Allianz has been writing coverage for drones, or UAS (unmanned aircraft systems), as they are more technically called, since 2006 in the United States. They began by writing aviation products liability coverage for UAS manufacturers and component manufacturers. This coverage was for those creating or manufacturing blades, motors, electronics and other component parts, as well as products liability for the entire aircraft system.

As the industry evolved and the civilian drone market began rapidly growing, Allianz created new policies and coverages to meet the needs of this growing industry. Allianz focused on the use of civilian consumer drones for commercial use and now insures thousands of unmanned aircraft.

Who Is Seeking Drone Coverage

We asked Mr. Van Meter what industries were looking for coverage for drones. Mr. Van Meter stated that as far as industries seeking insurance for commercial drones, it is across the board. There are many companies seeking coverage for film production such as news stations. It is much more cost effective for a news station to purchase a drone instead of renting a helicopter to obtain aerial footage of a newsworthy event. It also saves the station time in that a pilot can go straight to the site with a drone instead of a reporter having to get to the airport and get into a helicopter, and then flying to the site.

Other industries looking for drone coverage falls under aerial data collection. Aerial data collection encompasses virtually any other use of drones, including industrial inspections, crops, and cell phone towers. Infrastructure inspections such as roadways and bridges, and crop surveying are all ways drones are being used. Engineering firms as well as forensic engineers are using drones for inspections of projects and losses.  Yamaha in Japan has been using drones for non-commercial crop surveying for over 20 years. Plots are often smaller and on hillsides in harder to reach areas and drones were a natural way to view crops. It is not anticipated that drones will be used in the U.S. for crop surveys in the near future due to individual state licensing requirements and the need to comply with both FAA requirements under Part 337 and Part 107 as well as state pesticide regulations.

Use of Drones in Claims Adjusting

With the recent severity of the hurricane season, we asked about carriers' use of drones for hurricane duty and claims adjusting in general. Mr. Van Meter advised that, as assumed, the use of drones removes the hazards of sending personnel onto damaged rooftops or into other damaged areas that could be unsafe.

We were curious as to whether companies were training adjusters to fly drones, or whether they were hiring outside pilots to accumulate the information.  According to Mr. Van Meter, more carriers are training their adjusters to fly drones. Some are hiring outside pilots to accumulate data, rather than investing in equipment and training. The growth of the industry is such that many are training adjusters. It is relatively easy to get a commercial drone pilot license and meet the FAA Part 107 exception, as it is a self-study course with a written exam only. There are currently 60,000 Part 107 pilots. While carriers are training adjusters and putting drones to use, it is still experimental in many ways due to the newness of technology and development of abilities.

Coverages for drones are similar to coverages for regular aviation risks per Mr. Van Meter. While coverages differ by carrier and drone use, Allianz drone coverage includes hull physical damage for the drone, cameras, sensors and control stations; and liability, including aviation products liability, war, TRIA, third party general liability for BI and PD, lost or stolen drones, non-owned aviation liability, and privacy injury.  Additional coverages are available for third party legal liability for drones and additional hull insurance for aerial systems, remote control, and additional equipment.  Some pilots may also need cyber coverage, professional liability or other commercial coverages. Allianz also insures other insurers who are using drones in their operations.

Mr. Van Meter states their targeted Part 107 drone insureds are professional, conscientious pilots who seek additional education to become certified. He accredits Allianz's success in providing drone coverage to this underwriting selection.

Delivery Drones

We also asked Mr. Van Meter about the use of drones for deliveries. He advised that because the FAA's main goal is to protect the public, the United States has not advanced as far as other countries regarding using drones for deliveries. Rwanda has been using drones to deliver blood, medications and other supplies to remote areas and can verify that such actions have saved lives. The FAA moves very methodically in order to keep the public safe, so it is taking longer to get drones approved for flying beyond visual line of sight and night flying. The FAA sees infrastructure inspection as the number 1 use of drones.

Coverage for Hobbyists and Commercial Pilots

Having heard from certified pilots that coverage can be expensive, we asked Mr. Van Meter about access to coverage for both hobbyists and certified pilots. He advised that hobbyists could find coverage for their drones through the Academy of Model Aeronautics (AMA); it provides umbrella coverage in excess of their underlying homeowners policy with limits up to $2.5 million. Small commercial pilots can find coverage through www.allianzdrone.com with 1 million dollar limits with annual premium less than $1,000 for a single drone. Coverage includes property damage to the drone, war, TRIA, and hull. Mr. Van Meter says they have seen a little of everything in hull claims from equipment malfunction, operator error, theft from vehicles, crashes into trees, water and other objects. Through their policies, Allianz is trying to fill any gaps for a drone pilot. Allianz has not had any losses where drones have crashed into a manned aircraft, like the incident with the Black Hawk in NY; and no losses from a drone being shot down. The commercial drone pilot may need standard GL and professional liability such as E&O, but as far as property damage to the drone, recovery, war, privacy, TRIA and other coverages are available. Cyber coverage for the drones is not yet available from standard aviation carriers. A commercial drone pilot does not need to purchase insurance however if they are not using their drone for hire.

Drone Adherence to Flight Restrictions

When asked what keeps drones from flying into restricted areas, Mr. Van Meter explained that most drones are have GPS and geofencing built into the aircraft. These help keep drones from flying in restricted airspace or operating outside of the rules. Most drones show the location of the drone on a map image. Once the drone is turned on, it knows where it is and what areas it should not cross. This was developed after the man flew the drone onto the White House Lawn.

Drone Threats

There is of course the potential for terrorist actions or illegal activity, such as flying contraband over the prison fence or flying drugs over the border. This leads to the need for detection and deterrent technology. Deterrent technology is still in the works, but being able to identify a drone that is engaging in unauthorized activity and either blocking the signal, locating the pilot or even taking down the drone are all things to be considered.

How Can We Help

Mr. Van Meter perceives a need for brokers to become more knowledgeable about where they can go to get questions answered so that they are able to select the right policies for their insureds. Brokers need to be informed about the widespread use of drones in various industries, know the FAA regulations, and the broad coverages and sources that are available to cover drones.