Drone Insurance: Do You Really Need It?

Since the demand for drone photography and video has skyrocketed in the past few years, insurance carriers have been taking note. While there were very few options for drone insurance even five years ago, today there are many options to choose from.

In this article we’ll help you decide if drone insurance is right for your business, and help you choose the right policy from the right provider if it is. Here’s what you’ll learn:

• Why All Commercial Drone Operators Need Drone Insurance
• How Much Does Drone Insurance Costs
• What to Look for in a Drone Insurance Policy
• Drone Insurance Providers

What Drone Insurance Is

Drone insurance provides UAV or UAS operators protection against accidental injuries or damage inflicted by their drone. Drone insurance primarily covers third party liability claims for small business owners, and more infrequently damage to the drone itself.

While most insurers gear their coverage options toward commercial uses of drones, those that use drones for personal or hobby use can still get coverage. While the use of drones has increased dramatically over the past few years, as of 2017, there are no regulations which require hobby or commercial drone operators to carry liability insurance.

Why Commercial Drone Operators Need Drone Insurance

Source: Unsplash

Picture this. You’ve taken the time to build a great website for your real estate drone photography business which is now ranking well on Google. You’ve booked gigs with local Realtors who are now promising to recommend your services to their colleagues.

Then, while on a job in the city, you get distracted and crash your drone into powerlines. Your accident causes power loss to hundreds and the debris from your destroyed drone narrowly misses injuring a small child who was watching you work. Think your photography business insurance policy covers it? Think again.

Sounds pretty scary right? Bad enough to not only destroy the reputation of your new business, but possibly lead to huge legal bills and maybe even fines or jail time. This is no hypothetical scare story. This actually happened in Los Angeles in 2015.

The simple fact is that even the most skilled professionals in the world occasionally make mistakes, and equipment failure can happen to anyone. If you want to avoid the possibility of hefty legal fees, you need drone insurance.

Expert Tip: Insurance is Necessary Evil for all Commercial Drone Pilots

“At the end of the day, no one really wants to buy insurance. It’s a necessary evil. But when you’re operating what’s essentially a flying lawnmower over property that’s not your own, getting liability coverage feels more justified.”

— Alan Perlman, founder of Founder at UAV Coach & Drone Pilot Ground School

Some Clients Will Demand it

Even if your chances of having an accident are remote, some clients, particularly large corporate clients in real estate, education, law enforcement, or oil and gas, require any drone pilots they hire to have drone insurance. If you want to work with these kinds of clients, you need drone insurance.

Expert Tip: More Clients are Demanding Drone Insurance

“Clients hiring drone pilots, especially in real estate, are now requiring insurance just as they do for any other type of supplier. Further, we are seeing a marked increase in the requested limit – with many more jobs requiring $2.5mm of liability insurance – as shoots go increasingly up-market.”

— Jay Bregman, Founder of Verifly

Added Benefit: Drone Insurance Can Help Build Your Brand

Since drone insurance is not legally required operate a drone for commercial purposes (yet), you may be tempted to skip the insurance and just dive right in. Even without the glaring financial and legal risks you’re setting yourself up for, you are missing out on a great branding opportunity.

If you had to pick between two drone photography companies who had equally great portfolios, and one proudly claimed to be “Licensed and Insured!” on their website and the other didn’t, who would you choose? If you’re anything like most Realtors or homeowners, you’re going to pick the insured company every time. After all, even though the risk of damage or injury may be small, why risk it?

That means that drone insurance is not only a great way to protect your small business from legal and financial woes, but a great branding opportunity as well.

How Much Drone Insurance Costs

Source: Unsplash

The cost to insure your drone for commercial use can vary pretty dramatically depending on the type of drone, your intended use, you skill level, and the general locations you will be using the drone.

There are two ways that you can purchase drone insurance. With a long term policy (you pay monthly premiums for a one year term), or a la carte with an hourly policy.

Standard One-Year Drone Insurance Policies

According to Alan Perlman, policies range from roughly $600-$1000 per year to insure a typical drone like a DJI Fantom 4 with $1,000,000 liability coverage.

David Attard over at dronesbuy.net, provided us with some ballpark liability pricing he’s been seeing for insuring a typical (less than 15 lbs) drone used in commercial photography.

Average Drone Insurance Costs 2018

On-Demand Hourly Drone Insurance Policies

Launched in 2016, drone insurance startup Verifly has been offering hourly drone insurance policies that can be purchased on the go with an easy-to-use Uber-like app. Once you sign up for Verifly, you simply need to choose a quarter mile circle flight area on a map. Verifly then assess the potential risks in your selected area (wind speed, proximity to schools, stadiums, airports, etc) and gives you a price for a one, four, or eight hour policy.

The policy itself can be quickly downloaded for situations where proof of insurance is needed.

Currently Verifly is offering damage liability coverage ranging from $1,000,000 to $2,500,000 for as low as $10 per hour. They also offer a $10,000 of personal injury coverage for violations of privacy.

While violations of privacy may not seem very important, you can get sued for violating someone’s right to privacy while using your drone. For example, you may inadvertently film someone changing from a window of a house you fly by. .

Though they’re a startup, all Verifly policies are underwritten by Global Aerospace Insurance, who have been providing aviation insurance for over 90 years.

Hull Insurance: Coverage of the Drone Itself

While almost every drone insurance policy offers liability coverage for damage and injuries, fewer offer coverage for the drone itself: “Hull Coverage” in the aviation insurance industry. Luckily large drone manufacturers like DJI offer their own extended warranties and care plans for your drone. Starting at $219, these plans offer damage repair or replacement of your drone up to the full cost of the drone.

Expert Tip: In Most Cases, Hull Insurance isn’t Worth it

Alan Perlman, Founder at UAV Coach & Drone Pilot Ground School, explains how the numbers for hull insurance don’t really add up for most drone photographers working in the real estate market:

“Typically hull insurance (where you’re insuring the actual drone) isn’t really recommended unless you’re flying a system worth, say, over $5000+. Most real estate folks are flying systems well under that, and the numbers for hull insurance usually aren’t worth it. Some manufacturers like DJI offer their own insurance plans for the aircraft which make more sense financially.”

However, if you’re insuring multiple drones, or very costly drones, hull insurance might start to make more sense. One drone expert we spoke with recieved a quote of $1400 per year for $1,000,000 liability coverage, and hull coverage for for two drones valued at around $2000 in total. When he added a $6000 drone to his fleet, including hull coverage his premium went up to $1900 per year.

Factors that Affect the Cost of Drone Insurance

Believe it or not, pricing for drone insurance policies are generally pretty straightforward. The carrier will generally need to know;

• What type of drone you’re flying (make, model, and size)
• What kind of work you intend to do with the drone (commercial photography, inspection, law enforcement etc)
• How much experience you have flying drones
• Whether or not you’ve had any accidents in the last 5 years
• Whether or not you are a Part 107 FAA certified drone pilot (for more info, click here)
• Locations where the drone will be used (e.g. crowded city vs farmland)

Expert Tip: How Global Aerospace Assesses Risk for Drone Insurance

To get a better idea of what types of risks drone insurance carriers considering when pricing their policies, we spoke to Chris Proudlove, Senior Vice President of Global Aerospace, one of the largest and best respected aviation insurance carriers in the business.

“We assess a broad range of risk factors including the experience of the operator (pilot), the type of drone being flown and the purpose the drone is being flown for. We have seen a large number of physical damage claims, which to an extent is anticipated in a developing sector like drones, but the main risk for us to consider is liability to third parties. For that reason, our primary concern and something we assess more than any other risk factor, is the proximity of the drone operation to people or expensive infrastructure. A farmer flying over their own land creates a very different liability exposure than a drone flying over or close to a crowd of people or energy installation.

Another risk that we can cover is Personal Injury which includes Invasion of Privacy. Operators seeking that coverage will be required to advise their practices and procedures around collection, storage and publication of images or data.”

What to Look for in a Drone Insurance Policy

Source: Pexels

Let’s face it, unless you’re flying in the Faberge Egg room at the Hermitage, the odds of you doing a million dollars in damage with your 15 pound drone are pretty remote. In most cases, an accident with your drone is going to result in a damaged blade or at worst a broken window.

That said, once you start working with more commercial clients and larger corporations, you’re inevitably going to run into people who earn their living from anxiety and worst case scenarios: Lawyers.

Increasingly, lawyers for large corporations, especially those in real estate and entertainment (think big commercial film shoots or commercials) are not only requiring insurance, but demanding more liability coverage as well.

That means if you’re planning on using your drone for simple real estate photography in the suburbs, then you’ll probably be fine with a policy that offers $1,000,000 liability, and purchasing hull insurance separately from your drone manufacturer. The vast majority of homeowners or real estate agents are unlikely to demand liability for more than $1,000,000 if they demand insurance at all.

The main difficulty is that since the use of drones for commercial purposes are fairly new, there aren’t a lot of standard practices for corporate lawyers to assess risk in place yet.

Expert Tip: Some Clients Will Require up to $5 Million Liability for Drone Insurance

Jonathan Rupprecht, an Aviation Attorney and Commercial Pilot, explains why some corporations require drone pilots to have expensive liability coverage:

“The question of “how much?” is really a matter of how educated the company who you might be working for is. Some companies only require 1 million while others require 5 million or higher. Their attorneys are used to dealing with manned helicopters that can kill and destroy all sorts of stuff if there is an accident so another “aircraft” will be treated similarly.”

It’s also important to note that if you own multiple drones, you’re going to have to insure each of them separately.

Expert Tip: Tips for Insuring Multiple Drones & Commercial Real Estate Photography

“Typically the standard drone insurance policy is enough, but if you have more than one drone in your fleet, it’s recommended that you choose a more expensive package that will cover liability across all your UAVs. It’s important to note that depending on the client, different policies may be required. Commercial real estate being handled by a large corporation would more than likely require higher coverage than a local family selling their home.”

— Sacha Ferrandi, Founder & Head Principal, Source Capital Funding, Inc.

Ask Your Agent About Damage Liability

Damage liability is coverage for any damage to someone else’s property that might result from your operation of the drone. Be sure to ask your agent how much damage liability is included in any policy you’re considering.

Ask Your Agent About Bodily Harm and Privacy Coverage

Since drones are fairly small, many drone pilots are less concerned with property damage and more concerned with personal injury and privacy issues. A falling drone may not damage a car very much, but can seriously hurt someone who happens to be walking by. Make sure to ask your agent how much bodily harm coverage is included in your policy.

Expert Tip: Bodily Harm and Privacy Concerns Are Important

John Bianco Professional Drone Pilot and founder of www.dronesonthejob.com, told us that he is more concerned with bodily harm than damage to property.

“As an FAA certified remote pilot flying drones for commercial purposes, insurance is a must for conducting business. My biggest concern is not so much for property damage but safety specific to bodily harm. Additionally, another major concern for operators and clients alike is fear of being sued for privacy issues.”

Ask Your Agent About Usage Limitations

Some policies will only cover you for certain uses. For example, if you’re a real estate photographer but get offered a gig shooting an oil pipeline, you need to make sure your insurance will still cover you. Always ask what situations you will be covered for.

Sample Drone Insurance Policy

To see what a drone insurance policy looks like, you can download a PDF of Verifly’s sample policy here.

Expert Tip: Look for a Policy from an Aviation Specialist

While many of the big insurance companies are coming out with policies for drone insurance these days, sticking with a carrier that specializes in aviation insurance is still probably your safest bet. Here’s Chis Proudlove from Global Aerospace on the issue:

“There are a myriad of options for insuring drone liability but the devil, as always, is in the detail. We would recommend operators obtain a policy from an aviation specialist as they have policy forms developed specifically for the needs of drone operators. If insurance is obtained through a general liability or homeowners insurance policy, it is worth checking that commercial flights are covered and that no exclusions exist in the policy that may negate significant coverage items.

Also, it is worth establishing that your insurance provider has the ability to offer the right insurance products for you as your business grows. Can they insure the asset itself? Can they offer high limits of liability if a contract requires it?”

Always Get Multiple Quotes

Although drone insurance policies can be very similar across multiple carriers, it still makes sense to call around to get multiple quotes. While you may not see a lot of variety in pricing, you may have specific needs or concerns that not every company can provide.

Drone Insurance Providers

The Bottom Line

If you’re using a drone for any commercial purposes, you’re going to need to purchase drone insurance. If you only use your drone a few hours per month and don’t need more than $2,500,000 in liability coverage, Verifly is your best bet. If you use it more frequently, you can purchase a yearly policy.