Why do I legally need drone insurance?

Within the UK, commercial drone operators must be properly insured, and more specifically comply with regulation EC785/2004. Without the right commercial insurance, you will not be granted your Civil Aviation Authority, PFCO. Here at Coverdrone however, we understand that rules and regulations can be a tricky matter to understand. We have therefore broken down EC785/2004 regulation and provided a brief explanation of each critical section. The regulation however is easily obtainable and should be read in its entirety.

Breakdown of regulation EC785/2004

“The insurance should cover aviation-specific liability in respect of passengers, baggage, cargo and third parties. Regarding passengers, baggage and cargo, insurance should include cover for death and personal injury caused by accidents and for loss or destruction of or damage to baggage and cargo. Regarding third parties, insurance should include cover for death, personal injury and damage to property caused by accidents.” – As a drone operator, for this analysis, we will overlook ‘passengers, baggage and cargo’ as they are in the main not relevant. The operator however must buy Public Liability insurance that is aviation specific for injury or damage to a third-party persons or property. Commercial photography policies however can exclude aircraft or aviation activities, therefore ensure that you read your policy carefully.

“Air carriers and aircraft operators referred to in Article 2 shall be insured in accordance with this regulation as regards their aviation specific liability in respect of passengers, baggage, cargo and third parties. The insured risks shall include acts of war, terrorism, hijacking, acts of sabotage, unlawful seizure of aircraft and civil commotion” – In addition to the traditional covers that are obtained for Public Liability insurance, you must also make sure that your insurance covers risks which include acts of war, terrorism, hijacking, acts of sabotage, unlawful seizure of aircraft and civil commotion. We have seen some examples of insurers simply stating ‘war’ which is not sufficient enough. The responsibility lays with you, the drone operator, not the insurer, as it is your responsibility to make sure that all of these elements are covered within your policy.

“While the market practice of offering insurance on an aggregate basis may be conductive to insurability, in particular for risk of war and terrorism, by allowing insurers better control over their liabilities, this practice does not release an air carrier or aircraft operator from the obligation to respect minimum insurance requirements when the aggregate fixed by its insurance contract is reached” – An aggregate policy essentially provides you with a ‘pot’ of money up to the stated value on your schedule, however making a claim reduces the amount of money in the ‘pot’ by the claimed amount. As a result of this, your next flight could leave you short of the minimum required amount. You therefore have an option, to either buy more cover or buy a policy that is worded ‘each and every claim’. This will mean that your ‘pot’ is automatically topped back up for you. Again, and we cannot emphasise this enough, this regulation is saying that it is the operators responsibility not the insurers.

“Air carriers and aircraft operators shall ensure that insurance cover exists for each and every flight, regardless of whether the aircraft operated is at their disposal through ownership or any form of lease agreement, or through joint or franchise operations, code-sharing or any other agreement of franchise operations, code-sharing or any other agreement of the same nature” – So, here it is informing you that you must make sure that your insurance policy covers not only owned aircraft but any aircraft you have hired, borrowed/loaned or leased. Make sure your policy covers any aircraft, or you have informed your insures of any temporary drones.

“Air carriers and, when so required, aircraft operators, as referred to in Article 2, shall demonstrate compliance with the insurance requirements set out in this regulation by providing the competent authorities, of the Member State concerned with a deposit of an insurance certificate or either evidence of valid insurance” – Simply, you must provide evidence of your insurance cover to the aviation authorities.

“In respect of liability for third parties, the minimum insurance cover per accident, for each and every aircraft, shall be: Category MTOM (kg) <500 minimum insurance 750,000 SDR’s” – This section is setting out how much cover must be purchased for the size of the aircraft you are flying. For now, it is assumed that the drones in question will weigh less than 500kg. You therefore must purchase 750,000 SDR’s (special drawing rights) in British pounds, currently this is just under £800,000. However most insurance policies will set a minimum of £1,000,000 which allows for some fluctuation in the SDR exchange rate. It is also stating that each aircraft must carry this limit, therefore ensure that you have checked that all drones are itemised or that the policy is for any drone.

“This regulation shall apply to all air carriers and to all aircraft operators flying within, into, out of, or over the territory of a Member State to which the treaty applies” – This is stating that any drone that is being used within the EU must comply with this regulation.

“This regulation shall not apply to:

  • State aircraft as referred to in Article 3(b) of the Convention on International Civil Aviation, signed at Chicago on 7 December 1944
  • Model aircraft with an MTOM of less than 20kg
  • Foot-launched flying machines (including powered paragliders and hang gliders)
  • Captive balloons
  • Kites
  • Parachutes (including parascending parachutes)
  • Aircraft, including gliders, with a MTOM of less than 500kg and microlights, which: are used for non-commercial purposes, or are used for local flight instruction which does not entail the crossing of international borders”

The above exclusions have provided a lot of confusion to both operators and new insurers alike. At first glance it appears that drones weighing less than 20kg are exempt from these regulations. However, the important element is the use of the wording ‘model aircraft’. Using your drone commercially removes you from this, therefore you must comply fully with the regulation.

Commercial operation means an operation for remuneration and/or hire” – Again, this has proved to be problematic for some. We hear so much about situations in which clients are operating on behalf of a friend but are not being paid. Remuneration can be a grey area – for example is receiving a ‘bottle of beer’ now a form of payment? For the sake of not being prosecuted, we would recommend that for any flight that could have a commercial angle to it, that you are purchasing the appropriate insurance cover.

If you have any questions in regards to the regulation or are unsure on the most suitable policy for you, please get in touch.