Drone Insurance: Should Hobbyists Insure Their UAVs?

Whether you call it a drone or an unmanned aerial vehicle (UAV), the demand for this type of aircraft is climbing to new heights each year and highlighting the need for insurance protection in the event of a crash.

Part of what’s fueling the skyrocketing desire for drones is greater affordability and accessibility. A quick search on Amazon returns drone price tags starting as low as $19.99 to high-end drones costing upwards of $4,000.

And that’s helping push sales up. According to NPD Group, by 2018, sales are expected to soar to $1 billion, up from $130 million in 2015.

While the sky is the limit on drone innovation, there are risks involved. Whether you’re a farmer using your drone to capture information about your crops or you’re using first person view (FPV) technology to stream your flight right to your mobile device, there’s always that chance that something will go wrong.

What happens when your drone crashes? Are you covered by insurance?

Spend a few minutes perusing the database of drone accidents and you’ll see that while crashing your drone into the Seattle Space Needle (yes, this actually happened) probably isn’t a likely scenario for you, crashing your drone into a neighbor’s car — or worse, into your neighbor — is.

Whether the cause is human error or technological malfunction (most commonly the case according to the FAA’s Data Incident System), damage can be costly. As the popularity of drones increases, so, too, will the frequency and types of accidents.

Do you need drone insurance?  

In the United States, UAV insurance is currently not required for recreational drone use. But that could change.

Numerous factors come into play when deciding whether or not to purchase drone insurance. For example, if you purchase a very lightweight drone for less than $100 and gift it to your child who flies it in the backyard of your house only, it may be cost-prohibitive to purchase insurance that costs equally as much.

Some homeowners and renters policies cover recreational drones, but most restrict drones as an aviation exclusion since the Federal Aviation Administration (FAA) classifies them as “small aircraft”.

Check with your insurance agent or shop around for the best coverage.

While other insurers view the personal use of drones as a hobby, they won’t cover your drone if it crashes or you lose it. And policies will not cover intent to spy on others.

A typical scenario is your drone snaps photos of your neighbor while in his home and he sues you for invasion of privacy.

If your policy does cover recreational drones, it would most likely:

• Reimburse you should your drone be stolen or damaged by a disaster, such as a fire, as defined by the policy.
• Pay medical expenses if the drone injures someone, but keep in mind that the policy would not cover injuries to family members or pets.
• Pay legal expenses and court awards if you’re sued for injuries or property damage caused by the drone.

Matthew Henshon, a Boston-based attorney whose firm specializes in emerging technologies, points out that while insurance is not currently mandated for recreational use here in the United States, drone users should keep in mind that technology is imperfect.

“The law of averages tells us that the more someone flies a drone, the greater the probability of a crash.”

Henshon, a personal drone enthusiast whose own drone recently suffered a minor crash, draws a valid distinction between recreational drone users like himself and commercial drone users who are bound by FAA regulations that often require insurance. “Recreational drone users have much more wiggle room and therefore must evaluate their own comfort level with risk when considering insurance.”

Drone insurance options and rates

Drone insurance costs can vary depending on type of drone and use. For example, coverage rates for closer range, mini drones such as quadcopters, used for aerial photography, will be much different than endurance drones, such as octocopters that come with lots of equipment.

You can purchase drone insurance through individual liability coverage from a private insurance agent though some companies require a commercial license. A commercial insurance policy covering liability up to $1 million can run less than $1,000 a year depending on a number of factors.

Club memberships

Organization, such as the Academy of Model Aeronautics (AMA), provide drone insurance with a valid membership.

According to the AMA, coverage includes $2.5 million of personal liability, $25,000 in medical coverage, $10,000 in accidental death and $1,000 for drones damaged by theft, vandalism or fire.

On-demand drone insurance

Apps, such as Verifly, provide on-demand policies for both recreational and commercial users via hourly fees.

Before you go shopping, consult your insurance company on what your existing homeowners or renters policy covers and what it excludes so you can assess whether purchasing additional drone insurance makes sense for you.