The Liability Scam

[Dave Pitman]

Guys, as I'm sure many of you are aware (in the US anyway), most underwriters are wanting to charge us a liability premium for each covered UAV. I'm not talking hull coverage, I'm talking liability risk coverage. Rather than charging based upon actual risk involved by having a UAV in the air. They also want to charge for the "risk" involved by having your backup in it's case, which of course generates no risk.

They defend this model saying that the automobile insurance industry gets away with it so they should as well. There are a couple of underwriters that are bucking this trend and are insuring the Pilot and class of UAV flown instead of the whole fleet that may not even be on site let alone in the air.

For example, Verifly doesn't care how many uas you own or have on site in their case. They insure based upon what is in the air. Their policies are underwritten by Global Aerospace. But if you want to purchase an annual policy underwritten by Global Aerospace guess what. They want you to pay a liability premium on all you craft. Not just the one you have in the air.

There is not a "rule" or "law" that this is how it is supposed to work. It works because they make a lot of money where no risk is involved. It works because there is not yet enough market pressure to get them to change. This post is only meant to inform you and hopefully as you go forward you will do what you can to add pressure to the underwriters to provide a more fair model.

Thanks for reading!

 

[AH-1G]

However I been asked if I use Verifly several times, which I don't. The companies I was doing work for do not like Verifly, I didn't ask why.

 

[Tim Jones]

Agree that it should be like a driver of a car, you are insured no matter what you are driving. The only way to make that happen is ask for it, and refuse coverage when they will not go that way. Verifly is a good stop gap. It satisfies due diligence, but sooner or later someone will figure out they are loosing money to them and come up with a better coverage.
Don't be surprised if eventually the FAA offers insurance

 

[Dave Pitman]

I suspect the brokers writing policies underwritten by Global Aerospace are particularly annoyed by Verifly due to the fact that Global won't let them write annual policies based upon the same model that Global provides to Verifly.

 

[Dave Pitman]

The AMA is now offering Commercial liability policies that insure the pilot and not the particular UAV. You can get hull insurance which is tied to the model, but the liability coverage is much more fair. More Pressure !!
AMA Commercial Insurance

 

[Tim Jones]

interesting, I wonder what their rates are like. I sort of laugh when people say they don't need liability insurance. Clearly they have never seen one of these things fall out of the sky

 

[Dave Pitman]

You can fill out the form and get an instant automated quote. It quoted me $900 per year for $2mil which included all of my UAVs. That is the rate that Global quoted that included 1 UAV.

Yeah, I am pretty conservative and envision the drone loosing a motor or esc, angleing off coarse on the descent into traffic, hitting a windshield of a mom driving their kids to school who is startled and runs off the road into a bus stop filled with waiting bus riders. Time to pony up for insurance.

 

[Tim Jones]

that is quire reasonable.
Will need to do some research on how they are at paying claims. Thanks for sharing that. Been trying to figure out how to move off of verifly

 

[ArrUnTuS]

The global trend is to have compulsorily secure. Especially in Europe. In my case, and from the very first moment that the first regulation came out, AESA (Spain) made it obligatory for all aircraft to have insurance. All the aircraft and each one of them must be registered with their own insurance. In addition, any insurance company is not valid, it must be registered in civil aviation and have permission to issue aeronautical insurance. Legally they have already eliminated the possibility of a single insurance for all drones, which happens for example in the mechanical garages.

Depending on the number of drones you have, it may or may not be possible to take out insurance for all aircraft. In my case each one costs me 200€ per year. Only civil liability. Own damages are not covered. Depending on the price and number of drones it may be better to have insurance for each aircraft.

The idea is very good and it should be noted that in the end the regulations are copied from one country to another

 

[Dave Pitman]

However I been asked if I use Verifly several times, which I don't. The companies I was doing work for do not like Verifly, I didn't ask why.

I can guess that the reason is

A) It is a new model of how to engage liability insurance. I also was skeptical but it seems like it's going well.

B) If you regularly work for the client, they probably like the idea of holding a certificate of insurances without need to keep revisiting it on every operation. This is also related to it being a new model. But Verifly has made it quite easy to forward proof of insurance to the client for any time it is used.

I prefer an annual policy myself. However if Verifly helps to apply pressure to the market to be more competitive then I'm all for it. It certainly won't be a viable solution for all ops.

 

[BigAl07]

Several of my clients will not accept Verify as an insurer.

 

[The Editor]

Guys, as I'm sure many of you are aware (in the US anyway), most underwriters are wanting to charge us a liability premium for each covered UAV. I'm not talking hull coverage, I'm talking liability risk coverage. Rather than charging based upon actual risk involved by having a UAV in the air. They also want to charge for the "risk" involved by having your backup in it's case, which of course generates no risk.

They defend this model saying that the automobile insurance industry gets away with it so they should as well. There are a couple of underwriters that are bucking this trend and are insuring the Pilot and class of UAV flown instead of the whole fleet that may not even be on site let alone in the air.

For example, Verifly doesn't care how many uas you own or have on site in their case. They insure based upon what is in the air. Their policies are underwritten by Global Aerospace. But if you want to purchase an annual policy underwritten by Global Aerospace guess what. They want you to pay a liability premium on all you craft. Not just the one you have in the air.

There is not a "rule" or "law" that this is how it is supposed to work. It works because they make a lot of money where no risk is involved. It works because there is not yet enough market pressure to get them to change. This post is only meant to inform you and hopefully as you go forward you will do what you can to add pressure to the underwriters to provide a more fair model.

Thanks for reading!

Please note that Global Aerospace do not underwrite anything! - They never have.
They are simply operating a pool arrangement on behalf of other underwriters. They like to pretend they underwrite your risk - they do not. They have been given authority by certain underwriters to bind on that risk carriers behalf but GA are not on risk for anything. They simply cream of a profit commission for placing your business.
The 'real' underwriters behind GA are split:
Munich Re (Germany) 44.96%
National Indemnity 23.39%
Tokio Marine and Nichido Fire Insurance Co., Ltd. 12.37%
Mapfre Global Risks 10%
Mitsui Sumitomo Insurance Co., Ltd. 9.28%

So if you enter into a policy with GA your risk carriers will be split as above.
http://www.ms-ins.com/english/index.html

 

[Dave Pitman]

@The Editor Very interesting, but not surprising (it's hard to be surprised these days)

How did you come to this understanding?

 

[jwaitkus]

Does anyone know why people are against Verifly? I really like just buying insurance per job as I am starting out. Obviously if it turns into something bigger the $10/Hour would not be the most economical idea.

 

[Tim Jones]

I can guess that the reason is

A) It is a new model of how to engage liability insurance. I also was skeptical but it seems like it's going well.

B) If you regularly work for the client, they probably like the idea of holding a certificate of insurances without need to keep revisiting it on every operation. This is also related to it being a new model. But Verifly has made it quite easy to forward proof of insurance to the client for any time it is used.

I prefer an annual policy myself. However if Verifly helps to apply pressure to the market to be more competitive then I'm all for it. It certainly won't be a viable solution for all ops.

If for no other reason the competition is good.
Sooner or later someone will come to market with a reasonable policy

 

[The Editor]

@The Editor Very interesting, but not surprising (it's hard to be surprised these days)

How did you come to this understanding?

35 years working in the insurance industry.

 

[Dave Pitman]

35 years working in the insurance industry.

Fair enough. Joe over at Inspire Pilots went missing when I asked him why Global would underwrite Verifly policies without specific serial #s but not annual policies. He also was not forthcoming about the info you provided. Thanks.

 

[The Editor]

Fair enough. Joe over at Inspire Pilots went missing when I asked him why Global would underwrite Verifly policies without specific serial #s but not annual policies. He also was not forthcoming about the info you provided. Thanks.

If you look at GA's website you will see they are very careful not to say they underwrite any policies of insurance
They will say things like they arrange, or facilitate insurance or provide cover. They will never say they underwrite because they don't.

 

[Sojourner60]

Hi everyone, I'm new here, but I think we all are.

I talked to an insurance company a few months back, I'll have to look in my records and see IF I can find their name. They were $50 / month for $1,000,000 which also included damage to the aircraft, and fly aways.

I thought I read somewhere else that the AMA was only $75/ year. I've been meaning to talk to them. Guess I'll have to go to their website and check it out.

 

[sar104]

Hi everyone, I'm new here, but I think we all are.

I talked to an insurance company a few months back, I'll have to look in my records and see IF I can find their name. They were $50 / month for $1,000,000 which also included damage to the aircraft, and fly aways.

I thought I read somewhere else that the AMA was only $75/ year. I've been meaning to talk to them. Guess I'll have to go to their website and check it out.

AMA membership is $75 per year, but the commercial insurance that they offer is in the $700 region for $1M liability. I had not realized that it covered multiple aircraft though - that is a big deal. I'm also currently with GA and as a result only have one of my aircraft insured.