Thinking of Using Drones to Perform Home Inspections? What insurance options do you have?

Most home inspectors are familiar with and carry General Liability, Commercial Property and E&O or Professional Liability Insurance to protect their business and understand the risks they run if not protected by these critically necessary types of insurance. The American Society of Home Inspectors (ASHI) recommends these coverages at a minimum. Until recently drones may not have been used as tools at all in the home inspection field.  Drones are probably not covered on your commercial general liability policy or business owner’s package.     Drones are currently being used for fun hobbies such as photography; throughout different industries such as in science, surveillance, and logistics and, specifically including property surveying and home inspections.   So drones are gaining popularity with business owners.   The FAA now requires drone insurance to meet Section 333 exemption for a drone that is used commercially.

However, drone insurance coverage nuances are just being created for the insurance industry.  International Organization for Standardization (ISO) has developed different endorsement forms   for adding endorsements to Commercial General Liability, Commercial Liability, Commercial Umbrella Excess, Commercial Inland Marine, Commercial Property and Capital Assets together with business interruption exposure due to loss of use of a drone.  Information about all of the ISO forms for drone and white papers on drone are available.  See ISO’s Emerging Issues Portal (http://www.iso.org)

Any carrier that offers drone insurance can use these ISO endorsements by adding them to your existing coverage.  However, of every carrier underwrites policies for drones due to the cost of replacement, technical differences, and various types of machines availability and standards of safety for operating and FAA requirements being undefined until very recently; and what function (s) the drone will perform.

Disputes over the ethics and morality of the use of drones as weapons may also have historically driven the carrier’s decision not to provide coverage so as not to tarnish the public image of the insurance company.  However, as more and more companies use these as tools in commerce; the public‘s perception may become more favorable.   If a distinction is made in ordinary language between domestic drones and weaponized combat drones more frequently, it may aid the acceptance of drones as well.

Home Inspectors obviously want coverage for a domestic drone, while a defense contractor is more likely to request coverage for weaponized drones. Some carriers include Lloyd’s of London ( a specialty carrier) Stonewall Aviation, Global Aerospace, Assurex Global and AIG.  Most carriers who serve the aviation industry are very knowledgeable about drones and do offer drone insurance.

But in regard to purchasing commercial drone insurance for a home inspector, you first need to know if you are actually insuring a drone, or is it really technically something else? The terms drone, UAV and UAS are used interchangeably in general business.  It behooves you to clearly identify the technical name of the equipment or tool you want coverage for in seeking drone insurance.

• Drones are defined as any kind of remotely guided vehicle whether on land, sea or air with the main qualifier being unmanned. Regulations are in progress that would further define what is or is not a drone
• UAV’s are defined as unmanned aerial vehicle s that are remotely controlled or guided through pre-programmed software.
• UAS’s are defined as unmanned aerial systems.

There are numerous debates about which definition is technically correct.  The technical name used by the maker is the most logical term to use for insurance. To be assured of coverage you want to furnish the manufactures Id or serial number similar to a motor vehicle Id no. and to update the policy if new drones are acquired.  But most importantly, since you are using the drone commercially, the drone must be registered with the FAA if it weighs more than .55 lbs. and it cannot exceed more than 55 lbs. in weight. If you are not registered with the FAA you can be fined and even imprisoned.  Federal Drone Registration Part 107.   You must also have a FAA Commercial Remote Pilots License which became effective on 8/29/2016. Your carrier will require copies of the registration and license.

The identity of this particular tool is what is essential so that the insurance covers the repair or replacement cost of that particular item and sufficiently identifies that specific piece of equipment if damage to persons or property occurs while in use.

Next you need to define exactly what the function of the machine is and tasks you are going to be performing with the drone and equally important what liability could result from the tasks you are performing.   The most important factor to a carrier boils down to what risks are assumed and what damage can be caused by the use of this tool in your business. Damage could result from crashing the drone along with injury to a person and/ or property if hit by the drone or pieces of it, in the event of an explosion or malfunction.

Home Inspectors use drones mainly to inspect roofs and chimneys because of the height, the necessary angles that need to be examined on steep roofs, and the danger of falling.  The primary function of the drone for these inspections is actually aerial photography so you will need a good camera that can be remotely operated while attached or built into  the drone and produce high resolution pictures.  You may want a dual control model camera where a pilot mans the flying function and the inspector reviews the photos simultaneously for quality and to determine whether different shots or angles are needed.  You also want to be sure the camera is covered either separately or as part of the drone insurance. In a UAS the aircraft or drone is the Platform, the Payload is the camera or sensor and the Ground Control Station is the remote pilot and the inspector, or just the inspector if he is also the pilot.  You want to ensure you have coverage for all parts. Fortunately, the drone itself has a wide range of  price s depending on the model you select  starting at approximately $175.00and the camera may actually be the most expensive  piece of equipment.

Damage to the property owner may also result if an unsafe defect on the property is not detected as part of the home inspection and later results in a loss.  This type of injury is either covered by Error & Omissions or Professional Liability for the home inspector.  Some insurance company such as Target Professional Programs offer Home Inspectors Insurance as a specialty insurance endorsed by ASHI that has a combined BOP package with Professional liability and Drone insurance endorsements.

Target’s General Liability insurance can limit coverage to specific types of inspections that you actually perform depending on whether they are residential, commercial, Section 8 or other types.  This lowers your cost for premium.  They also offer tailored optional insurance coverage, e.g. mold inspection but not termite inspection.

So if drone inspections are in your future business plans, you want to explore your insurance options thoroughly.