The use of drones for commercial and recreational purposes continues to grow, which drives the market for Drone Insurance Programs. According to Forbes Business Insight, the commercial drones market will hit $6.30 Billion by 2026. The Federal Aviation Administration (FAA) gives drones the classification of Unmanned Aircraft Systems (UAS). Drones are also known as unmanned aerial vehicles (UAV), and their uses are increasingly more complex, ranging from recreational purposes to commercial and military applications. There are 861,036 drones registered with the FAA, broken into 329,114 commercial and 528,336 recreational usages.
What is Drone Insurance & Who Needs It?
Drone insurance protects the UAS and UAS owners against damage to the aircraft, accidents, and more. In 2022, there are no current FAA insurance requirements for recreational or commercial drone use. However, there are laws in several states regulating drones. Check the National Conference of State Legislatures (NCLS) website for state-by-state drone laws.
Although insurance is not a statutory requirement, anyone who owns or uses a drone is an excellent prospect to purchase the protection drone insurance offers. Those using drones for commercial purposes are obvious candidates for drone insurance coverage. In addition, many commercial drone businesses have clients with drone risk management needs that require them to provide certificates of insurance with a minimum level of drone liability insurance as a contractual condition of doing business with them.
Recreational users are also prospects for drone insurance to protect their property and the liability of causing physical harm to persons or damaging their property. Essentially, drone coverage is advisable for anyone who owns a UAS for any purpose to cover others and their property at risk and themselves from their drone usage.
Types of Drone Insurance
The most common coverages available for drones are liability and hull insurance. There is also payload insurance that protects components and gear, which often are more costly than the drone itself. Examples include LIDAR lasers, cinematography-type cameras with advanced thermal and multispectral imaging, sensors, and gimbal stability systems.
Agents writing drone insurance programs need to include ground equipment such as remote controllers, laptops, tablets, dedicated ground stations, batteries, base stations, GPS, surveying equipment, and other electronic systems, plus transportation and storage cases, and more. Finally, drone insurance for personal injury and non-owned coverage is available for drone owners and pilots.
The full array of drone usage is evident by viewing the USG Insurance Services page in its Program Business Market Directory listing for drone insurance programs.
USG Drone Target Classes:
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Remotely or Autonomously Piloted
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Aerial Filming & Videography
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Construction
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Property Inspection & Real Estate
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Line Inspections
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Agricultural Applications
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Aerial Commercial Photography
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Crop Dusting
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Border Surveillance
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Pipe/Power Line Surveillance
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Suspect Tracking
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Communication/ Broadcast
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Disaster Response/ Relief
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Movie Production
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Damage Assessment
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Aerial New Coverage
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Atmospheric/ Weather Research
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Mail/ Freight Transport
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Critical Infrastructure Monitoring
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Flood Mapping
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Damage Surveying
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Real Estate Mapping
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Mining
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Sporting events Coverage
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Wildlife Monitoring
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Roofing Investigations
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Locating individuals
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Fire & Explosion Investigations
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Underwriting Surveys
Drone Coverage Under Homeowners and Renters Insurance Policies for Non-Commercial Usage
Many homeowners and renters policies include certain types of coverage for non-commercial drone-related incidents that are not available for coverage through drone insurance programs.
Liability – Protects against claims of bodily injury or property damage due to drone operations by the homeowner, family member, or other people with permission to operate it. Coverage may extend to privacy issues should the owner be sued for accidentally recording a person who has not given their consent to be recorded or for claims of intentional invasion of privacy.
No-fault medical coverage – Helps to pay losses for accidental injuries to others who are not family members when caused by a drone in non-commercial use.
Theft or loss of a drone – Inexpensive drones costs are below the homeowners policy deductible. So, only expensive models with costly video recording, GPS navigation, and other such gear are covered for replacement if the drone is stolen or lost. Depending on the policy and carrier, expensive items may require an endorsement or separate policy for the most comprehensive coverage.
Coverage While Flying the Drone
Drone liability insurance helps pay bodily injury or property damage claims against commercial drone operations. It covers the liability risks for drone owners and approved operators. Drone liability insurance is unique because some insurance companies offer options to allow insureds to purchase an annual plan or obtain coverage by the month and even by the hour when flying the drone. However, only monthly and yearly plans extend drone coverage nationally, while hourly options limit the scope to a defined area or destination designated in the policy.
Policy limits for a typical drone liability policy start at $500,000 and go up to $1 million in liability coverage. However, liability limits for up to $25 million per occurrence are available from specific drone insurance programs.
Coverage While Not Flying the Drone
Videographers, photographers, and drone operations need ground-based insurance to complement their drone coverage. Ground-based insurance covers the on-ground equipment drone operators use in public and approved private areas while their drones capture aerial images or other commercial applications. Non-flying insurance includes personal and advertising injury, 3rd-party bodily injuries, and property damage claims resulting from ground-based operations and premises liability.
Physical Damage Coverage
Hull insurance for drones will pay for physical damage to repair or replace the UAV it covers. Also known as hull and machinery insurance, it primarily pays for total loss, partial damage to the UAV and its equipment, and for other salvage-related costs and dry-docking expenses. Labor and legal costs related to drone operations are also covered under hull insurance. Optional physical damage coverage can include theft and loss of use.
Drone Insurance Costs (and what factors affect the price)
Commercial drone insurance programs offer coverage like most typical commercial insurance policies. However, the pricing structure is uniquely variable depending on the type of use for an individual drone and the risk it and its operators face while in use. Due to the variety of applications for drone usage, insurance rates and payment plans vary widely. Typical drone liability insurance plans start at $5 per usage hour up to $1,000 for an annual plan with limits starting at $500,000.
There are apparent trends in pricing between the costs of hull insurance and liability insurance. While hull insurance premiums tend to rise over time, the premium for liability coverage can trend lower as insurers track consecutive policy periods without claims against them.
Best Drone Insurance Programs
When agents seek the best drone insurance programs, they find the Program Business Market Directory is the right resource. For example, a quick search for drone insurance programs, and you would discover USG Insurance Services.
USG Insurance Services provides innovative solutions for harder-to-place commercial insurance accounts, including unique drone insurance programs. Writing coverage in all states with a growing network of 20+ branch offices nationwide, it has a $220+ million book of business that surpasses industry growth standards. Its agents appreciate that USG does not divide its Producer/Brokers by territory, coverage, or account size.