What you need to know about ground and air insurance for drones

With unmanned aerial vehicles (UAV’s), or drones finding increasing applications across all sectors of the global economy, recent insurance claims in South Africa have shown that ‘losing’ a drone is not as far-fetched as one would think.

James Godden, head of Santam Aviation, says drones cost anywhere in the region of a few thousand rands to the much more sophisticated commercial drones that come in at a much higher price, and operators and enthusiasts need to ensure that the correct insurance cover is in place in the event of loss.

“Over the last few months we have fielded a number of claims that have resulted in the loss or damage to equipment due to a malfunctioning link between the pilot and the drone itself. It is therefore important for drone operators to be properly insured.”

In South Africa, drones are used extensively in farming, in wildlife management to save dwindling animal populations, maintain power lines, monitor traffic flows and provide security surveillance of assets in remote parts of our country. The development of drone technology has resulted in a multi-billion dollar global industry. A review by the regulator of the South African Aircraft Register over a 12-month period shows a dramatic increase in the number of registered drones, from 216 in January 2016, to 465 in January 2017.

To secure the appropriate short term insurance cover, private and commercial drone operators must adhere to the laws applicable to the use and operation of these unmanned aircraft. Godden says that recreational drone operators should take particular note of the fact that insurance under most general personal lines offerings does not cover the aircraft while in use (flying) and would require additional specialised insurance.

As drone technology became more available to the general public, the South African Civil Aviation Authority (SACAA) recognised the need to govern the industry and introduced the Remotely Piloted Aircraft Systems Regulations that came into effect from 1 July 2015. These regulations provide clear guidelines in respect of the operation and use of drones. SACAA clearly distinguishes between two types of drone operations: the first being private use and the second being commercial use.

Godden explains: “when referring to a private operation, a drone may only be used for the individual’s personal and private purpose with no commercial interest or gain. Private drone operators are required to adhere to all the statutory requirements relating to liability, privacy and any other laws enforceable by any relevant authority – and need to act responsibly in the operation of such equipment. A commercial operation is defined as any other use, and has to be a registered operation operating in terms of Part 101 of the Civil Aviation regulations (SACAA, 2016).”

In response to the growing popularity of these remotely piloted aircraft systems (RPA’s), Santam Aviation has developed an insurance product that provides the full spectrum of cover for drone owners and operators within the private and commercial space. Santam is one of the few insurers that are willing to insure this niche area of insurance.

“What is important to note, especially for recreational drone operators, is that insurance under our general personal lines offering covers very limited and restricted in-flight cover and would provide for loss of drone aircraft and claims stemming from Public liability. Umbrella liability and Personal legal liability insurance are excluded,” notes Godden.

The Santam Aviation policy offers full and comprehensive cover on the drone whether operated or not. This includes comprehensive third party cover on the limit the client elects to take.

“We currently insure a number of drones on the Santam Agriculture platform under the sections Business All Risks and Householders,” says Godden. Commercial or business policyholders should however note that the company will not indemnify the insured against liability in respect of the ownership, hire purchase or leasing of any aircraft as this is regulated by the Civil Regulations Act. “It is therefore important that drones used in commercial applications are covered under a separate aviation policy which provides greater security against liability claims as a result of drone activities.”

“At Santam we want to give our drone sector clients peace of mind, knowing that they have the right cover in place. However, the onus is on the owner and operator to act responsibly in the operation of this equipment. We are here to advise and guide our clients on mitigating any risks that may result in the damage, loss or liability that may be incurred in the use of these remote unmanned vehicles,” concludes Godden.