Victoria Stone explains carrier needs for UAS insurance

By Luke Geiver | November 13, 2014

Victoria Stone may have an impressive history in the insurance industry, but a large portion of her future is in the unmanned aircraft systems (UAS) market. Stone, senior vice president at California-based POMS and Associates Insurance Brokers, started working in the UAS industry two years ago after a request from a major corporation looking to find coverage for a unmanned aerial vehicle (UAV) demonstration. “We had only a few weeks to pull it together and find an insurance carrier but we got it done,” she said. “Two days before the event the FAA told us we couldn’t do it. The deal never happened, but it opened up a whole new opportunity for me.”

Following the failed attempt of the UAV demonstration, Stone began educating herself on the UAS industry and the perspective of insurance carriers. She has since helped several UAS-related clients—from manufacturers to component providers—find coverage. “Most of the carriers really want to write this business. When I go looking for a quote, I’m not just getting it from one carrier,” she said.

In nearly all cases, carriers are looking for non-formal minimum requirements before providing insurance. Insurers are asking specific questions in order to determine the coverages needed, Stone said. Typical coverages would include third party liability for bodily injury and property damage, along with physical damage on the Hull.

Carriers want to know how the UAV will be used, loss history if any, who are the pilots (critical to the underwriting process), ground station equipment to be used, recovery plans should the UAV be lost in flight, maximum takeoff weight with equipment attached, wing span, maximum operating altitude, range and if the aircraft has the ability to independently detect and avoid other aerial traffic. In addition, carriers also want to know the protocol in the event the pilot loses line of sight, specifically, does the UAV contain an automated recovery program that allows the aircraft a safe return to a pre-determined point. “Carriers are pretty savvy about what it is they need to know,” Stone said.

In addition to UAV specifics, insurers will also want pilot history, past and present experience, number of UAV flights flown in the past 6months or year, make and model of the UAVs being insured, annual hours of flight utilization of the UAVs, and has the pilot had any claims, had his license suspended or revoked. “With a UAV, it is still human control which means a lost can result from human error.”

In one instance, a UAV firm using UAVs outside the continental US and in a remote area overseas, was denied coverage from 10 carriers due to the fact that the company was using inexperienced, non-licensed pilots to operate the UAV. “As you can see, pilot experience / licensed is critical to the underwriting process,” Stone said.

Carriers believe that by 2020, 30,000 UAVs will be in the air, creating more than $89 billion worth of UAV investment by that time period, Stone added.

Stone and her team help provide insurance for not only US domiciled firms, but in many cases, new UAV startups with operations domestically as well as internationally. In many cases new UAV start-ups will be backed by outside investors. In those cases, Stone said, the start-up company will need to consider executive officer protection (Directors and Officers Liability) in the event that the company fails with its new venture. Without insurance, the investors can proceed with litigation against the failed business owners.

Component manufacturers looking to place sensors, cameras or GPS systems into a UAV package may also consider insuring their products, Stone says, to reduce the risk to those component providers in the event of an incident.

Although Stone is well versed in the process currently underway by the U.S. Federal Aviation Administration, she and her team are already geared up and ready for an even greater need for UAV insurance once regulations are in place to allow greater usage.

“We have a solid dedicated team to support our clients whether they are the end-user, the manufacturer, the distributor or component manufacturer,” she said.