What you need to know about insurance for your agriculture drones
Introduction
Drones are rapidly revolutionizing agriculture across the world. From precision crop monitoring to targeted pesticide application, uncrewed aerial vehicles (UAVs) are boosting efficiency and yields around the world and are not going away anytime soon. However, with the promise of technology comes risk. That’s why specialized agriculture drone insurance is essential for responsible and successful drone operations.
The History of Aerial Application and Drone Insurance
Insurance has been around for hundreds of years, but aerial application insurance is a relatively new thing. Orville and Wilbur Wright became the first people to successfully fly a powered aircraft back in 1903, and that innovation sparked a revolution in the way we do many things today. The ability to travel quickly through the air created advancements in not only travel, mail delivery, aerial surveying, and eventually space exploration, but it also opened the door to massively increase the crop yields from aerial application. Aerial application, also known as “Crop Dusting”, was first started back in 1921 by Army Air Corps pilot Lieutenant John A. Macready who successfully sprayed 6,000 Catalpa trees with lead arsenate. After that, it was only a matter of time before the aerial application industry would take off!
Things have mostly stayed the same over the past 100 years with pilots flying single engine fixed-winged airplanes to spray fields. Over time, technological innovations such as turbine engine aircraft and rotor wing aircraft were introduced into the industry and aerial application became even faster and more effective. Within the last 10-15 years, UAV’s (Uncrewed Aerial Vehicles) started making their way into the market and within the last 5-7 years, they have really started to make their impact on the aerial application industry. Stark Flight is the world’s largest drone manufacturer and has made huge strides in changing the landscape. With thousands of spray drones entering the market, it has altered the way we think about aerial application as an industry.
Today, the insurance market is still adjusting to the influx of spray drones, but more and more aerial application insurance companies are starting to see the benefits of writing policies for these new aircraft. Some companies are only writing spray drones as supporting business with existing crewed aircraft accounts, while others are writing these on a stand-alone basis. All these insurance companies must make sure their customers are following the rules and regulations for these new operations and that is why only specialized insurance companies who have been re-insured with FAA compliances can write this type of business. The rules and regulations are changing every day, and it is important to make sure your insurance agent is immersed in the evolving world of the FAA and drone operation regulations.
The Need for Agriculture Drone Insurance
Agricultural application drones, while incredibly useful, come with inherent risks. Accidents can happen in many forms and insurance is there to protect you from the things you can and cannot foresee. It is our job as aviation insurance brokers to make sure you are protected from any and all risks that can come from your spray operation. Here are some examples of what could happen during a drone spraying operation:
– Physical damage to the drone: Crashing your drone or having a non-flying incident.
– Damage to property: A drone could crash into buildings, vehicles, or other equipment.
– Injuries to people: Flying the drone into someone or spraying chemicals onto bystanders.
– Crop damage: Overspray damage to property of a 1st or 3rd party.
– Unforeseen Incidentals: Flying a drone into powerlines causing power outages to essential facilities like hospitals, schools, refrigeration units, or government buildings.
– Lawsuits: Legal protection from any lawsuit from your work as an aerial applicator.
– Pollution: Chemical spills into waterways or other environmentally protected areas.
– War and Terrorism: This is always a worry when flying heavy drones which can carry large payloads. In the U.S., all insurance companies must offer War/TRIA when quoting aircraft policies.
– Non-Owned Insurance: Chemical companies or other 3rd party companies who contributed to the aerial application but did not fly the operation.
These incidents can lead to significant financial losses and legal liabilities for aerial applicators. Ag spray drone insurance provides essential safeguards.
Types of Coverage on an Aerial Application Policy
In an aerial application insurance policy, applicators will have a few primary coverages: Hull, Spares, Chemical Liability, and Non-Chemical Liability. The coverages that are required for legal flight in the United States are the Chemical and Non-Chemical Liability. Each state is different and has its own rules and regulations you’ll need to abide by to do aerial application in that state. For example, one state may require you to get a ground pesticide license with an aerial category to do custom application from an aircraft in that state; while others will only require you to get a pesticide license with no proof of chemical liability insurance. It is important to know the laws in the states that you are flying in and have an agent who knows what to ask for.
The primary coverages of an aerial application policy are as follows:
Hull Coverage
– This covers the cost of repair or replacement if your drone is damaged or destroyed.
– This will include physical damage coverage for your drone while in flight, and while not in flight.
– You get to choose your hull limit (within reason) and that is the replacement cost to make you whole in the event of a total loss.
Spare Parts
– This covers the cost of repair or replacement of any equipment that is necessary for your aerial application operation that is not flying.
– Examples include: spare batteries, spreader systems (while detached), charging stations, cooling stations, generators, RTK stations, and a field opts kit.
Chemical Liability
– Aerial application chemical liability can be categorized into 3 types of coverage.
| Comprehensive Chemical (CC) | This has no exclusions and will cover for herbicides and defoliants. |
| Limited Chemical (LC) | This will cover fungicide and insecticides but will not cover for herbicides and defoliants. |
| Excluding Chemical (XC) | This provides the least amount of coverage and will allow for seeding and fertilization operations only. |
– This limit is typically sub-limited at 1/3/1 bodily injury and property damage.
$100,000 bodily injury (per person)
$300,000 bodily injury (per occurrence)
$100,000 Property Damage
– The market can provide limits of $300k CSL, $500k CSL, and in rare cases $1M CSL. (CSL: Continuous Single Limit)
– All policies will cover 3rd party chemical drift as that is the requirement in most states.
– 1st party chemical drift coverage is also available in the form of “Crops Treated” and “Adjacent Fields” endorsements. 1st party chemical drift protection only applies to custom applications, not personal acres.
Non-Chemical (GL) Liability
– This covers any 3rd party liability claim that is not associated with chemical drift. o This is here for if you fly the drone into someone or something.
– This is also where legal liability is held in the event of a lawsuit.
– Limits typically start at $1M but can extend up to $10M.
Factors Influencing Agriculture Drone Insurance Costs
Insurance providers consider several factors when determining premiums for aerial application drone insurance costs:
– Drone specifications: Cost, size, and capabilities of the drone are the key factors when discussing the hull coverage and chemical liability.
– Operator experience: Pilot certification and flight hours are important. We are seeing more experienced pilots get perks within their policies and in some instances, we are seeing slight discounts. This will be more and more important as the years go on and continuing education becomes more prevalent.
– Usage: The difference between doing seeding operations and herbicide operations are night and day in the eyes of our underwriters. Knowing your operations will allow the underwriter to put the right coverage limit in place for your operation.
– Risk management: Safety procedures and previous claims history are key factors in whether an underwriter will write your business. If an aerial applicator has claims from the previous season, the limited market will get more limited and will likely only have their expiring carrier or an excess market to cover them.
Ag Drone Insurance FAQs
What is the average cost of an aerial application drone insurance policy?
As with everything in insurance… it depends. This is one of the biggest and most important questions we get. In short, it isn’t going to be the cheapest insurance policy you’ve ever purchased; however, it has come down substantially from where it was not even 2 years ago. On average, a single drone operation can expect to spend between $2,500 to $6,000 on an annual policy. That is down from $8,000 to $11,000 just a few years ago.
Are there deductibles on aerial application policies?
Yes and no. There will be deductibles on hull coverage but there won’t be one for either of your liabilities.
Is insurance mandatory for operating agricultural drones?
Regulations are evolving, but most states are going to require you carry a minimum chemical limit and underwriters are going to require you carry a minimum non-chemical limit for legal liability purposes.
Does the insurance cover drones used for spraying pesticides, herbicides, aquatics, rights-of-way, and forestry?
Yes, but you will need the appropriate chemical coverage to cover each of those operations.
Can I get coverage for multiple drones under one policy?
Yes. All policies must follow the Part 137 certificate holder and any drones flying under that certificate must be stated on that policy for a claim to be paid out.
How do weather-related damages factor into insurance coverage?
Weather is a huge component when talking about aerial application insurance. These policies are occurrence-based policies and if the weather caused an occurrence triggering your policy, a claim will be paid as long as the operator was in compliance with the FAA and state regulations.
Best Practices for Minimizing Risks and Insurance Costs
- Maintenance and safety: Regularly inspect your drone and have a checklist before each flight. Make sure your batteries are stored properly and cycled regularly.
- Regulations and certification: This is going to be the biggest factor when something goes wrong, and a claim is being paid out. If you are not in compliance with the required regulations, an insurance company will likely not pay out a claim due to flying illegally.
- Risk management plan: Have procedures for pre-flight checks, emergency landings, etc.
- Operator training: Ensure competence in piloting and emergency responses.
Conclusion
Aerial application drone insurance is not a luxury; it’s a necessity for protecting your farming investment and managing liability. By partnering with an experienced insurance provider, you can tailor an agriculture UAV policy that minimizes risk and fits your budget.
* Please note that this article was written by Vaughn Tolbert, owner of VT Insurance Agency LLC. The information in this article applies to the US, and while the specifics of the agriculture drone insurance market in other countries and regions may vary, the general principles and takeaways from this article still apply.
About VT Insurance Agency
VT Insurance Agency is one of the leading insurance agencies in the U.S. for aerial application drone insurance and is one of the founding fathers in the agriculture drone industry. When the FAA Part 137 was taking a year and a half on average to get processed through the FAA, VT Insurance Agency was able to partner with a non-profit educational foundation (Farm-I-Tude) to give operators an option to fly legally and get insurance that would be effective. Owner, Vaughn Tolbert, is a national board member for the aerial application drone association (U.Pass), which advocates for Ag drone pilots and helps push for advancements in the industry. We have also partnered with industry leaders across the country like AgriSpray Drones, Best Way Ag, Rocoza, HSE-UAV and more to make sure their customers are taken care of the right way. With over 1,000 drones currently insured around the country, VT Insurance will make sure you are not only properly covered and in compliance with the FAA rules and regulations but are also in compliance with your specific state’s regulations as well. There are few competing insurance companies to choose from for aerial application drone insurance coverage and VT Insurance Agency is appointed with all of them.