2019 | JGS Insurance - Part 2 

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  1. The ABCs of Captive Insurance

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    By Conor Moran, Assistant Vice President – Commercial Lines

    What is captive insurance and is it a good idea for your workers’ compensation coverage? Captives are formed by companies as subsidiaries whose sole purpose is to insure the risks of their corporate parents. They are especially useful in situations where conventional insurance that meets your unique needs is unavailable or the price is exorbitant due to the degree of risk involved. A captive allows you to essentially pay insurance premiums to your own corporate structure rather than an outside carrier, garnering the opportunity to profit from your captive’s investments.

    Although captive insurance companies have been around since the 1980s, they have mostly been used by large companies that could afford to take on the risk. More recently, however, the structure has been implemented by small- to mid-sized companies too. Good candidates for establishing a captive insurance company include businesses that:

    Want to have better control over their workers’ comp programs, with more streamlined administration and faster turnaround times;

    Have sufficient business risk to support the premiums;

    Have consistent, free cash flow of at least $500,000 per year; and

    Are willing to commit to a long-term strategy to control their risk.

    While captive insurance premiums are tax deductible, the IRS has cracked down sharply on businesses using their captive insurance companies as tax shelters, and they have fallen out of favor with some business owners. Yet when established and reported properly, they can be a great idea for workers’ comp insurance plans.

    With a captive insurance company, businesses no longer need to rely on the whims of the commercial market with its accompanying volatility and threat of policy cancellations. By managing larger retentions backed by your captive, you can achieve potential premium savings of 20 percent or more, along with a potential return on your investment from funds otherwise paid to an insurance carrier. In a down year, you can minimize losses with protection through prefunding and reinsurance.

    The key to success in the captive market is to only assume reasonable risk, with premiums calculated by an independent actuary. You should implement a proper governance structure, directed by the captive owner, and maintain a conservative and reasonably prudent investment portfolio. Be sure to maintain consistency in your claims guidelines and don’t try to adopt a “we cover everything” approach. Finally, locating your captive in a highly receptive captive domicile can be helpful as individual states can vary on this issue.

    One of the best features of captive insurance is the fact that you have control.

    If a valued worker is awaiting compensation following an injury, you can ensure that he or she is kept on track toward recovery with timely reimbursements, rehabilitation program approvals, and other medical allowances. If a “worst case” catastrophe hits, you can be sure you’re ready and staffed appropriately to handle your needs.

     

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  2. The Unseen Danger of Cyber Liabilities

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    By Chase Helwig, Assistant Vice President – Commercial Lines

    Does a substantial portion of your business operate utilizing some form of technology? Do you store customer and business information on your computers? How about your technicians or employees? Do they use their phones to help communicate important details about work?

    Chances are, the answer to the majority of these questions is a resounding “yes.” A common misconception of business owners is that if they are not a tech company or gigantic corporation, then they do not have cyber liability exposures. Well, if you answered yes to the above questions as most businesses do, then you do have cyber exposures. That shouldn’t be too much of a surprise, especially considering how quickly new technologies are coming out to simplify business. Every one of us has been there at some point, whether it’s storing purchase orders in a database or utilizing software-as-a-service (SaaS) solutions to solve problems at work.

    Technology has made life easier in innumerable ways. Unfortunately, nothing easy comes without a price. When it comes to technology, that price is a dramatically increased liability pool. If you follow the news, it would be hard to miss some of the consequences of cyberattacks and cyber liabilities in general. It seems like every day a company faces a huge breach, whether it’s Target in 2013 (which affected 41 million people and ended up costing the company $18.5 million) or even Equifax in 2017. According to a 2017 study sponsored by IBM and conducted through the Ponemon Institute, the average total cost of a data breach in 2017 was $3.62 million.

    There is a light at the end of the tunnel, however. Cyber insurance coverage is specifically designed to deal with data breaches and cybercrimes from both a regulatory and a civil liability standpoint. Many business owners believe general liability insurance can cover some of the damage stemming from cyber incidents. Unfortunately, that isn’t the case. Cyber insurance will mitigate liability which involves sensitive customer information and help deal with the consequences of it.

    Here are a few examples of what cyber policies generally cover:

    • Legal fees and expenses from civil or governmental entities
    • Notification of customers (many regulations require the notification of customers in the event of a data breach that involves personal information)
    • Repair/replacement of damaged equipment and systems
    • Data recovery from compromised units
    • Restoration of customer identities
    • Public relations (data breaches are often accompanied by a decreased brand opinion)
    • Business operations (to keep your business running while things are being fixed)

    Now it is time to ask again,

    Is your business adequately protected against cyber liabilities?

    Cyber attacks are becoming more and more prevalent, increasing in frequency right along with the technology that makes them possible. Insurance is just one piece to a larger puzzle. Ask for a comprehensive review of your cyber liability exposures prior to your renewal, as an uncovered claim could spell the end of your business.

     

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  3. New Jersey Requires Employers to Offer Pre-tax Commuter Benefits

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    By Barry Fields, Vice President – Employee Benefits

    On March 1, 2019, Governor Phil Murphy signed a bill into law that will require New Jersey employers with 20 or more employees to establish pre-tax transportation fringe benefit programs. Although many employers voluntarily offer these benefits, New Jersey is the first state to require employers to provide them for their employees.

    Transportation fringe benefit programs allow employees to set aside pre-tax dollars for certain work-related commuting expenses. The New Jersey law requires these programs to provide benefits for transit passes and vanpooling expenses, although employers may also include qualified parking.

    Covered employers must offer these benefits by March 1, 2020. New Jersey employers with 20 or more employees should start taking steps to implement a pre-tax commuter benefits program. Employers should also watch for regulations from the Department of Labor and Workforce Development.

    Transportation Fringe Benefit Programs

    New Jersey employers that are subject to the state’s unemployment compensation law and have at least 20 employees must offer all of their employees the opportunity to elect pre-tax benefits for qualifying transit passes and vanpooling expenses. The program must allow employees to elect benefits at the maximum level permitted by federal law.

    Internal Revenue Code Section 132(f) allows employees to use pre-tax dollars to pay for certain work-related commuting expenses. These expenses include qualified parking, transit passes, and vanpooling. These pre-tax dollars are exempt from federal income taxes and Social Security taxes.

    Maximum Benefit Limits

    Federal tax law establishes a maximum amount of transportation fringe benefits that employees can exclude from income for tax purposes. These limits are subject to annual increases for inflation. For 2019, the maximum benefit levels are:

    — Qualified parking: $265 per month

    — Vanpooling and transit passes (combined): $265 per month

    Qualified Expenses

    Transportation fringe benefit programs can provide benefits for qualified parking, transit passes, and rides in commuter highway vehicles (vanpooling).

    Qualified Parking — Parking provided to employees at or near the employer’s business premises. It also includes parking on or near the location from which employees commute to work using mass transit, commuter highway vehicles, or carpools.

    Transit Passes — Any passes, tokens, farecards, vouchers, or similar items that allow employees to ride free of charge (or at a reduced rate) on mass transit or in a vehicle that seats at least six adults (excluding the driver) if a person in the business of transporting persons for pay or hire operates it. Mass transit may be publicly or privately operated and includes bus, rail, or ferry.

    Vanpooling — Transportation between the employee’s residence and place of employment in a commuter highway vehicle that seats at least six adults (excluding the driver).

    Compliance Deadline and Penalties

    New Jersey’s commuter benefits law became effective on March 1, 2019. However, no penalties will be assessed against employers until March 1, 2020, unless the Department issues regulations that include an earlier compliance deadline. Also, a special timing rule applies to collectively bargained employees. Covered employers must offer pre-tax commuter benefits to their collectively bargained employees when their collective bargaining agreements that were in effect on March 1, 2019, expire.

    Employers that fail to offer pre-tax transportation fringe benefits as required by the law may be subject to penalties. First violations can trigger penalties between $100 and $250. Employers will have 90 days to offer a pre-tax commuter benefits program before the penalty is imposed for a first violation. After that 90-day period, employers can be subject to a penalty of $250 for each 30-day period of noncompliance.

     

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  4. How Reflecting on the Positives Can Improve our Lives

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    By Ross Rutman, Assistant Vice President – Habitational Group

    If life can seem pretty hard at times, that’s because it is. However, although the negative things can start to tally up, most of us have good things in our lives. Although the good cannot simply undo the bad, taking some time to reflect on the positive things in our lives can help us derive some pleasure from knowing that there is good in the world. This process of engaging with the positive can have positive psychological effects.

    A Sense of Positivity Can Put Our Problems in Perspective

    Most bad things that happen to us probably won’t have a silver lining, and if they do, it will probably be with the benefit of hindsight. However, many of the problems that we’re facing today are problems that we will overcome and look back on with a sense of achievement. We survived because we were strong enough to get through it. Whatever we are facing, viewing it in the context of our whole lives helps us realize that however bad it seems, it isn’t going to go on forever. It also allows us to think pragmatically about how we’re going to make life better in the future.

    Positivity and Gratitude Can Make Us Nicer to People

    When we feel like we deserve more than what we have and that we’ve constantly been let down by people around us, it becomes very easy to indiscriminately take that out on the people that we encounter. However, no one person is an island. Remember what you have and be grateful to the people around you who supported you and made the good things in your life possible. This makes it a lot easier to be nice to the people that you have to deal with and to treat them with kindness.

    Positivity and Gratitude Make Us Happier

    If we feel cheated by the world or let down by people, most of the time this is going to keep us down in the dumps. Even when good things happen, we will often be comparing them to fictional alternatives where things go according to plan. Rather, keep in mind the things in our lives that make us happy as this will put us in a much happier state most of the time.

     

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  5. Set the Rules of the Game So You Can Win

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    By Ryan Fleming, Director – Habitational Group

    When it comes to playing any sport or game, there are rules. Often it’s those who know the rules best who come out on top. A clear understanding of what specifically needs to be done at what particular time is pivotal to finding the winning points, yards, or position for victory. There are boundaries, penalties, and—most importantly—other players that we have to contend with, the latter being the most important to understand. So how’s this any different from home or work? I propose that it isn’t at all.

    At home, we are a blended family and are blessed with five kids ranging from 12 to 17 years old. The sports we are involved in are lacrosse, wrestling, motorcycle racing, basketball, and dance. (Let me put an emphasis on dance for any of you dance parents!) Oh, and jobs, they are all starting to get jobs, which is great and all if they could drive themselves.

    Our kids, just like any others, aren’t the best at planning or informing us of the plan, for that matter. We often find ourselves scrambling to get someone somewhere across town at the last minute while also figuring out how to feed them on the go. It wasn’t until we took the time and devoted the attention to setting rules and boundaries in our home that we finally started to win the game.

    For example, we utilize a cloud-based family calendar encompassing all activities. If it’s not on the calendar, it isn’t happening. We also have a weekly menu that is created every Sunday that allows us to shop for groceries online and have them delivered Monday morning for the week. Another thing that has helped us win this game is the Amazon Dash buttons. Inside almost every cabinet in the house is a dash button that, when pressed, orders whatever is needed in that cabinet for delivery the next day. Talk about a time-saver. No more wandering around Target buying more than you need and waiting in lines to pay. Setting the rules of our household has allowed us to win and win big. We are basically on autopilot with very few surprises.

    Work is tough. Things get thrown on your desk unexpectedly with deadlines you struggle to meet. People barge in with agendas that need addressing even though they aren’t yours. Our days often get away from us before we even get started. We wake up with a plan, but somehow that plan flies out the window the second we open our email. Working just for the sake of working isn’t productive, yet, that’s how our days are filled. We leave the day with a tired mind and sometimes tired body, but we are unclear of what was actually accomplished.

    It’s time to set the rules of the game in order to win each day. You have the ability to set those rules:

    Take time for yourself in the morning to get into your best state. If that means a workout, cold plunge, or simply coffee and reflection, make sure you never waver with this part of your day.

    Set up times during your day for email responses or returning phone calls. They will always keep coming and everyone will always expect a response in their timeframe unless you set a different expectation. Without setting parameters, the constant influx of emails and calls will surely exhaust you.

    Meetings need agendas and hard stops. More will get accomplished if the agenda is clear to all parties and the timer starts counting down.

    Ultimately, life will come at you from all directions at all times. It’s easy for things to overwhelm us, but we absolutely can win. We just need to clearly define the rules. To be effective employees, managers, fathers, and mothers, we need to design how we intend to play the game of life. Get clear on what you want and how you want to get there and start designing. It may seem like an arduous task, but separating your life into different areas will allow you to tackle each section. Good luck! Go TEAM!

     

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  6. Why Proactive Safety Programs Are Better Than Reactive Ones

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    By Conor Moran, Assistance Vice President – Commercial Lines 

    You run a small construction company. One of your employees is climbing up a ladder with one hand while holding some power tools with another and, as a result, puts not only the employee in danger, but also some of your other employees. How do you respond to this?

    For one thing, the employee technically hasn’t done anything malicious. It is simply a corner that has been cut, likely in the name of productivity. Either way, OSHA wouldn’t be happy about what is going on. And if OSHA isn’t happy, you probably won’t be happy either.

    When it comes to safety programs and regulatory compliance, there are generally two types of responses: reactive and proactive.

    Reactive Responses

    A reactive response is one that happens as a reaction to an injury or an illness and is designed to help minimize the costs which are associated with that event. If a management team chooses to go with reactive responses, more often than not, it sends the message that they don’t care about their employees’ safety. Insurance companies aren’t going to give you a break on your claim for making a handful of changes after the claim happens, either.

    Here are some hallmarks of reactive programs:

    • accountability often assigns discipline after accidents
    •  “clocks” which incentivize not reporting incidents (ex: “Pizza party if no accidents for one month”)
    • investigations try to fix the direct cause and not the system which led to it

    Proactive Responses

    Proactive responses will take place prior to accidents and help to anticipate those accidents and prevent them. This approach shows employees, whether they realize it or not, that the management and ownership of the company care about their health. In the longterm, this is going to save a lot of money and is by far the less expensive option.

    Here are some hallmarks of proactive programs:

    • hazard analysis
    • safety teams, coordinators and committees
    • safety equipment always on hand
    • analysis after accidents attempt to fix the system and not assign blame
    • regular inspection programs
    • incentive programs that promote reporting what you see, suggesting changes, etc.
    • regular safety training and education, not as a “punishment”
    • accountability avoids discipline or punishment

    How to Begin Implementing Proactive Safety Programs

    Implementing proactive programs begins with communications. Start with a written policy which uses clear language and promotes safety as an organizational value. When you do your normal weekly or monthly meeting, add a section about safety so you can go over your current plans and your employees can vent some of their frustrations or suggest changes.

    Next up, start implementing safety coordinators and teams. The teams should be small and will handle their sections of the business. Just like your organization, the teams can have a hierarchy and reporting will head upwards. In this way, you have more hands in the pot and will have more people checking to ensure safety on the ground level. It also allows you to ensure everyone and every area of the workplace has proper safety equipment.

    Next, identify the hazards in your workplace and label them. Make sure everyone understands the danger. Likewise, identify things which workers may be doing that require special training or precaution and ensure that programs are in place to handle those unique tasks.

    Why This Is a Good Thing

    These proactive programs are a good idea for a number of reasons, but the largest may be avoiding fines from regulatory agencies—such as OSHA—and lowering some of your costs on insurance. Insurance companies are going to value companies that are going out of their way to save themselves money and promote safety. Why? Because it means fewer claims.

    For business owners, this means lower costs, lower potential fines, lower risk and most of all, the value of knowing that you are doing everything that you can to keep your employees and workplace safe.

     

     

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  7. You’re Either First, Best or Irrelevant

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    By Ryan Fleming, Director – Habitational Group 

    Timing is everything. I catch myself constantly saying “Early is on time, on time is late and late is unacceptable.” With most things, being early is ideal, yet with other things, making an entrance is a better option. For example, there’s a sweet spot for arriving at a social function called fashionably late. Getting to a party first doesn’t always have the effect we want, but getting there a tad late and making a grand entrance sometimes does. Timing can make or break an event, product launch, arrival, etc.

    In most businesses, product releases or marketing campaigns are initiated constantly. An incredible amount of thought can go into product development, but how much focus is there on release timing? How many business owners take the time to really take a good look at their market and ask themselves how or when they want to arrive with their product or service? Even the best products or services released poorly will fall on deaf ears.

    Let’s take GM’s EV1 as an example. The EV1 was the first ever mass-produced electric car released by a major car manufacturer. In 1996, the world just wasn’t ready. Fast forward just ten years or so and Tesla arrives fashionably late with their Roadster, turning the car industry on its head. Another example could be the Microsoft SPOT watch. This was the first smart watch offering, but leave it to Apple to forego the opportunity to be First and capitalize on being Best with their Apple Watch. Both of the aforementioned examples show how patience is sometimes not only a virtue, but a necessity for a successful launch.

    Being fashionably late works in some instances, but sometimes it’s just a good old-fashioned land grab. Being first to market can work extremely well also. Let’s take Uber for example. Rideshare was going to happen no matter what. It was an inevitability. Uber was just the first start-up to make rideshare a reality, and everyone else (i.e., Lyft) has been trying to hitch a proverbial ride ever since. How about the ever-popular online auction site, eBay? In 1995, eBay not only stuck their flag in the ground first but they also moved so quickly that no one else was able to keep up even to this day. PayPal rewrote the idea of personal banking in 1998 and never looked back, clinching a massive portion of the banking industry’s market share. Sometimes the early bird does indeed catch the worm.

    So the question becomes, “Which is better, First or Best?” Different markets or products demand a different answer. It’s up to you to figure this out in your own market. You’ve got the next big idea, so what are you doing to make sure that it doesn’t fall flat on its face? If your idea is ahead of its time or the world is not yet showing a demand for it, then patience seems to be the key. Focus on being the best product or service instead of throwing the first rendition of your idea at a market that just doesn’t understand that they need it yet. Conversely, if your idea is set to revolutionize an industry or process that there is already massive demand for, then your focus should be trying to be first to the table. Get there fast and be ready to evolve quickly. Either way, a major portion of your planning has to be timing. Choosing when to release your brainchild to the world is paramount. You’re either First, Best, or . . . Irrelevant. Be thoughtful about your timing in order to obtain the desired result.

     

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  8. Does Your Business Need Employment Practices Liability Insurance?

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    By Chase Helwig, Assistant Vice President

    In 2016, the Equal Employment Opportunity Commission (EEOC) received 97,443 charges of workplace discrimination in private, federal, state, and local government workplaces. The EEOC responded to over 585,000 calls to their toll-free number and more than 160,000 inquiries in field offices.

    Since the financial crisis of 2007–2008, employee liability claims filed against employers have skyrocketed to nearly 100,000 annually, which is up 30 percent from the lows of the mid-2000s. If an employee files a claim against you and you are taken to court, or if you settle outside of court and you don’t carry Employment Practices Liability Insurance (EPLI), the cost could put you out of business.

    General liability insurance does not include EPLI, so talk to your insurance agent about what coverage you do have and consider the risk involved of not carrying EPLI coverage. Wrongful termination lawsuits have risen 260 percent in the past 20 years, and 75 percent of EEOC claims are made against small businesses with 50 or fewer employees.

    Employment practices liability insurance protects a business from lawsuits that are related to the Landmark Acts of Regulation. It covers employment discrimination, harassment, defamation, and retaliation. It provides protection against claims for the failure to hire, failure to promote, and wrongful termination. EPLI may also cover leased, seasonal, and independent contractors.

    The Landmark Acts of Regulation

    • Title VII of the Civil Rights Act of 1964
    • Age Discrimination in Employment Act of 1967 (ADEA)
    • Americans with Disabilities Act of 1990 (ADA)
    • Family and Medical Leave Act of 1993 (FMLA)
    • Genetic Information Nondiscrimination Act of 2008 (GINA)
    • Claims That Do Not Fall Under EPLI
    • Worker Adjustment and Retraining Notification Act (WARN)
    • Fair Labor Standards Act (FLSA)
    • Claims that fall under the National Labor Relations Act (NLRA)
    • Employee Retirement Income Security Act (ERISA)
    • Occupational Safety and Health Administration (OSHA)
    • Matters related to the continuation of benefits under COBRA

    How to Prevent Possible EPLI Claims

    No employee should be the victim of discrimination and ridicule. The executive leadership of any company or organization is responsible for fostering a culture of tolerance in their workplace. Conducting sensitivity training classes and responding promptly and courteously to all employee complaints is essential for the good health and future of your business.

    Consider the top six reasons employees sue their employer:

    1. Not giving a clear reason for firing an employee (this includes at-will employees)
    2. Firing an employee for bad performance when they have had good performance reviews. A poor-performance paper trail needs to be presented in court.
    3. Poor timing – firing an employee who has just filed an internal complaint against the employer or a supervisor
    4. Improper response to an EEOC charge – always respond promptly and courteously
    5. Failure to follow your own policies – make sure your HR and legal teams are providing the proper protection and training for management

    Don’t ever assume an employee is aware of and understands senior management’s policies. When an employee acts surprised and outraged at being terminated, it is because management did not clearly communicate with the employee.

    Employment attorneys are in general agreement that employees don’t always sue because the employer violated a law. Rather, they often sue because they were humiliated in the termination process and were not treated with respect and dignity.

     

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  9. How To Fix Anything: Part 1

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    By Steve Roderick, Assistant Vice President

    Hey, What’s Your Problem?

    How many industries would you describe as perfect? How many things, in general, would you describe as perfect? In the next few issues, we will discuss how to fix “anything” by breaking down issues to their basic elements. It’s just a process. You can either embrace it or just fold your poker hand and say, “Well, I can’t fix that!”

    Picking out shortcomings is easy—in fact, it’s too easy. As a society, we collectively do it way too much. So identifying problems in an industry shouldn’t be very difficult at all. However, being able to relate from a consumer standpoint is far more difficult. But that’s the answer to fixing it, whatever “it” is. You might have 99 problems, but the ones you need to be concerned with are the ones that your clientele see as problems.

    What Is Your Shoe Size?

    Start by being a customer. Put yourself in their shoes. It’s an exercise in self-awareness as a company. From the first point of contact with your business, then the purchasing process, to delivery of goods or services, to invoicing and finally follow-up. However your particular industry operates, run through it from beginning to end. Do it with your own company, and then give it a shot in the marketplace with a competitor. What was easy? What was cumbersome? What was disappointing? What was most rewarding? Would I look forward to doing it again? Be the customer. It’s such a simple exercise that so many people ignore, to great detriment to their understanding of how their industry operates.

    Wait, You Want Me to Fix What?

    OK, now the hard part: comparing what you do to how others do it and identifying the real problems that the customer faces industry wide. Not just how your company can do it better, but how the entire industry could do it better.

    First, identify your problem (a major discomfort) from the perspective of the customer. For example, if your widget machine is 78 years old and breaks down all the time, that’s your problem. What we are talking about here are things that your customers see as problems. They don’t necessarily care how much time you spend repairing your old widget machine; they just want their widgets on time. So we need to get into their heads and identify what causes them discomfort so we can ease their pain and so they continue to buy our widgets.

    Far too often, people blame poor performance on perceived professional handicaps. Statements like “We can’t compete with the bigger guys” or “We don’t have the money in our budget” reveal a lack of vision and a poor understanding of your customers’ needs.

    Glass Half Full

    Often when we go looking for problems, we automatically become pessimistic. The entire process holds a negative tone, so the negative attitude can tend to dominate. At this point, it is very important to be looking for light, not dark. It’s a paradox really: looking for problems with a good attitude and an end goal to solve them. Remember, that primary end goal should be solving your customers’ problems, not your own. Look for opportunities to benefit their needs. “When/Where/How can I make them happier?” These are the questions to ask when beginning this process. The solutions to your own issues come later. We don’t even know what those are yet. We have only just begun.

    The Unstoppable Force

    We all have our “go-to” people or providers for certain goods or services; usually found in the recent-calls list in your smartphone. That’s your end goal when fixing stuff. Be someone’s “go-to.” Be the one who solves the issues. We aim to make their lives easier, better, more profitable, and in turn, we want them to seek us out for solutions.

    So what’s their problem? Is it service? Monetary? Functionality? Transparency? Education? Accessibility? Time-related? Exclusionary? By focusing on their problems rather than your own, you start providing real value to your customers. If all you can come up with is a cheaper way to do something, all you have done is make yourself cheaper, and you haven’t fixed anything at all.

     

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  10. Unmanned Aerial Systems

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    By Eric Wokas, Risk Control Consultant

    Unmanned aerial systems (UAS), aka drones, are rapidly increasing in our nation’s airspace, which raises challenges for public safety. Whether you are a novice drone pilot or have many years of aviation experience, rules and safety tips exist to help you fly safely. Think of these tips as a preflight checklist.

    The Federal Aviation Administration (FAA) has developed rules for both recreational and commercial use (additional rules apply for government use). You are considered a recreational user if you fly your drone for fun or as a hobby. Recreational users need to know when and where they can fly and to register their drones. Even if you are only flying in your backyard, drones that weigh more than 0.55 pounds must be registered.

    For commercial use, drones that weigh less than 55 pounds must follow Part 107 guidelines. A completely new set of rules apply to UAS weighing more than 55 pounds. If your operation differs from Part 107, you will need a waiver from the FAA. You should also check state and local regulations to determine if additional restrictions apply.

    Here is a summary of small UAS operational limitations under Part 107:

    • Unmanned aircraft must weigh less than 55 lbs (25 kg).
    • Only Visual line-of-sight (VLOS) is allowed. The UAS must remain within the VLOS of the remote pilot in command and the person manipulating the flight controls of the UAS.
    • The UAS must remain close enough for the remote pilot in command and the person controlling the UAS to be capable of seeing the aircraft with vision unaided by any device.
    • UAS may not operate over any persons not directly participating in the operation, under a covered structure or inside a covered stationary vehicle.
    • Daylight-only operations, or during civil twilight (30 minutes before official sunrise to 30 minutes after official sunset) with appropriate anti-collision lighting.
    • Must yield right of way to other aircraft.
    • May use a visual observer (VO) but this is not required.
    • A first-person view camera cannot satisfy the “see-and-avoid” requirement but can be used as long as the requirement is satisfied in other ways.
    • Maximum groundspeed of 100 mph (87 knots).
    • Maximum altitude of 400 feet above-ground level (AGL) or, if higher than the 400 feet AGL, the UAS must remain within 400 feet of a structure.
    • Minimum weather visibility of three miles from control station.
    • Operations in Class G (uncontrolled) airspace are allowed without Air Traffic Control (ATC) permission. All other classes of airspace require ATC permission.
    • No person may act as a remote pilot in command or visual observer for more than one unmanned aircraft operation at one time.
    • No operations from a moving aircraft.
    • No operations from a moving vehicle unless the operation is over a sparsely populated area.
    • No careless or reckless operations.
    • No carriage of hazardous materials.

    The FAA’s B4UFly app assists users in determining where they can and can’t fly.

    For commercial use, you will need a Remote Pilot Certificate. Visit the FAA website to apply.

    Once you’ve passed your test, complete FAA Form 8710-13 for a remote pilot certificate and register your drone with the FAA.

    For recreational use, a Remote Pilot Certificate is not required. As previously mentioned, drone registration is required. You need to be at least 13 years old to register your drone. For those under age 13, they must have someone who is at least 13 years old register it for them.

    For both commercial and recreational use, once you have registered your UAS, make sure you mark your drone with your registration number in case it gets lost or stolen.

     

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