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Should you insure a drone?

01/14/2014 @ 9:48am

Insurance companies are realizing there is a void in their industry when it comes to drone protection.

“As the use of drones increases, we realize there is a gap in coverage,” says Brent Van Roekel, Nationwide Agribusiness. “The policies that both farmers and agribusinesses have, typically, exclude liability coverage for aircraft. In order to keep up with the technology and to keep up with customers’ needs, we needed to address that issue. We want to make sure our customers are covered appropriately.”

Yet, it’s an issue some don’t want to tackle. “There have been insurance companies that have come out and said they are not interested in covering drones because of the privacy aspects and intrusion on privacy that you could potentially have,” he says. “We obviously recognize that potential exists, but we feel that with the quality of our insureds and the folks we do business with, that it’s a smaller risk. We see the use of drones as being essential for the ag economy, so we need to be able to provide a solution.”

Toward the end of 2013, Nationwide Agribusiness began writing coverage for customers utilizing a drone. “It’s not a separate policy,” Van Roekel explains. “It’s an endorsement we put on the policy we already have for those customers.”

While it may sound odd, they are not charging customers. “Since our customers are using drones for crop scouting, we see this as an extension of their agronomy operation and feel this is a coverage that’s needed to be able to fully protect that part of their business,” he says. “We essentially built it into the agronomy piece of the coverage and are not charging an additional premium.”

For now, the company only offers liability coverage.“ Currently, the drones we’re seeing in use by farmers and even by agribusinesses like co-ops are typicallyunder$5,000,” explains VanRoekel. “They are inexpensive enough that we are not being requested to provide physical damage coverage. We realize that may change as drones become larger and more expensive.”

As the industry moves toward bigger and more expensive equipment and drone use moves into areas like fertilizer and chemical application, the price structure will also likely change. “For the $3,000 drones doing crop scouting, I don’t see a charge for that in the near future,” he says. “As the industry develops and there is more reliance on drones, I think you will start to see some additional charges for coverage.”

The company is planning an official rollout in March 2014 to let customers know drone coverage is available, but it’s still a work in progress.

“Our coverage is going to need to change as the industry changes,” says Van Roekel. “We’re trying to stay far enough in front of our insureds so we can provide this before they realize they need it, so they’re not behind the curve.”

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What Operator Is Covered? 01/14/2014 @ 10:45am I'll be interested to see what the insurance companies write into the liability coverage in terms of operator qualifications and competence. Will the insurance company require that the Unmanned Aerial System (UAS) be operated in accordance with FAA and other applicable laws and regulations to have coverage in effect? Or can anyone pick up the controller and fly a UAS over your or someone else's property any way they wish? If you hire someone to fly a UAS over your own property to check your crops and there is some injury to an adjacent property, for example if the UAS fails to respond to the controls and flies into the neighbor's house or cow, will your present liability coverage protect you? Will the operator's coverage protect you? What if the operator has no coverage? Do you have any risk in such a situation? I will be interested to see what caveats the insurance companies write into the policy. Right now, it is virtually impossible to conceive of a situation where insurance can cover a commercial operator and it may not be possible for insurance to cover a private operator on his own farm as the very act of crop scouting from a UAS will be considered commercial use by the FAA.

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