Does drone insurance cover test flights and pilot projects for new UAVs?
It can (and should) – but you need to make sure your policy is set up correctly. Many drone insurance policies will cover R&D and experimental flights if disclosed to the insurer, but they might require special endorsements or conditions (for example, having an experienced pilot or specific safety protocols). Always inform your broker/insurer about non-routine flights (prototype testing, demonstration projects, etc.) so they can confirm those activities are included in your coverage.
How is insuring a drone company different from a regular business?
Traditional business insurance usually excludes aviation activities and might not recognize the unique risks of drone tech. For instance, a standard general liability policy often has an “aircraft” exclusion – which would include drones – meaning no coverage if your drone causes an accident. Also, standard policies won’t cover things like software errors or cyber hacks. Drone companies need a specialized mix: think aviation liability, product liability, tech E&O, cyber, etc., all coordinated to fill the gaps left by generic coverage.
We operate globally – how do we cover drone activities and contracts in different countries?
The key is to use insurers who can provide international coverage (often via the Lloyd’s of London market or global insurance programs). Your policy should have “worldwide” coverage territory, and in some cases, you might obtain local policies or certificates in specific countries to meet local laws. Be mindful of regulations: for example, the EU requires drone liability insurance above certain weights, and some countries might need you to buy coverage from an admitted (local) insurer. Working with a broker experienced in multinational programs is crucial – they’ll handle compliance and ensure you have evidence of insurance (certificates, additional insured endorsements for clients, etc.) wherever you fly.
Do we really need both Tech E&O and aviation/drone liability insurance? Can’t one policy do it all?
Unfortunately, one size doesn’t fit all here – you need both. Drone/Aviation Liability covers physical harm or property damage caused by your drone (for example, it crashes into something or someone), whereas Tech E&O covers economic losses due to your product or service not performing as promised (for example, a software bug causing your client financial harm). A drone incident can lead to both types of claims, and each policy addresses a different aspect. Having both ensures you’re not caught in a situation where a claim isn’t covered by either.
Our client contracts have tough insurance requirements and clauses like indemnities and liability caps – what should we do about those?
You should always align what you agree to in contracts with what your insurance can support. If a contract requires, say, $10 million in liability coverage but you only carry $5 million, you either need to negotiate that down or increase your coverage – otherwise, you’re exposed. Indemnity clauses (where you hold the client harmless for certain damages) are common, and insurers can often cover contractual liability as long as it’s incidental to the service and not beyond what the law would impose. The best practice is to send those insurance requirements to your broker; they can advise if your policies meet them or if endorsements are needed (e.g., adding a client as Additional Insured, or adjusting your liability cap to match your policy limit).
Why is cyber insurance important for a drone tech company?
Think about the data and connectivity involved: drones are IoT devices capturing high-value data and often controlled via networks or cloud platforms. This makes them targets for hackers. A cyber policy covers things like a hacker taking over your drones or stealing your data – including paying for forensic investigators, customer notifications, and legal defense if client data is compromised. Plus, if your operations get halted by a ransomware attack or other cyber event, cyber insurance can compensate for the downtime. Essentially, if you have any IT infrastructure in your business (and who doesn’t?), cyber insurance is your safety net for the digital threats that other policies won’t cover.
How do we determine the right amount of coverage (limits) for our stage of company?
It depends on your risk exposure and stakeholder expectations. For a small startup doing a pilot project, a $1M liability limit might be acceptable initially. But if you’re scaling up, dealing with big enterprises or government contracts, higher limits like $5M or $10M often become the norm (and may be contractually required). Consider the worst-case scenario in your operations – that should guide your limit. For example, if a drone crash could realistically cause $3M in damages, you don’t want just $1M of coverage. Also, investors and board members may have input – they typically want to see that coverage increases in line with the company’s growth and valuation. It’s a good idea to review limits annually with your broker and adjust as needed.
Is drone insurance legally mandatory anywhere?
It depends on the jurisdiction. In the U.S., the FAA does not require insurance for commercial drone operations at the federal level (as of now), but some states or localities might have their own rules. In the EU, yes – drone operators must have liability insurance once drones exceed a certain weight or energy class (this comes from EU regulations similar to manned aircraft requirements). In Israel, commercial operators need to show proof of third-party insurance when getting a permit, even if the law doesn’t explicitly force ongoing coverage. Even where it’s not legally mandated, practically speaking, if you’re doing business with reputable clients, they will require you to have insurance. So, from a business perspective, it’s mandatory if you want contracts.
If we only provide software or AI for drones and don’t physically operate any drones, do we still need drone insurance?
You might not need aviation liability coverage if you truly never touch a drone, but you still have significant exposures. If your software guides drones or analyzes their data, a flaw in it could lead to someone else’s drone crashing or a bad decision – and you could be sued for that. That’s where Tech E&O insurance comes in, even if you’re “just a software vendor.” Also, consider product liability insurance if you provide any hardware or if your software is deeply embedded in a drone system (sometimes software can be considered a “product” in legal terms if it causes physical harm). And don’t forget cyber insurance – if your platform is online and gets breached, you’ll want coverage for that. In short, non-operating drone tech companies still need a robust insurance program, it’s just more tilted toward professional and cyber risks rather than aviation hull and liability.
We’re a small drone startup – do we really need Directors & Officers (D&O) insurance at this stage?
If you have anyone in a director/officer role (founders, a board, investors), it’s wise to have it. D&O isn’t just for big public companies. Even a small startup can get embroiled in a dispute – for example, a co-founder or an angel investor might claim mismanagement, or there could be a legal issue where personal liability is alleged (maybe a creditor or partner suing and including allegations against the CEO). The cost of D&O for a private startup is relatively low, and it provides peace of mind. Plus, many investors require it as part of the funding terms. Essentially, D&O insurance grows with you: it’s easier and cheaper to put it in place early, and then you can scale the coverage as your company gets more complex.
Have more questions? Feel free to reach out to us. We’re always happy to answer questions or walk through “what-if” scenarios specific to your drone business. And if you’re ready, we can schedule a personalized risk assessment and policy review to ensure you’re fully covered.
