Alexander Glinz, CC BY-SA 3.0

Data-Driven Risk Management Insights – SkyWatch Drone Insurance Top 3 Trend Lists

As the saying goes, “An ounce of prevention is worth a pound of cure.” This concept applies to drone operations today.

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Best safety and risk management practices can mitigate liability exposure. As the industry matures, and operations become more complex, now more than ever, drone insurance should factor heavily in business decisions. In this article, Elad Shalev, Marketing Manager at SkyWatch.AI, drone industry insurance leaders, provides insights into the top three industry and accident trends, as well as tips to help drone businesses soar.

Founded in 2018, SkyWatch.AI was one of the first companies to use technology, analytics and telematics to better assess the risks of drone operations. That data ultimately informed a range of plans to reduce risk for drone operators globally. It also translated into more reasonable, affordable and flexible insurance options.

SkyWatch.AI made drone insurance simple. With regard to customer interface, it developed a digital platform for individual drone pilots and businesses to customize and purchase policies according to needs, with just a few clicks. On the back end, it created a top-rated team to address customer service needs.

Over the past few years, the COVID-19 pandemic propelled the drone industry in unanticipated ways. Drones became the ultimate social distancer. Across the globe, approvals for drone deliveries for items such as medicine and food became more common. Businesses grew their drone fleets from a handful of aircraft to large in-house fleets. As the drone industry matured, SkyWatch.AI data revealed three significant industry shifts.

Over the past few years, drone pilots have invested more money in their equipment to achieve better quality results for their clients. Beyond visual line of sight (BVLOS) operations rely on heavily autonomous systems. Industrial inspections require high fidelity sensors. These are but a few examples of the types of the high tech capabilities and equipment needed for complex drone operations.

More advanced equipment costs more to buy. SkyWatch.AI data shows that since 2018, the average value of an insured drone has increased more than thirty percent. Shalev, who works with partners and creates value for the community through educational content, explained, “The drones people are insuring used to be worth a little less than three thousand dollars. In 2022, they are generally worth a little over four thousand. This tells us that drone pilots today have more expensive and sophisticated drones.”

Increased Professionalism

In the United States and most places globally, laws do not require pilots to carry drone insurance. However, as drone pilots use more expensive equipment to perform advanced operations, they increasingly desire to protect their investments.

SkyWatch.AI data indicates that the percentage of drone operators who have insured their own drone, referred to as  “hull damage” coverage, has risen annually. This year, hull damage accounts for more than a third of the coverage purchased by drone operators.

What can we learn from that? According to Shalev, “In the past, people purchased drone insurance only because clients and customers required them to have it. The fact that today more than a third choose to insure themselves, even when they don’t have to, indicates a few things. It shows us not only that the industry is maturing, but also that pilots have a higher appreciation for their gear and for the importance of insurance.” In short, drone operators have become more professional.

Drone pilots’ investment in insurance has matched their growing appreciation of risk mitigation. Pilots have been purchasing higher levels of coverage.

“Another interesting fact is that even though we didn’t change our insurance prices, the average monthly payment that people choose to invest in their drone insurance has increased every year,” Shalev noted.

SkyWatch.AI tracked a pivot from an average of $31 a month in coverage in 2018 to more than $100 a month in 2022.

Shalev surmises that because pilots now perform more complex operations than ever before, their needs dictate broader coverage, higher limits and tailored requirements.

“So to sum it all up, drone operators today are more sophisticated, with better equipment and do more complex operations. They also understand the importance of insurance. Our industry is definitely growing and maturing,” Shalev said.

Statistically speaking, more drones in the air increases the likelihood of mishaps. More complex operations also equate to higher risks. Shalev, who is also a certified Isreali lawyer, warns that risk factors can double, depending on the number of drones a pilot or business employs and the type of operations involved. That said, to provide context, drone accidents are not common. Shalev said that only about 10% of policy holders file accident claims.

 But even a few accidents can have strategic impacts for the industry. Even one negative media report can sway public perception, which continues to be a challenge for drone operations. SkyWatch.AI data revealed the following three types of accident and incident trends, which bear watching.

Of the few accidents reported, the most common, according to claims filed, involved a drone crashing into something, such as trees, walls and cars. The most common contributing factor for these crashes is a loss of signal.

Shalev mused, “Drone delivery operations involve flying to different destinations and returning, sometimes in urban environments. These will involve more risk. We saw claims involving delivery drones that crashed into some unexpected things like windows, birds and even a squirrel. That being said, with the right measures, drone deliveries have generally proven to be safe and very efficient.”

SkyWatch.AI also received a number of claims involving drones that took a dip in the water. Oceans, lakes, pools, and other bodies of water ranked high on the list of drone dips.

The company culled out several reasons for this. Sometimes the drone sensor confuses the water with the sky and the drone flies into it. In other cases, the drone has climbed up to the sky (“thinking” it is landing) until it loses signal. Flying over water, especially open sea, exposes drones to extreme weather conditions, which can lead to accidents. Finally, it is harder to assess distances when flying over the water. This can lead to flying too far and losing signal.

Many claims involved a drone that has simply disappeared. This can occur during BVLOS flight when a pilot losessignal because the drone either flew too far away or into areas with bad reception. Thefts also account for equipment losses. The majority of these cases involve car break-ins, where a drone left visible in a car presents a target of opportunity for thieves. SkyWatch.AI insurance can cover such claims.

Despite these drone gaffs, generally speaking, accidents remain the exception to the rule. To avoid becoming a statistic, SkyWatch.AI offers the following tips to incorporate into operational best practices.

Weather can prove to be unpredictable and highly problematic for drone operations. A quarter of all accidents involve a weather component in one way or another. Failing to check the weather before take off has factored into some of these mishaps.

Incorporating proper and accurate weather checks, not only before take-off, but throughout operations, can help prevent problems.

Shalev advised, “A relatively simple but important check includes taking the time to assess whether or not visibility is consistent throughout the expected range of operation. Clouds, fog, and other environmental factors can appear quickly and significantly disrupt operations if they are not anticipated.”  One of the first weather-related claims SkyWatch.AI ever received involved a pilot that flew his drone directly into a windmill due to fog.

Precipitation can also wreak havoc on drone systems, causing structural damage and frying electronics. Assessing precipitation levels enables pilots to make more informed predictions about the most likely conditions for that day. It allows pilots to be prepared to mitigate operational fault and error.

Weather checks also should include a review as to whether or not conditions will remain suitable for the capabilities of one’s drone and the complexity of the operation to be performed. A small drone flying in high winds can spell disaster.

Any weather review should involve an equipment check. High winds, extreme cold or heat can impact battery performance. Independent of environmental conditions, pilots should always check equipment.

“Always make sure all batteries, for both the drone and the controller, are charged. Inspect all drone and equipment components and replace parts accordingly,” said Shalev.

A classic avoidable incident SkyWatch.AI sees too often involves crashes that occurred due to defective propellers. It takes only a few minutes to review one’s drone and gear to prevent these kinds of mishaps. 

The good news is that many drone operators purchase insurance to protect their operations. The bad news is that sometimes they don’t understand what coverage they actually have.

“It is crucial to make sure before you start your operation, you know two things about your drone insurance,” explained Shalev. “The first is that your insurance meets all employer or customer requirements, in terms of both amount and unique needs. The second is that your insurance covers your own needs like self-damage coverage for your drone and equipment.”

As noted above, Skywatch offers hull coverage. This does not protect third parties. It insures one’s drones and equipment.

SkyWatch also offers third party aviation liability. This includes property damage, bodily injury, and personal injury to others. Bodily injury refers to medical expenses and physical accidents. Personal injury refers to coverage for libel, slander, or invasion of privacy.

Often, damage caused by any type of aircraft, including drones, may be excluded from business or homeowner’s general liability policies. Even when drone operations are included in these policies, or any other insurance plan, it may not cover commercial use. An aviation policy can either supplement other coverages or provide independent coverage.

“Should you experience any accident, SkyWatch.AI policies are primary. This means we will pay the policyholder’s claim first before another plan needs to kick in,” said Shalev.

Drone pilots that operate professionally should carry third party drone liability. In closing, Shalev said, “If anything were to happen, make sure everyone around you is protected. Let us help you fly with peace of mind.”

Read more about Skywatch.AI:

Dawn M.K. Zoldi (Colonel, USAF, Retired) is a licensed attorney with 28 years of combined active duty military and federal civil service to the U.S. Air Force. She is the CEO & Founder of P3 Tech Consulting and an internationally recognized expert on uncrewed  aircraft system law and policy. Zoldi contributes to several magazines and hosts popular tech podcasts. Zoldi is also an Adjunct Professor for two universities, at the undergraduate and graduate levels. In 2022, she received the Airwards People’s Choice Industry Impactor Award, was recognized as one of the Top Women to Follow on LinkedIn and listed in the eVTOL Insights 2022 PowerBook. For more information, follow her on social media and visit her website at: https://www.p3techconsulting.com.