1.7. Insurance cover for drone operations

Just like cars need to be insured in many jurisdictions drones need to be insured so they can be legally operated. In other jurisdictions such insurance might not be legally required, but the company still needs to consider getting insurance cover.

Separate insurance might be legally required for the operator (a legal entity), for each drone or for drone pilots.

The cover of third party liabilities is usually the most important aspect of drone insurance.

Payloads, drone types, flying frequency and locations, pilot certifications and other factors specified in the insurance contracts must be in line with actual operations in order for the insurance cover to be meaningful.

If the company uses third party drone service providers, it needs to specify contractually what insurance cover it expects the service provider to have.

Risks

  1. The lack of insurance cover can constitute a violation of the law and expose the company to fines and the loss of permissions to continue drone operations.
  2. Lack of insurance cover can expose the company to the risk of significant compensation claims from third parties.
  3. Insurance claims are not submitted to insurance companies in spite of entitlements to do so.
  4. Insurance premiums for drones no longer used continue to be paid.

Audit Steps

  1. Review existence and scope of insurance covers related to drone operations.
  2. Validate that conditions in the insurance contracts relating to drone pilots and drone types are met.
  3. Assess 3rd party liability insurance cover for all types of drone payloads.
  4. Validate that contracts with drone service providers are clear in regards to the obligation of the 3rd party’s insurance cover.
  5. Ensure that the due diligence process for the review of drone service providers includes a step to ensure that the 3rd party does have the insurance cover as required by contract.
  6. Review the process to ensure new drones, mission types, pilots or payloads are insured before deployment.
  7. Reconcile past insurance claims with incident reports as well as information about accidents from interviews with pilots.
  8. Review the process to ensure insurance payments for discontinued drones are also discontinued.

 

drone audit program index