formation of a task force to develop a process for owners of small Unmanned Aircraft Systems (UAS) to register their aircraft, paving the way for liability insurance for drones.

The group of experts are tasked with setting up a system that will allow the general public to register drones without help from a third party. The agency has already said that self-proclaimed ‘drone registration agencies’ are unnecessary.

Some carriers, such as AIG and Zurich, are already in the market and are preparing to underwrite billions of dollars in liability coverage for drones.

AIG’s policies are offered through the company’s subsidiary Lexington Insurance Company, and bear many similarities to auto insurance plans, covering both “broad physical damage” and “third party liability coverage.” However, as they are written especially for drones, the policies also cover drone “operators” and on-ground crew members, as well as electronic malfunctions and component failure.

The rise in popularity of drones has also seen the creation of specialist brokers such as Transport Risk Management, which operates a specialist drone insurance brokerage under the name Unmannedrisk, and offers place liability coverage up to $500m per occurrence and place hull physical damage coverage up to $50m, for annual premiums ranging from $800 to $1,300 per year for $1m.

Transport Risk Management said it insurers more than 4,000 individual drones for all uses worldwide, and offers hull coverage at a rate of 6.5% to 13% depending on risk and value, with deductibles at 2.5% to 5% of the insured value.

BWI Aircraft Insurance Specialists said it is offering liability insurance only from as little as $595 for $500,000 liability, making attractive for smaller drones.