Insurance Checklist for Starting a Drone Service Company (Legal + Insurance Steps)

Quick TL;DR

• Start with the basics: Part 107 certification, business registration, and a dedicated business bank account.

• Buy the right insurance: liability, hull, payload, and cyber when applicable. Match limits to client COI requirements.

• Put signed contracts, site releases, and COIs into every job folder. Document everything and build a safety management system from day one.

Insurance Checklist for Starting a Drone Service Company (Legal + Insurance Steps)

Executive summary

If you are launching a drone service company, insurance and legal setup are not optional. Clients will ask for certificates of insurance and contract protections. Regulators will expect proper pilot certification and waivers for special ops. Insurers want paperwork, safety processes, and a clear operational model before they quote good terms. 

This guide gives a startup-ready, actionable checklist that covers licenses, the insurance products you need, contract language to protect your business, operational controls that lower premium and reduce claims risk, and a step-by-step launch plan you can follow this week.

No fluff. Copy-paste everything into your business setup folder and use it.

Phase 1 - Legal and regulatory foundation (first 7 days)

1. Get certified

   • All commercial pilots must hold a Remote Pilot Certificate (Part 107) or operate under a certified program. Get yours now and keep a PDF of the certificate in every job folder.

2. Register your business

   • Choose an entity: LLC is common for small service companies because it separates personal assets. Register with your state and get an EIN from the IRS. Keep the formation documents and EIN on file.

3. Open business bank accounts

   • Separate business and personal finances. This simplifies accounting and keeps insurance and tax records clean.

4. Register drones and equipment

   • Ensure all drones are registered with the FAA and display registration numbers. Keep registration confirmations in the asset folder.

5. Trademark and brand protections

   • Optional at start, but register your business name and secure domain and social handles.

Phase 2 - Insurance basics you must buy before the first paying job

Get quotes from specialty brokers that understand aviation and drone risk. Do not rely solely on general commercial lines agents.

1. Commercial liability (third-party liability)

   • Minimum commonly requested by clients: $1,000,000 per occurrence. For urban or higher-risk work choose $2,000,000 or higher. This covers bodily injury and property damage to others.

2. Hull insurance (physical damage)

   • Covers repair or replacement of your drone airframe. Schedule expensive aircraft values and use agreed-value if replacement cost is important.

3. Payload insurance

   • Cameras, LiDAR, and SSDs are often excluded unless scheduled. Schedule high-value payloads with serial numbers and invoices.

4. Non-owned equipment coverage

   • Useful if you rent rigs or borrow gear. It protects you while operating equipment you do not own.

5. Professional liability / E&O

   • Covers claims about negligent professional services, for example wrong survey data or missed defects in inspection work.

6. Cyber / data liability

   • If you store client images, maps, or personally identifiable data, buy cyber coverage for breach notification, forensic costs, and legal defense.

7. Short-term or hourly on-demand policies

   • Useful for occasional pilots, but ensure COI wording, hull and payload cover, and flight-over-people endorsements if needed.

8. Workers compensation

   • If you hire employees, carry workers compensation per state law.

9. Commercial auto and inland marine

• Commercial auto if you transport teams and equipment. Inland marine covers gear in transit and can fill theft-in-transit gaps.

Read: High-Value Custom Builds: Valuing & Insuring Custom Racing or Cinema Drones

Phase 3 - Contracts, COIs, and client documentation (first 2 weeks)

1. Standard service agreement

   • Must include: scope of work, deliverables, payment terms, cancellation policy, liability limits, indemnity, and dispute resolution. Keep it short and client-friendly but protective.

2. Site release and job sheet

   • A one-page form clients sign on location: permission to operate at agreed launch/landing points, scope confirmation, and signature.

3. Certificate of Insurance (COI)

   • Provide a COI for each job when required. Ask the client for the exact COI wording early in the negotiation. Do not rely on verbal statements.

4. Equipment schedule

   • Maintain a CSV with serial numbers, purchase dates, purchase price, and agreed-value. Share scheduled items with your broker.

5. Subcontractor and pilot agreements

   • If you use subcontractors, require them to carry their own insurance and sign indemnity clauses. Or have a tight permissive pilot clause in your policy if you rotate pilots.

6. Client data handling clause

   • Define data retention, encryption, and notification procedures in writing. This helps with cyber underwriting and limits liability.

Phase 4 - Safety, operations, and documentation (first month, then ongoing)

Underwriters reward documented safety programs. Build these practices now.

1. Operations manual and SOPs

   • Create simple SOPs for preflight, takeoff/landing, payload handling, leak-proof data transfer, and emergency procedures. Keep a PDF and printouts in each vehicle.

2. Preflight checklist for every job

   • Pilot initials and timestamp each checklist. Store in job folder.

3. Maintenance logs

   • Track firmware updates, part replacements, and repairs. Attach invoices.

4. Telemetry and media retention policy

   • Export raw telemetry after each job and store it in two secure locations. Keep original SD cards in numbered envelopes for 12 months or per client contract.

5. Pilot training and recurrent checks

   • Require recurrent training, scenario-based simulator checks, and an annual skills review. Keep certificates.

6. Safety management system (SMS) basics

   • Incident reporting, near-miss logs, corrective action records, and a named safety officer. Even a lean SMS shows insurers you take risk seriously.

7. Equipment storage and transport rules

   • Locked cases, inventory before and after transport, and documented chain-of-custody for payloads and SSDs.

Phase 5 - Practical insurance-binding checklist (what to give the broker)

When you ask for quotes, give the broker the following in one zip file:

• Business formation docs and EIN.

• Pilot certificates and named pilot roster with hours.

• Fleet manifest with make/model, serials, purchase invoices, and payload schedule.

• SOPs, SMS summary, and maintenance logs.

• Loss runs if you have previous claims.

• Typical mission profiles and exposure: urban percentage, BVLOS percentage, flights over people, average sorties/week.

• Client contract template and sample COI wording requested by top clients.

Use the sample broker email below to speed replies.

Sample broker email to get a meaningful quote (copy-paste)

Subject: Quote request - Drone Service Company - [Company name] - [City, State]

Hi [Broker name],

We are launching a drone services company and need quotes and sample policy language. Summary below and attachments included.

- Fleet: [number] aircraft (list make/model and serial numbers in attached CSV).  

- Payloads: list attached with invoices and agreed value where applicable.  

- Pilots: [number] pilots - Part 107 certificates attached and 12-month hours summary.  

- Operations: primary services offered - [real estate, inspection, mapping, spraying], percent urban: [X%], BVLOS: [Y%].  

- Desired coverage: $1,000,000 per occurrence liability, hull scheduled with agreed-value for selected assets, cyber/data liability $1,000,000, E&O $1,000,000, non-owned equipment for subcontractors, and inland marine for transit.  

- Attachments: SOPs, maintenance logs, sample client contract, COI wording requested by clients.

Please provide premium ranges, deductible options, required endorsements, and any underwriting questions you need answered. Target binder date: [mm/dd/yyyy].

Thanks,  

[Name / Contact]

Startup financial planning for insurance (short)

• Budget conservatively. Small commercial operations often begin with $600 to $1,800 per year for liability plus hull for a single operator. Add payload and cyber as needed. Scale budgets up as your fleet, payloads, and urban exposure increase.

• Remember deductibles: lower premium usually comes with higher deductible. Choose a deductible your business can pay without breaking cash flow.

Sales and client onboarding - COIs and expectations

• Ask for the venue or client COI wording at contract signing. Getting COI wording late kills deals.

• Keep a COI template ready with your insurer so you can issue a certificate quickly when a client asks.

• If a client requires unusual wording, relay it to your broker early. Don’t promise a COI you can’t produce.

Sample contract clauses (copy-paste)

Scope and liability cap
"Contractor will perform aerial services as described. Contractor's liability for third-party bodily injury or property damage shall be limited to the limits of Contractor’s insurance as provided in the certificate of insurance. The Client shall be responsible for obtaining releases from property owners where required."

Data handling and retention
"Contractor will store Client data for up to [X] days following delivery, encrypted at rest and in transit. Contractor will notify Client within [Y] days if a data breach occurs."

Indemnity for client direction
"Client agrees to indemnify Contractor for claims arising from directed operations that violate local law or Client instructions that materially increase operational risk."

Get legal counsel to adapt these to your state and business model.

Final launch checklist - 30 items you must check before first paid flight

• Pilot Part 107 certificate on file.

• Business registered and EIN obtained.

• Business bank account open.

• Fleet registered and serial numbers recorded.

• Liability insurance quote and binder in progress.

• Hull and payload scheduling plan with invoices.

• Cyber and E&O quotes reviewed if you handle client data.

• Standard service agreement ready.

• Site release template ready.

• COI template ready and tested with broker.

• SOPs and preflight checklist in place.

• Maintenance log template ready.

• Telemetry export and storage SOP written.

• Client data policy drafted.

• Subcontractor agreements template ready.

• Workers comp set up if hiring employees.

• Vehicle insurance and inland marine arranged if transporting gear.

• Pricing model includes insurance cost as a line item.

• Emergency contact and incident response card printed.

• Chain-of-custody forms for payloads and SSDs.

• Training schedule and recurrent checks calendar.

• Sample COI sent to top 3 clients for review.

• Broker contact and escalation path recorded.

• Backup drive and cloud backup configured and encrypted.

• Mail templates for claim notice and client communication saved.

• Annual review date set for policy renewals and limit checks.

• Client onboarding packet created.

• Accounting software set up for insurance premium tracking.

• Document retention schedule set (12 months for telemetry minimum).

• Legal counsel or advisor identified for contract review.

Final advice

Insurance and legal setup are not boxes you check later. Get them right before your first paid job. Clients will test you with COI requests, and an uninsured loss can sink a small company. Spend the time on paperwork and safety today so you can scale without ugly surprises tomorrow.

Read: Short-Term vs Annual Policies: When Pay-As-You-Fly Makes Sense

Author

Svetlana - I am a Drone Insurance Writer and Researcher. I write about drone risk management and insurance for US pilots. Not a licensed broker. For policy advices contact a licensed insurance professional.