Since the new Part 107 rules came into effect in August 2016, there have been an increasing number of drones being flown commercially. There are already a lot of people flying drones recreationally and the commercial market is exploding with new possibilities. Small unmanned aerial vehicles (UAVs) are being used for industrial inspections, thermal image mapping, real estate surveys and cinematography to name a few.
Along with the increase in drone use comes the question of drone insurance coverage. UAV insurance is needed to protect against damage to your drone, cameras or any equipment that it may be carrying and to protect you against any injuries your drone may cause to people or property.
While no one has to buy drone insurance in order to fly their UAVs legally, a lot of drone pilots definitely see the value in getting this type of insurance. At first, insurance firms were reluctant to offer coverage for small unmanned flying vehicles. However, at this point in time, drone sales are surging (half a million were sold in 2016).
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Do I Really Need to Buy Drone Insurance?
If you are mulling over buying drone insurance, you should think about a few things:
1) Are you flying an expensive drone?
If your drone is inexpensive and didn’t cost a bundle, getting damage insurance may not be cost-effective, as the cost of replacing the drone won’t be very high. Also, certain drone manufacturers do offer coverage for repairs up to a certain dollar amount; so be sure to check that out.
However, if you spent thousands of dollars on your drone and equipment; then getting damage insurance is pretty important to protect your investment.
Even though it is possible to get by without damage insurance it is a smart purchase.
You may find that some insurance companies will consider you a lower risk and charge less of a premium based on your skill level at operating your small UAV. This is a very good reason to consider drone pilot training courses.
2) Are you flying the UAV in crowded areas?
You should also consider where you fly. If you are operating your drone near people or crowded areas then liability insurance is a must.
Drones can sometimes injure animals or people and may also damage property. If any of these problems should occur, you may be on the hook for medical expenses or repair costs. Liability protection will assist you with these expenses.
Also, if you get sued because your drone has flown into a private area, or drifted into airspace which is restricted, you may find that a court verdict against you leads to huge bills.
This is why we recommend liability coverage for those who fly drones in areas which are very populated.
3) Clients May Require You to have Drone Insurance
If you’re using a drone for commercial work, it’s quite possible that you will need to buy insurance. A lot of firms that you may contract with will request this coverage in order to protect their companies from liability in the event of an accident. When you buy this coverage, you’ll meet that obligation and you’ll also be able to market yourself as a drone pilot who has insurance. Many prospective clients will appreciate the fact that you are insured and consider it a positive signal in favor of hiring you.
4) What About Local Regulations?
Are you operating within the United Kingdom or Canada? If you are, you should know that you will need to purchase insurance for your commercial drone, provided it exceeds a particular weight. Right now, in America, there aren’t specific requirements. However, you may run across legislation, depending on where you travel. Look up the local regulations in the area that you’ll be working to be sure that you are flying legally.
Coverage Options for Drone Insurance
Drone insurance is an emerging market and since it’s relatively new, it’s still evolving. Here are some basic facts which will help you get a handle on things. Other options may also be available in the future. However, most people end up buying one of the five forms of insurance that we’re about to discuss:
1) Liability Insurance
2) Hull Insurance
3) Insurance for Payload
4) Insurance on Ground Equipment
5) Non-owned Insurance
Okay, let’s get started.
1.) Insurance for Liability
Of all of the forms of insurance available to drone owners, liability insurance is the most vital. It’s a lot like liability insurance for an auto. However, unlike auto insurance, it’s not mandatory.
When you choose liability insurance, you’ll be protected (in a financial sense) from 3rd-party claims for property damage or bodily injury.
In a worst-case scenario, you might lose control of the drone and it might go into a group of people, triggering a severe injury which might, in turn, trigger a lawsuit which costs you a lot of money. Also, you may be sued if your drone causes damage to a building or a car.
With insurance for liability, the financial responsibility of paying for lawsuit-related expenses falls on the insurer, rather than you. Please be aware that you may still be found guilty of negligence if you did break the law.
However, there are comprehensive policies for liability which do offer protection from expenses related to your own negligence and/or to invasion of privacy. Look at the policy features carefully in order to understand what you will be covered for under that policy.
Different insurers provide different options. For example, there are policies for commercial and recreational flying and policies may also vary based on flying environments and skill levels.
There are insurance firms which don’t provide drone insurance until applicants prove that they have sufficient experience; such as twenty hours of flying time.
While the Federal Aviation Association doesn’t require insurance for liability, there are scenarios where you may have to purchase it. For example, some local laws may require its purchase and some contract requirements may necessitate its purchase. If you live in the United Kingdom or Canada, you may be mandated by law to buy this form of insurance, depending on how much your drone weighs and how large it is.
2.) Hull Insurance
While insurance for liability does cover damage to the property of third parties, as well as injuries to others, the type of insurance known as hull insurance covers the drone itself. With this form of insurance, you will be covered for expenses which arise from the damage of your drone.
For example, if for some reason your drone smashes into a tree or building, your insurer will cover repair costs or the cost of replacement; depending on the extent of the damage.
You should be aware that many insurers who sell you full hull coverage are covering only the drone itself. If the drone hits the ground and the camera or sensor that it is carrying onboard gets damaged, the camera and sensor may not be insured under this type of insurance.
Equipment coverage may be purchased separately. We’ll go over information about that a bit later on in this article.
The amount of money you can collect via hull insurance will vary. The value of the drone is primarily the biggest factor in terms of the determination of your hull insurance coverage.
Your insurance company will work with you to get an estimated value for your UAV.
It’s your responsibility to ensure that the drone isn’t undervalued, as an undervalued drone may be under-insured. If it is under-insured, you may overpay for your premiums. Some other factors, including how much you paid for the drone and its level of depreciation will also be considered while an insurer is determining the insurable value of the UAV.
As you may expect, a drone which costs thousands will be more expensive to insure than a drone which costs hundreds.
3.) Insurance for Payload
We referenced the fact that insurance for onboard equipment isn’t included with typical hull coverage. If you want to insure the onboard equipment that you use with your drone, you will need payload insurance. Some companies call this type of insurance by other names.
Typical drones never fly “empty”. If you’re flying your drone as a hobby, you are probably attaching a camera to it in order to capture still photographs and/or video. If you do work as a photographer or filmmaker, you’re probably flying your drone with one or more high priced cameras onboard.
If you do inspections of infrastructures or thermal mapping, you may attach a camera with infrared capability to your drone. Other applications, including the measurement of wind speed or temperature, may necessitate the usage of sensor equipment from third parties.
Typically, equipment which is attached is at a greater risk of being damaged than the actual drone. For example, a minor fall might trigger damage to an onboard camera or “total” the camera.
When you choose payload insurance, it will cover damage which is accidental to any equipment which is attached. You’ll be in line for financial compensation for repairs or full replacement (the level of damage will determine whether repair or replacement is needed).
The value of the equipment will determine the coverage amount in the same way that the value of the drone determines the hull coverage. Both of these (payload and hull) are valued separately in order to get a truer value for each one.
4). Insurance For Ground Equipment
Most drone pilots have ground control stations which include a lot of different forms of equipment, such as remote controllers, laptop computers, UAV cases and extra sensors. Any ground equipment that is related to operating your drone is eligible for insurance coverage under this category.
Some insurers even have plans that include the cost of data recovery in the event that the data you are collecting gets corrupted or damaged.
5.) Non-owned Insurance
If you are hired to do a project where you need to lease or hire a drone and/or the associated UAV equipment such as expensive cameras or sensors, then you will need Non-Owned insurance. This type of insurance coverage will protect you from expenses related to damage to the drones or equipment that you don’t own and any damages to people or property that they may cause.
This type of insurance includes:
Non-Owned Liability Insurance
– this coverage protects you or your business from claims of bodily injury or property damage from UAVs that you don’t own but are operating. Deductibles for non-owned liability insurance will be much the same as deductibles for typical drone liability coverage. It won’t, however, cover physical damage to the drone or the drone’s payload.
Non-Owned Hull Insurance
– this coverage is sometimes mandatory when you operate a non-owned drone. Some companies want to know that you’ll be able to cover expenses which relate to drone damage.
Non-owned Insurance for Payload
– this coverage will insure equipment that is non-owned and attached to the drones. Lots of companies rent very expensive cameras or sensors to do particular jobs. These companies can benefit from insuring the equipment that they don’t own because if a camera which is leased gets damaged or totaled, payload insurance will cover the cost of its repair or replacement.
Certain insurers will combine ground equipment coverage and payload insurance, via a bundled insurance package. If you’re interested in this type of bundle, contact your insurer and ask if you can purchase one, or if you’ll need to buy the two forms of insurance separately.