Drone Insurance: The Ultimate Guide (2018)
Drone insurance is the best way to protect yourself and your property when piloting a UAV. Since 2016, when the FAA introduced the small drone rule, over 100,000 people have been certified for recreational and commercial drone use. But what does this mean for you?
As UAV’s continue their exponential growth in popularity, so does the impending need for drone insurance. You’ll need to protect yourself and your valuable property in the case of an accident. In fact, if you fly drones commercially, there are a ton of benefits that come with owning drone insurance.
You may be asking yourself, “how do I insure my drone?” we’re glad you asked.
There is plenty of opportunity to get insured affordably and easily, which is exactly why we’ve put together this blog to find the best fit for you.
In this guide, we’ll clear up the best way to navigate insuring your drone as both a recreational and commercial user. We’ll be covering:
- Part 1: Do I REALLY need drone insurance?
- Part 2: What types of drone insurance are available?
- Part 3: How much is drone insurance going to cost?
- Part 4: What type is best for me?
- Part 5: Brokers vs. Underwriters
- Part 6: How do I get drone insurance?
- Part 7: How do I file a claim?
- Part 8: FAQ’s
Part 1: Do I REALLY need drone insurance?
As recreational and especially commercial drone usage continues to grow, protecting yourself and your equipment has never been more important. Whereas UAV insurance is fairly new to the market, it is extremely smart to consider and stay ahead of the curve.
If you fly strictly recreationally, you can get away with flying uninsured. There is no real risk involved and no detriment to your wellbeing as long as your UAV is piloted safely. However, if you are flying in a hazardous or high air traffic area, it wouldn’t hurt to implement a short-term insurance policy.
If you are piloting a UAV for business use, there is plenty of reason to get your drone insured.
Firstly, in a matter of years, insuring your commercial UAV after receiving your Part 107 Certification will most likely be mandatory. For the time being, insurance is incredibly affordable and the options are diverse. Drone insurance will also protect you from third-party damages and serve as a safety net for your personal property. It would not be great if your DJI Mavic 2 Pro took a hit a week after purchase and you had to eat $1500, especially if it’s how you earn an income.
Now that you know insuring your UAV is a wise investment, let’s go over your options.
Part 2: Types of Policies
When purchasing insurance, it is important to know the two primary options available: liability and hull insurance.
Liability insurance covers third-party incidents. In most cases, you will be required to purchase liability insurance before you are permitted to purchase hull insurance. It will cover any damage made to third-parties, whether that be property or individual.
Generally, a liability policy for your UAV will give you $1 million in coverage, but could cover as low as $500k or as high as $25 million. As coverage gets lower or higher, so will your insurance payments.
A liability policy is extremely important to consider because it will protect you from damage caused to others in an incident and cover your costs after a minimal deductible. Most policies will cover medical bills and property damage, but some policies offer coverage for bail bonds, legal expenses, and other unexpected costs. Liability insurance is the most important coverage to purchase because you never know when something could go wrong with your UAV. Technology isn’t quite perfect and we are all subject to human error.
Alternatively, hull insurance is available to cover damage to your personal property. If you harm your drone beyond simple cosmetic damage, hull insurance will cover repairs– generally for 5-10% of the drone’s value in a deductible. Drones are an expensive investment, whether it be personal or commercial, so protecting yours with hull insurance makes sense to prevent an unexpected loss.
For those of you with removable accessories, like high-quality cameras or sensors, you should consider payload coverage. Payload insurance covers accessories individually just like hull insurance protects your UAV. You can also expect to pay 5-10% in a deductible for damages to these covered accessories, just as in hull insurance.
An important thing to note in reference to payload insurance is that sometimes it will be necessary due to removable cameras in high-end drones. In smaller UAV’s, most cameras will be a permanent part of the drone, whereas larger, more expensive drones will generally have a removable, upgradable camera.
If you operate a UAV with removable accessories, make sure to specify with your broker to get the right coverage for you.
You know the different options of coverage you have for your drone, now let’s go over what it’s going to cost you.
Part 3: How much does drone insurance cost?
Before we go into just how much it will cost to insure your UAV, it is important to note that there are two different policy formats to choose from: on-demand and annual coverage.
On-demand coverage allows a pilot to insure their drone only at times in which they are flying. This coverage has been exploding in popularity the past few years because of its flexibility. You are even able to choose your exact flight-map to cover you and your UAS based on exactly where you will be flying.
On-demand insurance is likely more sought-after by recreational drone enthusiasts rather than certified commercial pilots because it provides protection in high-risk situations and only when needed. For those of you who don’t fly frequently, on-demand coverage would make more sense to protect yourself and your property when necessary.
The other policy format available is traditional annual coverage. Annual coverage will insure you contractually for an entire year and requires a lump sum payment up front. An annual insurance policy makes more sense for individuals who pilot UAV’s commercially and need year-round protection for their frequent drone-use.
The BIG question: What will these policies cost you?
An annual rate will generally run you anywhere between $500-800 a year. If you add hull and payload insurance on top of your required liability coverage, it will likely be closer to that $800 number. If you stick with general liability coverage, then you will find yourself in the $500 ballpark.
On the other hand, on-demand rates vary broker-to-broker, but typically fall to about $10/hr for general liability coverage.
Part 4: What policy is best for me?
It really comes down to how often you fly your drone and the typical length per flight.
General rule of thumb would be that if you go flying five times or more a month, you might as well get annual coverage. At that rate, with on-demand coverage, you’d be paying $50 a month and $600 a year. For the same price with an annual policy, you would be covered year-round with no restrictions.
Another thing to consider is flexibility and ease. Most on-demand coverage you can obtain from the convenience of your phone. Apps like SkyWatch make insurance coverage available in an instant at a incredibly affordable rate. Flexibility is provided by a la carte style coverage with on-demand as well. In an annual insurance policy, you may be forced to pay for coverage that you don’t necessarily need.
Annual coverage is great for commercial UAV pilots who fly for their business. You can get complete coverage at a flat-rate with no time or location restrictions for your flights. It is a wise investment for anyone who operates UAV’s at a corporate level.
Part 5: Brokers vs. Underwriters
When purchasing insurance coverage, you will be working with both a broker and an underwriter.
Underwriters will be the ones assessing the risk of potential policyholders. They determine eligibility for coverage based on claims history and general requirements set by the agencies. Ultimately, underwriters recommend the broker on whether or not the consumer is a viable candidate for insurance coverage, which heavily influences final policy price.
Brokers simply deliver the determined policy. They can also review and revise policies as they deem necessary, but generally trust the assessment of the underwriter. Brokers work independently for companies and must be licensed to sell in the state they operate out of. Brokers and underwriters work closely, but for different companies.
Part 6: How do I get drone insurance?
There are three main players in the world of drone insurance coverage:
SkyWatch offers on-demand coverage via a mobile application. They offer short-term policies for down to 1 hour and provide detail-specific features that set them apart from their competition, such as a risk-assessment map for your selected flight zone, custom flight areas, and a flight safety rewards program that reduces price of your coverage for safe piloting of your UAV. This insurance coverage can be schedule for now, later, or on a monthly basis to tailor to your preferred format of payment. Additionally, SkyWatch sells hull and liability coverage.
The next big player we have to mention is DroneInsurance.com. They are your one-stop shop for all your UAV insurance needs, offering coverage for as little as one day and as long as a year. They handle anywhere from $1 million to $25 million in general liability coverage and are currently developing an app to make the current browser-based system even more accessible. You are able to insure up to 10 drones per policy and even protect your drone it gets stolen or damaged while not in operation. All policies are offered through Liberty Mutual Insurance with base coverage starting at $7 a day and liability coverage starting at $30 a day.
Verifly is an application and on-demand insurance provider that offers plans for 1, 4, and 8-hour flight times. Upon purchase, you will be covered in the selected time frame in a 2-mile radius. Policies purchased through the app offer coverage ranging from $1 million to $10 million. Location and a variety of other factors will play into the final rate, but hourly coverage starts at only $10/hour and can be bought up to 60 days in advance of flight time.
Even if you don’t use one of the three providers we’ve recommended, most policies will ask you the same series of basic questions to begin the application process. This may include your general information, what type of coverage you are looking for, and the value of what will be insured. This is all to gauge how they can best help you.
The determining questions will be your logged flight hours, training and certification, accident history, specifics on your UAS, and typical area of operation.
Generally speaking, the apps will ask less questions than annual written policies.
In the end, it is entirely your decision who to use as your insurance provider, but the process is relatively simple no matter where you go.
Part 7: When/How Do I File a Claim?
You should file a claim if there is damage to property or an individual, whether it be you or a third-party. If the extent of the damage only comes down to minor cosmetic damage on the drone, then there is no need to file a claim, but if it renders your drone useless or someone else is harmed in the incident, a claim should be filed immediately.
It is always best to file a claim immediately after an incident occurs because it gives you the opportunity to best describe what happened.
Following an incident in which a claim should be filed, processes vary based on your provider.
For the on-demand providers, a general claims email address is typically provided to document the claim and notify the provider. Make sure to be as detailed as possible. If possible, take photos of the damage sustained and scene of the incident, and keep a detailed record of who was present and who was involved.
For annual providers, the same process will likely take place over the phone.
Part 8: Other Frequently Asked Questions.
Are drones generally covered in homeowners insurance?
Unfortunately, it really just depends. Most homeowners policies will protect your drone through a personal articles policy and there is generally no deductible or a very small deductible to compensate for damages. However, some policies don’t cover drones if they are being operated for commercial use.
Are drones covered in my business general liability insurance?
Normally drones aren’t covered in business general liability coverage. UAS’s are often excluded from coverage so there is no confusion about what is included in the policy. You must get a liability policy specifically for UAS operations.
Is drone insurance legally required?
No. Truthfully, it will more than likely be required for Part 107 certified pilots in the very near future, so getting insurance now is very smart, especially if you are a commercial operator.
Do I need to be P107 certified?
Most annual policies require Part 107 certification, but the on-demand apps offer policies for both recreational and commercial pilots.
Will my insurance policy be effective if I leave the country?
Drone insurance policies are ineffective when traveling outside of the country. If you are doing so and operating your UAV, it is probably a good idea to consider on-demand coverage for your flight time.