It wasn’t too long ago that the concept of flying a drone for commercial purposes seemed like a far-fetched idea. However, in the last few years, drones have become big business, taking over industries and making the skies a lot more crowded.
Today, if you use a drone, it’s treated like almost any other vehicle that you may own and operate. To that end, it can be necessary to get insurance for it.
Today we’re going to dive deep into the world of drone insurance so that you can determine if it’s right for you.
What is Drone Insurance?
As you might expect, insuring your drone is similar to doing the same for any other thing that you may own. Just like your car or technological devices, it can be necessary to protect it in case something happens.
There are several types of drone insurance available that we’ll get into later, but the core concept is that you want to protect yourself financially from any burden that could occur when using a drone.
Do You Need Drone Insurance?
If you only fly your drone in the backyard and you have no desire to do anything beyond play around with it, then insurance can be a waste of time and money. Also, if you are piloting a relatively cheap offering, the cost of insuring it will grossly outweigh the price of replacement.
Overall, when it comes to recreational usage of drones (including racing), there may not be a pressing need for insurance. Since these devices are cost-effective and you aren’t going to be using them around people (hopefully), it’s not much of a liability.
However, if you are utilizing a drone for business purposes, then insurance may not just be a good idea, it may be required. In some instances, employers or clients may need you to have comprehensive coverage before you can do business together.
Some examples of industries or jobs that will require coverage-
- Police or SWAT assistance
- Fire and rescue
- Filmmaking and videography
- Inspection of worksites (i.e., piping)
- Real estate
This list is not comprehensive, but it should give you a good idea of when you may need to get insurance for your drone.
Overall, you want to think about it like this – what are the chances that something bad could happen? Here are a few examples of ways that being uninsured could cost you a lot in the long run.
Flyaway: drones are lightweight, which means that they can be susceptible to strong winds. When that happens, is your device going to fly into a telephone wire and knock out power to a section of the neighborhood?
Personal Injury: drones have a lot of moving parts, and they can be dangerous if you’re not careful. Even if you aren’t near people when using your drone, it could get carried in a gust and land on someone’s face, sending them to the hospital.
Property Damage: what will you do if your drone crashes into someone else’s property, leaving a lasting mark? What if it breaks a window or leaves a dent in a car?
If you’re uninsured, then all of these situations can be expensive. Also, if you are piloting a relatively pricey drone, then damage to the device itself can get costly as well.
Finally, keep in mind that most homeowners insurance does not cover drones. Even if you’re using it in your backyard and it’s considered personal property, you have to double check to see if your policy will cover it. If not, then you could be paying out of pocket for any damage or accidents that occur.
Types of Coverage
Whether you’re trying to avoid a lawsuit or you’re in a line of work that requires insurance, it’s necessary to understand which options are available to you. Typically speaking, there are two types of drone insurance for commercial pilots – hull and liability.There are additional insurance options as well, so let’s break them down.
No matter what, you have to get a policy that covers any liability that may occur. For the most part, this is going to be the basic insurance that any provider will offer, although you can add to it to cover additional parts and components as needed.
Liability insurance typically covers property damage and personal injury. Depending on your insurance carrier, you may be required to get a certain level of coverage, but most policies start at $500,000 and work their way up. In some cases, you may even want to get covered for several million, just to be safe.
When discussing any kind of insurance (but especially liability), it’s imperative that you talk to your provider about any specific limitations. As we’ll see, there are additional forms of insurance that may not be included in this plan, so you have to be sure what’s covered and what isn’t.
If you are piloting an expensive drone, then you want to be able to make a claim if it is damaged or destroyed. Whether it’s your fault or not, hull insurance can protect you financially if and when you have to replace your drone.
One thing to remember is that it’s necessary to update your insurance to reflect the current value of the drone as it ages. For example, if you paid $2000 two years ago, there is little chance that you could claim that amount if it’s totaled today.
On average, you will want to renegotiate your hull insurance on an annual basis so that both you and the insurance company can understand how much coverage you need. As the drone devalues, you should pay less in premiums to cover it. Otherwise, you could wind up throwing money out the window.
Also, pay attention to how the insurer values the drone. In some cases, you may be able to claim the appraised value discussed at the time of drafting the policy. In other situations, the insurer may look at the current market to determine a price, which could be significantly lower.
In some instances, your drone may be required to carry specific items. For example, if you are delivering products or parts to a certain area, then you will want to have the payload insured for the full replacement value. One example of this could be carrying a camera for videography.
For some pilots, they may think that it’s easier and more efficient to lump the cost of the payload with the drone itself (a la hull insurance). However, it’s much better to evaluate them separately.
What happens if the drone drops the payload? The hull is intact but the cargo is destroyed, so it’s much harder to separate them after the fact.
Ground Control Insurance
Do you use a laptop to control your drone? Do you have equipment that is specifically used to monitor and maneuver your drone while it’s in the air? If so, then you may want to get that covered as well. If something breaks down or is damaged while on the job, insuring it can keep your financial burden to a minimum.
Non-Owned UAV Insurance
In this case, you are leasing a drone that is owned and insured by a third party. Although they may have coverage on their end, it’s still a good idea to get a policy for yourself as well. For the most part, you can get non-owned insurance for all of the same components as usual.
Liability, hull, and payload insurance are usually offered for non-owners so that they are fully protected in case something happens during their lease. In fact, some drone lenders may require that you get this kind of insurance so that their coverage and costs are not affected in the event of an accident.
Personal Injury Insurance
Yes, liability coverage does protect against physical harm to a person, but this type of insurance goes the extra mile. Typically speaking, it covers additional things like libel, slander, and invasion of privacy. As you can imagine, filmmaking and videography would be a perfect reason to get this kind of policy; however, it might be a good idea to have no matter what.
The reason we say that PI insurance is good for all drone pilots is that there is kind of a negative stigma surrounding these devices. Having this coverage could protect you in case someone decides that your drone is more of a nuisance than anything else.
Drone Insurance Costs
By now, one thing that you’re probably wondering is how much all of this coverage is going to set you back. That depends on the kind of policy you get, as well as the duration of the insurance.
Annual vs. On-Demand
If you operate your drone as part of your business, then you will have to cover it all the time since you are using it often. However, if you are just piloting a drone for a temporary period (i.e., shooting a video), then it can be better to get on-demand insurance instead.
Companies like Verifly can offer hourly rates to drone pilots, usually around $10. For that price, you can get up to $1,000,000 in liability coverage, which will pretty much cover anything that happens. In this case, it’s probably not conducive to add on hull or payload insurance unless you are operating an expensive piece of equipment.
As far as annual costs, liability insurance is going to eat the most out of your finances.
We already mentioned that most companies require at least $500,000 in coverage, which can cost as little as $600 (sometimes less) per year. If you need to cover more than that (i.e., $1,000,000), then it could run you around $750-$800 every year.
For the most part, drone insurance policies don’t cover more than $5,000,000 (although some high-end options can go up to $10 million). If you go with the deluxe coverage option, then it will likely cost around $2,000 annually.
Hull and payload insurance will depend on the value of the products you’re using. If you are piloting a drone that costs $200, you probably don’t need to invest in hull insurance as it will cost more than the device itself. Usually, you will want to seek out this kind of policy if you are using high-end equipment.
Also, some insurance companies may include hull insurance with your standard liability policy. When drafting your coverage, remember to discuss all of the explicit details. It’s best to go in with a list of questions of potential scenarios so that you can be sure that you’re protected for all of them.
Some examples could include:
- What if someone else is piloting the drone? Will that void the insurance?
- What if the drone is destroyed by another person (i.e., shot down)
- What if the drone loses power and crashes as a result?
- What kind of personal injury is covered?
- Does the insurance pay for repairs, or does the drone have to be totaled?
- Is payload coverage included?
- What kind of ground control items are covered by this policy?
Overall, think of anything that could potentially happen. There are no stupid questions, and it’s better to be sure of something than to assume that it’s covered.
How to Lower Your Premiums
As with all forms of insurance, there are things you can do to lower your costs. Like being a safe driver with no accidents, you can show the insurance company that you are a safe bet. Since underwriters are always concerned with risk, it helps to put their minds at ease.
Here are some ways that you can improve your coverage while lowering the price of your premiums.
If you are a commercial drone pilot, then that means you have a Part 107 license. To get this license, you have to pass a rigorous written test that covers all kinds of rules and regulations set forth by the FAA, including airspace protocols.
While passing the test is a fantastic start, it doesn’t require that you take any safety classes for piloting. However, if you do take these courses, you can drastically reduce your premiums.
The Unmanned Safety Institute offers classes that will qualify, and be sure to document your results along the way. Also, you will have to stay current with these certifications, meaning that you have to plan for annual testing.
Create a Standard Operating Procedure
Although this process is not required by law, it does help show the insurance underwriters that you take safety seriously when piloting your drone. Developing a comprehensive SOP for your drones and all peripheral equipment can help lower your costs.
To make your SOP look better, you should have sections that outline what to do in certain conditions, such as inclement weather or faulty equipment.
Create a Flight Logbook
Again, this isn’t necessary, but it helps establish a baseline for the underwriters. Just like driving for years without an accident shows that you’re a safe driver, logging numerous flights without any incidents does the same for your piloting skills.
Beyond the cost savings potential, having a logbook is also good for your own documentation as well. If there are any questions about your drone’s whereabouts or actions on a given day, you can refer to the book as evidence.
Other Conditions That Can Lower Premiums
Although your actions can show that you are a responsible drone pilot, some situations are inherently riskier than others. Here are a few other considerations that insurance companies may have.
Usage – piloting a drone for photography is not as dangerous as inspecting an oil rig or using it for search and rescue.
Environment – are you piloting in a densely populated area with a lot of power lines? Or are you going to be flying in a relatively open space with few people around? Also, are you going to be inside or outside?
Flight Time – how many hours have you logged with your drone? The more, the better.
Getting Insured: What You Need Beforehand
Because drone insurance is still relatively new, it’s imperative that you shop around and find the best coverage for your needs. However, to make this process as smooth and productive as possible, there are a few things you should get ready beforehand.
1. Estimate Your Drone’s Value
If you are planning on getting hull insurance, then you will want to come in with a verifiable price tag for the insurance company. If you can get it appraised by a reputable source, you may not have to use the appraisers from the insurer. In some cases, this may allow you to claim more.
Beyond the drone itself, you will also want to do a valuation on any other equipment you will be using for your work. For example, any cameras that will be attached should be itemized and priced out.
2. Determine Your Coverage Needs
Do you think that you’ll be okay with liability, or will you require hull insurance as well? What about payload or personal injury coverage? It’s best to go in with a solid idea of what options you must have so that you can get a reliable and accurate quote.
3. Compile All Piloting Documentation
If you have a logbook, bring copies of it with you. Also, be sure to have documentation showing the number of hours you’ve piloted the drone, as well as any other certifications you may have. Insurance companies love paperwork, so bring as much of it as you can.
4. Operational Information
Where are you planning on piloting your drone? What kind of activities are you going to be doing? These are questions the underwriters will want to ask, so you should have comprehensive answers for them when you arrive.
5. Bring a List of Questions
We covered some of the queries you want to ask when determining the level of coverage you have, but here are some additional questions to bring up when trying to get a quote.
- How much are the deductibles?
- Do you cover multiple drones under one policy, or do they have to be separate?
- Will my coverage extend outside of the US?
- Do you provide coverage for in-transit? (In this case, you are not piloting the drone)
- Can I combine hull and liability insurance? (Sometimes this can be cheaper)
- What training or documentation do I need to qualify for this kind of policy?
Can I Lose My Insurance?
This is one question that has a multitude of answers. You should bring it up during your consultation to find out what circumstances could cause you to lose your coverage. Some insurers are much more strict than others, so it’s helpful to get a complete understanding of what limitations you may have.
Some examples could include-
- Not having a flight log and being unable to prove fault in an accident
- Piloting your drone dangerously or unethically (with proof)
- Intentionally damaging property or the drone itself
- Failing to register your drone properly
- Not making note of maintenance and upgrades to your drone
Overall, you don’t want to give the insurance company a reason to deny your policy, so be sure that you know what to expect and pay attention to how you operate your drone at all times.
Some Drone Insurance Companies
Since you will want to compare quotes, it’s essential to have a list of various insurers who cover drones. This list is far from comprehensive, but it should be an excellent place to start.
- Avalon Risk Management
- Aviation Insurance (Pat Costello)
- Aviation Insurance Resources
- AVION Insurance
- Berkley Aviation
- XL Catlin
- Starr Aviation
- Transport Risk Management
- UAV Protect
- Unmanned Risk Management
- Unmanned Vehicle Insurance
What if I Need to File a Claim?
If something happens to your drone, then you want to make sure that you follow proper procedure so that you don’t hurt your chances of getting paid. You will want to check with your insurance company to find out any particular details, but here is a good list to follow.
Notify the Insurance Company – do this ASAP so that they know what’s happening and can respond accordingly
Notify Any Authorities – if someone is injured or your drone was stolen, you will want to call 911 immediately
Stay With the Aircraft – don’t leave it unless there is a compelling reason to do so (i.e., it’s dangerous to go near it)
Don’t Make Any Statements – talk with your insurance company first to avoid getting into trouble. For example, admitting fault could hurt your claim.
Communicate and Cooperate With Your Insurers – the easier it is for them to assess the damage and file your claim, the sooner you can get your money
Don’t Dispose of Anything Until They See the Damage – even if the drone is totaled, it’s necessary to allow the insurance company to assess the damage themselves to avoid any hint of fraud
Are you ready to get your drone insured? Now that you’re armed with all of the information you need get out there and explore the world!
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