TABLE OF CONTENTS

Drone Insurance: A Step-by-Step Guide to Liability & Drone Hull Insurance

how to get drone insurance

Getting drone insurance is a smart move if business is being conducted.

If you’re making money with your UAV, or you plan to in the future, insuring it could save you a lot of money down the line if an accident happens.

And let’s face it, UAV technology isn’t perfect. Fly-aways beware!

Getting drone insurance may also help you close clients (who may not want to work with you unless you’re insured). If anything, you’ve got peace of mind knowing that you’re covered in the unlikely event of an accident.

Insuring your drone is a relatively new concept.

Over the last several months, I’ve been getting a lot questions about how to get insured, what’s covered, how much it costs, and the options available.

First of all, do you even need drone insurance?

If you want to be insured, your homeowner’s insurance likely does NOT cover use of your drone, even if you’re just operating recreationally in your own backyard.

Some companies will only insure you if plan to pilot your drone commercially as a professional pilot.

In the U.S., UAV insurance is not currently required for either recreational or commercial RC drone use. In Canada, though, if you’re operating commercially you must be covered for at least $100,000 liability.

In some instances, you might need a minimum level of insurance coverage to take on a project, whether it’s needing to secure a city film permit, or working with a larger company that requires insurance for each of its vendors.

At the end of the day, all serious UAV pilots have liability insurance. It’s a strong, credible indicator for your business prospects. Insurance shows that you’re professional and reputable.

For those who plan to fly commercially, this guide covers:

  1. What is drone insurance?
  2. Accident and liability coverage
  3. What types of coverage are available?
  4. How much does UAS insurance cost?
  5. How to get insured
  6. Companies that will insure your UAV
  7. How to file a drone insurance claim

Let’s get started!

01 CHAPTER

What is Drone Insurance?

Note: Live in the U.S. and need to get certified? Check out our drone certification guide to learn more about what’s required. We also have a Drone Pilot Ground School training course to help you prepare for your written test.

Drone insurance acts like any other insurance policy. If you lose your drone or get into an accident, the company will cover your damage and liability costs to a certain extent.

Drone Pilot Ground School

Insurance companies want pilots to have operating manuals, maintenance logs, and a record of parts or add-ons they’ve purchased. These items, along with proof of training or of planning to get trained, indicate that you’re a safe flyer or want to become one.

This lowers the amount of risk you pose to your drone, other people, inanimate objects, and to the insurance company’s costs. The safer and more prepared you are, the more likely you’ll be to obtain insurance and get a desirable rate (similar to car insurance).

Here’s a list of potential uses (operations) a company could insure you for:

  • Law Enforcement and SWAT
  • Emergency Response (FEMA)
  • Fire and Rescue
  • Traffic Patrol and Accident Assistance
  • Homeland Security
  • Corrections Facility Security
  • Agriculture and Conservation
  • Construction
  • Facilities Protection: Electrical, Nuclear, and Water Sites
  • Maritime and Shipping
  • Pipeline/Hydro-Transmission Line Inspection
  • Railroad and Highway Maintenance
  • Archaeology and Geology Exploration
  • National Parks and Recreation
  • Movies and Videography
  • News Gathering
  • Real Estate

Source: Unmanned Risk Management

02 CHAPTER

Accident and Drone Liability Coverage


Here is a list of potential accidents covered under commercial drone liability insurance:

  • Loss or damage to the UAV and associated equipment
  • Coverage for aircraft operators, including other non-pilot, on-ground crew
  • Manufacturer Product Liability
  • Third Party Legal Liability
  • Premises Liability
  • Aviation and Premises Medical Payments
  • Fire Legal Liability
  • Independent Contractors Liability
  • Personal Injury
  • Advertising Liability
  • Contractual Liability
  • Fellow Employee Coverage
  • War, Hi-Jacking and Terrorism
  • Damage to Premises You Rent
  • Your Property & Office/Studio Contents

Sources:

03 CHAPTER

What Types of Coverage are Available?

I. Liability

In aviation insurance, the base policy is liability only. This coverage must be purchased prior to adding any other type of coverage.

Think about it like the foundation of the UAS insurance policy. This coverage will protect the business from Property Damage and Bodily Injury claims that may arise through the commercial operation of UAS. Typically, liability limits start at $500,000 and usually can be negotiated to as high as is required by the business and its clients (limits as high as $10,000,000 per occurrence are not unheard of in UAS insurance).

However, each company may or may not offer you certain limits based on their underwriting criteria. It is often argued that liability is the biggest concern of any business, especially one that operates aircraft.

II. Hull

Generally, the next coverage to consider after liability is “hull” coverage.

Hull coverage’s purpose is protecting the business from the financial cost from any Physical Damage that may occur to its UAV(s). Typically, this coverage is quoted on an “Agreed Value” basis. The business owner, their broker, and the insurance company will agree upon a value and quote the UAV based on that valuation. However, it is very important to make sure that the UAS’ value is accurate.

If a UAV was purchased in early 2015 for $1,500, the market value is most likely not the same at the beginning of 2017. Not keeping up with the declining value of UAVs will lead to overpaying for insurance, problems in the claims process, and overall dissatisfaction with the insurance carrier. If your UAV is totaled, the insurance company will cut you a check for the insured value of the UAV minus any applicable deductibles (deductibles on a UAV policy are usually between 5% and 10% of the insured value of the aircraft depending on the insurance policy).

However, some companies will adjust the value of the aircraft to reflect the current market price (example: you cannot insure a DJI Phantom 3 for $6,000 and expect to get that amount in the event of a claim). This is another reason why it is important to have the stated value be in line with the current market price of your UAV.

III. Payload

Depending on the type of UAS that is operated, another option to consider is payload coverage.

If a business owns multiple cameras or sensors, that are designed to be carried by a UAV, payload coverage is very important. This coverage is similar to the above Hull coverage, except it is specifically designed for payload equipment. This coverage is designed to protect the insured from any Physical Damage losses to a scheduled payload. Again, a similar deductible of between 5% and 10% of the insured value of the equipment will be applied to payload items.

For this type of coverage, an insured does not simply want to “lump” the value of the payload in with the hull coverage on the UAV. These items should be scheduled separately. Just like the hull coverage, it is important to accurately insure the value of the payload. An example of how the scheduling should look on the quote/binder/policy is provided below.

Aircraft Schedule

2017 DJI Inspire 2 – S/N 0DDX091356F9 – $3,000 (Insured Value)

2017 DJI Zenmuse X5S – S/N 0DDP4987321 – $1,899 (Insured Value)

2017 DJI Zenmuse X5R – S/N 0DDF2345697 – $3,199 (Insured Value)

IV. Ground Equipment

Ground equipment such as dedicated ground stations, laptops, tablets, UAV cases, remote controllers, and other items associated with an insured UAV can be added to insurance policies. Similar rates and deductibles to the hull and payload coverage should apply to the ground equipment.

V. Non-Owned Coverage

There are a few types of Non-Owned coverage that can be added to a UAV insurance policy. The first is Non-Owned UAV Liability coverage. This coverage is designed for a business that operates UAVs that are not owned, or leased for a significant amount of time, by the Named Insured. Non-Owned UAV Liability coverage will protect the business from any claims of Property Damage or Bodily Injury that may arise from their use of a Non-Owned UAV (but not physical damage to the non-owned UAV itself). If Non-Owned UAV Liability coverage is added to a policy, it typically follows the liability limit of the owned aircraft. If a business is ever asked to operate a UAV that is owned by someone else, Non-Owned Liability coverage is something for them to consider.

A second Non-Owned UAV coverage to consider is Non-Owned UAV Hull coverage. This coverage, just like the “owned” Hull coverage, is coverage for Physical Damage to the non-owned UAV(s) operated by the Named Insured. The Named Insured generally selects a limit for this coverage. So, if a Named Insured generally operates a 2017 DJI Inspire 2, equipped with a DJI Zenmuse X5S Camera, that is not owned by that Named Insured, they should consider adding Non-Owned Hull coverage in the amount of $4,899 ($3,000 for the Inspire 2 and $1,899 for the DJI Zenmuse X5S).

A third Non-Owned coverage to consider is Non-Owned Payload coverage. Again, this coverage works in a similar fashion to the “owned” Payload and Non-Owned Hull coverage described above. If a Named Insured operates an Owned 2016 Freefly Alta, and commonly carries RED cinematic cameras owned by the production companies that hire them, Non-Owned Payload coverage is a must (these cameras, equipped with certain lenses, can sometimes be valued around $100,000!).  Or, if a Named Insured preforms aerial inspections, using expensive sensors not owned by that Named Insured, Non-Owned Payload coverage is, again, crucial. Some insurance companies add this coverage on a case by case basis. In that situation, the Named Insured will Other companies allow you to set a coverage limit and add a “blanket” endorsement to the policy.

VI. Personal Injury

Personal Injury coverage is a relatively new offering in the UAV insurance world. This type of coverage is for libel, slander, violation of privacy, and copyright infringement. The most important portion of this coverage is the violation of privacy language. With the negative portrayal of UAS in the media, and the population’s irrational fear of flying cameras, it is a good idea to consider this type of coverage.

A big thank you goes out to Joe Ernster of Bullock Agency, Inc. for providing us with this list and in-depth information regarding types of coverage.

04 CHAPTER

How Much Does Drone Insurance Cost?


Drone insurance policies are usually broken up into two parts:

  1. Liability (damage and claims to third parties)
  2. Hull damage (damage related to your UAV)

A commercial insurance policy for a DJI Phantom 4 or Yuneec Typhoon H covering liability up to $1 million can run as little as $600-$800 a year (depending on volume, experience, and background).

Or if you use a company like Verifly, an on-demand drone insurance company, you can get $1 million in liability for as little as $10/hour.

Please note that these are general numbers from our research. You will need a unique quote from an insurance company to know exactly how much you will be covered and what it will cost.

In early 2017, I got an email from Alex Sheard over at SkyVuzeTech with some updated pricing, and he gave me permission to post the email below. Another data point for you:

New 2017 average “ballpark” pricing:

Need coverage to get your operation going…
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Berkley Aviation offers per unit policies.

$1,000,000 UAV Liability Limits – $750/yr.

$2,000,000 UAV Liability Limits – $1050/yr.

$3,000,000 UAV Liability Limits – $1450/yr.

$5,000,000 UAV Liability Limits – $2,050/yr.

Unfortunately, Berkley Aviation does not offer physical damage coverage at this time. They are shooting for mid-March and we can always add it when it becomes available.
_____

For larger operations with multiple UAV’s in their fleet, one of our carriers has a policy that offers both UAV liability & physical damage coverage.

THERE IS NO ADDITIONAL COST FOR MULTIPLE UNITS AS LONG AS YOU ARE ONLY OPERATING ONE AT ANY GIVEN TIME!

Banded Pricing Models to give indications based on 1 aircraft in flight.

Silver: Up to $3,000 physical damage; $1M Liability
Premium INCLUDING taxes and fees $1,025/yr.

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Gold: Up to $3,000 physical damage; $2M Liability

Premium INCLUDING taxes and fees $1,450/yr.

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Platinum: Up to $10,000 physical damage; $2M Liability .

Premium INCLUDING taxes and fees $1,950/yr.

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Policy financing option available for 20-25% down with 9 monthly installments.

If it’s been a while, take a moment to fill out an updated application and we will make sure you have the PROPER coverage for the industries lowest rates.

Each company structures their policies a little differently. Some include hull insurance, others do not. Do your due diligence and chat with a number of companies before moving forward.

Here are a few things that your insurance broker may consider when putting together your application for the underwriter:

  • Have you logged at least 50-100 hours of flight time?
  • Do you keep a maintenance log?
  • Are you an FAA-licensed drone pilot?
  • Do you own vs. lease your equipment?
  • What do your website / marketing materials look like?
  • Are you able to automatically record your flight log and data?
  • Are you flying over water, or operating indoors?

Also, have you completed some kind of drone pilot training? (Not required to have gone through any kind of program or degree; they’re looking for experience and being able to demonstrate operational competency.)

05 CHAPTER

How to Get Drone Insurance


To get insured, you will first need to obtain quotes from multiple companies and decide which one you want to go with.

To get a quote, go to an insurance company’s website, find the “get a quote” form, and fill it out.

Here’s some info you’ll need to have handy:

  1. Information about you, including your address and contact info.
  2. The type of coverage you need (liability vs. hull
  3. The cost of each part of your rig, including equipment
  4. Specific information about the UAV(s) you have
  5. Where you’re planning to operate
  6. How many hours you’ve flown
  7. How much training you’ve received
  8. If you have any previous history of accidents or loss
  9. 333 exemption grant or other country-equivalent certification paperwork

Check out this form from Aviation Insurance to see what information a company might ask you for in the consultation stage.

Alternatively, you can download Verifly’s app and get a quote from them for on-demand coverage.

Once you’ve obtained multiple quotes, you can compare prices and coverage. This will help you decide which company is offering you the best deal.

They’ll guide you through the rest of the procedure.

Can you lose your insurance?

Yep, here’s a few reasons why you might get dropped from your provider. Every provider has its own exclusions, and it’s important to understand what they are.

Here are a few we’ve heard about:

  • Not logging your flights and being able to prove what happened during an accident with flight log data.
  • Not registering your serial number and putting proper identification numbers on your drone.
  • Not logging all battery cycles and maintenance changes (even propeller changes).
  • Not practicing ethical flight, and uploading dumb videos to YouTube that proves it!
06 CHAPTER

List of Brokers / Companies That Will Insure Your Drone


The below companies all offer drone, UAV, UAS, and quadcopter insurance coverage.

One thing I’d like to point out, is that very often I get asked, “But I already have insurance with my AMA membership. I don’t need anything more than that, right?

Well, in this 2015 insurance summary, it’s clearly stated that your $2.5 million liability policy:

…does NOT cover business pursuits; that is any activity that generates income for a member beyond reimbursement of expenses, except this business pursuit exclusion does not apply to individual members providing modeling instructions for pay to AMA members.

So, if you plan to fly commercially, your AMA insurance won’t cut it.

In alphabetical order, here’s a list of drone insurance brokers that can help you find the best sUAS insurance policy for you and your company. This list is particular to the United States, and some of the companies listed are very specific to the drone industry, while others offer more diverse business products to their clients.

List of Drone Insurance Brokers

List of Drone Insurance Underwriters

The team over at ArcadiaSky maintains a separate list of insurance providers outside of the U.S., particularly drone insurance in Australia and in the U.K.

And finally, a quick word about what an “insurance broker” actually is, written by the team at Kinney Pike Insurance:

Brokers have access to a broad range of coverage for their clients.  By working with a drone insurance brokers, you’ll often find insurance professionals dedicated to securing the right product for your specific needs.  Brokers value their relationships with their clients, and often have multiple resources and extensive expertise to address the unique insurance market and, risks and coverage you face. Brokers work closely with insurance companies/underwriters and carefully choose and secure the best coverage at a competitive price for their clients.

07 CHAPTER

How to File a Drone Insurance Claim


You might not need to file a claim right now, but it’s good to know what might be required if you do end up filing one.

Here’s a general outline from Unmanned Risk Management:

  1. Read over your insurance policy for specific duties to accomplish. This will tell you what your insurance company does and doesn’t want you to do.
  2. Notify the insurance company as soon as possible. Note the time, place, description of the occurrence, names and contact information for any injured people and witnesses.
  3. Notify the proper authorities. Contact the police for theft or vandalism claims.
  4. Do not make any statements (oral or written) without the insurance company’s permission.
  5. Do not abandon your aircraft or insured property; take all reasonable precautions to protect your property immediately after the incident.
  6. Cooperate with the insurance company and their representative(s).
  7. Allow the insurance company to inspect the damaged property prior to repair or disposal.
  8. File proof of loss with the insurance company within a set amount of time.
08 CHAPTER

Next Steps

Hopefully this guide has given you everything you need to understand drone insurance and begin the process.

Remember, you might be covered by your homeowner’s insurance if you’re only flying recreationally, but make sure to confirm this before continuing to fly.

If you’re a commercial pilot, getting insured is highly recommended to protect you and your business.

Here’s an interview we did with the CEO of Verifly, Jay Bregman:

https://www.youtube.com/watch?v=sEJI_FrSIdo

Questions? Feel free to email support@uavcoach.com.

Happy to help where we can.

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