Your Pocket-Sized Guide to Drone Insurance

Last updated January 23rd, 2020
A firefighter fighting a burning building

As a valuable piece of property, and one that frequently comes in potentially dangerous contact with other people, you may be wondering about insuring your drone.

Do you need to get insurance for your drone? What are the options available? Are the rules the same for recreational drones and commercial drones?

These are just a few of the questions that people ask themselves when they buy their drones. And we are going to address as many as we can in this article.

How Drone Insurance Works

When you hear the term “drone insurance”, the chances are high that what the speaker is referring to is ‘drone liability insurance’.

Drone liability insurance covers the drone owner or pilot, or his business, from accidental injuries to pedestrians or privately owned property.

A majority of commercial drone liability insurance is sold to commercial videographers, photographers, real estate sales agents, and agricultural companies.

Does this mean recreational drone operators have no need for drone liability insurance?

Not exactly.

In many areas, recreational drone pilots are required by law to insure their drones before getting them registered.

Whether or not you live in an area that compels you to get insurance for your drone, you want to consider getting some personal liability coverage for your drone.

Although some might classify your hobby drone as super cool fun toys, the truth is that your recreational unmanned vehicle is a high sophisticated piece of hardware—more so than the average toy.

It makes sense that a huge number of personal drone operators purchase personal drone liability insurance, when you look at things from that perspective.

There are several ways a drone owner can buy a drone insurance policy.

There are many options they can choose from, including: a yearly policy, riders to any current business policy, and also a short term policy.

Some drone insurance businesses go as far as selling policies on an hour-to-hour basis—an attractive option for you, if you don’t frequently fly your drone and would like to cut costs.

Who Needs Drone Insurance?

We would all like to think that we are superhuman in at least one respect. But the truth remains that even at our most accomplished tasks; we are still liable to making mistakes.

Also, equipment failure could happen at any time.

Even the most skilled drone pilots are subject to these realities which can befall anybody. And if you want to save yourself from being liable to significant legal fees, then you need drone coverage or insurance.

It’s for this reason that, in many areas, commercial drone operators are compelled by regulations in place to get insurance for their drones, as well as comply with airspace rules.

The risks that drone insurance covers can be categorized into three broad groups:

  1. Property Damage: Examples of this are many. Your drone flies into a power line and this causes a nearby building to go up in flames; your drone goes off midair and drops onto a vehicle, causing damage.
  2. Bodily Injury: An example of an incident that falls under this include: your drone falling out of the sky and into a group of people, causing injuries to one or more peoples.
  3. Invasion of Privacy:  In this scenario, a person accuses you of spying on them with your drone or that with your device you have captured sensitive images of them in their private residence.

Drone insurance can be considered a by-product of aviation insurance. Aviation risks are given special consideration as specialty risks with extreme financial exposure.

And the same can be said about drones, since they can potentially cause property damage, serious body injuries, and even death.

Policies are therefore treated with caution by insurance providers. For example, while some insurance policy coverage meant for photography and videography will acknowledge drone use, the insurance company has to be informed of any additional drone related activity.

Not every insurance provider will cover drone usage, and providers which do usually require additional compliances to hedge the risk.

Perhaps an example would illustrate this point nicely:

A court case in California over a 2016 wedding-UAV accident highlights the dangers and possible openings for claim denials when drone coverage is not clearly understood by the drone owner.

A wedding photography business by name Hollycal Production, Inc. was covering an outdoor ceremony in Corona, California. They were using drones which they considered an activity that was routine to their operations.

Then everything went south when the drone operator lost command and the drone flew into a wedding guest.

The guest, a woman, suffered permanent damage to one eye.

The insurance provider, Philadelphia Indemnity Insurance Co—whom Hollycal had a policy with—denied the claim. The US District Court sided with the insurance company and agreed that the drone was not a regular part of photography practice. They believed that the drone instead was subject to the aviation exclusion in the Hollycal’s insurance plan.

Types of Drone Insurance

You need to address liability and property worries when trying to decide on which drone policy to go for.

You want to ensure you are covered against liability claims for accidental drone incidents and pilot mistakes.

You also need to make sure to cover the investment put into your UAV. Drone prices can go all the way up to several thousands of dollars.

Commercial Drone Liability Insurance

Commercial general liability insurance takes care of the expenses for accidental injury or property destruction which result from the use of your drone.

This policy covers bodily injury, disabilities, and even death that comes about due to a drone crashing.

It also covers damage to power and other utility supply lines, cars, roofs and other private property that your drone damages while you use it.

Commercial Drone Hull Insurance

“Hull Insurance” in aviation circles designates that which applies to accidental damage to the aircraft—that is your drone, in this case—while it is operating.

This is a policy offered on its own, and one that every recreational and commercial drone owner should consider. Costs will vary between insurance prividers but they usually have a deductible.

A deductible is an amount you have to pay for what is covered, before your insurance plan starts to pay as agreed.

If you have more than one drone and wish to insure both, you should expect the costs to increase accordingly.

Drone Insurance for Fire & Theft

Fire and theft are two perils that are usually taken care of through policies catering to business property insurance or a Business Owner’s Policy. This is a policy that combines property and liability in one plan.

Prices for premiums will vary with providers and can reach a few hundred dollars. Prices will also increase with the value of the drone and related equipment in question.

Standalone Drone Insurance Policies

Standalone insurance policies are those that provide coverage just for the risks that come with drone photography and drone use.

Policies prices vary and could range from several hundred dollars to $1000 annually to insure the typical drone with coverage going up to $1 million.

Standalone drone insurance policies are usually tailored for smaller, lighter drones that weigh below 15 pounds which are used in by commercial photographers.

They usually don’t cover any loss of the drone or damage.

The risk with this sort of insurance policy is that it leaves several gaps in other parts of your business which merit coverage.

On-Demand Hourly Policies

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Some startups have begun filling in the perceived gaps in the industry.

For example, Thimble, formerly known as
Verifly, a drone insurance startup that is headquartered in New York, offers
drone insurance policies based on hours, and that can be conveniently bought
with an app.

You can sign up for Thimble and then describe a quarter-mile flight path on
a map.

They will assess the possible risks and then present a price for a one-hour,
four-hour, and eight-hour policy.

The policy you get can also be quickly downloaded to be used whenever you
need to show proof of insurance.

Currently, Thimble is offering liability coverage that ranges between $1
million and $2.5 million which can be bought for as little as $10 an hour.

They also give policies for $10,000 of personal injury protection in cases
involving violation of privacy.

Factors that Affect Drone Insurance Prices

There are
many factors that come together to estimate the pricing for drone insurance.

As you go in
search of an insurance policy, be prepared to explain to your business use of
the drone, for example, and the typical mapped areas where you intend flying.

Your experience
and any training will also be brought to the fore before any costs will be
arrived at for a drone liability insurance policy.

The insurer will typically want to know:

  • What type of drone you intend to fly (make, model, and size)
  • What your activities with the drone will be (recreational or commercial — inspection, photography, law enforcement, etc)
  • How much experience you have with flying drones
  • Whether or not you have had any accidents or incident while flying drones in the last 5 years
  • Whether or not you are certified as a pilot with the aviation authorities
  • Locations where you intend flying your drone in (remote areas or crowded urban settings)

Policies will all look similar in many cases. But you still want to shop around for a bit to get multiple quotes.

You want to
look beyond the pricing sometimes into the nitty-gritties to make sure that all
your fears are cleared with whatever policy you finally settle with.

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