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Drone Insurance: Because You Will Crash Your Drone

Feb. 13, 2017
Homeowners Insurance, Insurance
drone-insurance
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Drone sales are taking off, and you don’t have to shop around much to see why: They’re really cool. You can buy recreational drones that perform aerial rolls and flips, record stunning video, follow you automatically and use sensors to avoid obstacles in flight. There’s even a drone you can build yourself out of Lego bricks. And yes, it actually flies.

The Federal Aviation Administration forecast last year that hobbyists would buy 1.9 million drones in 2016 and up to 4.3 million in 2020.

But with high-flying enthusiasm comes down-to-earth reality: Accidents can happen, making insurance a must. Depending on the policy, insurance can cover the drone itself. But the bigger risk is your liability in case the drone crashes into a person, causing injuries, or into somebody’s house or car, causing damage. Another risk: Someone suspects you’re spying (even though you’re not) and sues you for invasion of privacy.

Check renters or homeowners insurance

Standard renters and homeowners insurance policies likely cover recreational drones, according to the Insurance Information Institute, an industry group. If you have such a policy, the liability insurance would apply to everyone in the household, including any teenage drone enthusiasts.

But it’s important to check with your insurer about coverage for your drone because interpreting a policy can be tricky. Some policies, for example, have an aviation exclusion, which means they don’t cover aircraft, but some do cover model aircraft, says aviation attorney Ryan Hilton of Butler Weihmuller Katz Craig in Tampa, Florida. Is a drone a model aircraft? That’s a question to ask your insurer.

If you end up in a legal dispute with your insurance company over a drone claim, most courts will say a drone is a model aircraft, even if the insurer doesn’t agree, adds attorney James Michael Shaw Jr., also of Butler Weihmuller Katz Craig. “But it’s risky to count on the courts to agree with your interpretation if it’s different than the insurance company.”

Drone insurance under your policy

If your homeowners or renters insurance policy does cover recreational drones, it likely would:

  • Reimburse you if the drone is stolen, or if it’s damaged by a disaster covered in the policy, such as a fire.

Good to know: The deductible — the amount subtracted from a claim check — would apply. There might also be a dollar limit on coverage. Ask your insurance company if you can buy more coverage if your drone is worth more than the limit. A renters or homeowners policy will not cover your drone if it crashes or you lose it.

  • Pay medical expenses if the drone injures someone.

Good to know: The policy would not cover injuries to family members or pets. The expenses it pays would be limited to the amount of no-fault medical coverage in the policy. If those expenses exceeded the limit and you were sued, then your liability insurance would kick in.

  • Pay legal expenses and court awards if you’re sued for injuries or property damage the drone causes.

Good to know: You’re on the hook for any damages above the policy’s liability limit. Home or renters insurance will not cover damage by your drone to your own home or car. But your car insurance would cover vehicle damage if you purchased comprehensive insurance, an option that covers damage from falling objects and other disasters.

What renters or home insurance doesn’t cover

Your renters or homeowners insurance won’t cover you if your drone is used for the following reasons:

  • For business purposes. A renters or home insurance policy doesn’t cover business use. Even a simple transaction — say a friend pays you 20 bucks to take photos of his backyard — would count as business use, Hilton says.
  • To spy on somebody, Hilton says. For example: You hover the drone outside a neighbor’s window, take photos and then are sued for invasion of privacy. Insurance policies won’t cover intentional acts.

A homeowners insurance policy might cover you if you inadvertently take photos of someone else and are sued, according to the Insurance Information Institute.

Is renters or home insurance enough?

You’re probably OK relying on a renters or homeowners policy if you fly your drone infrequently, only for fun, and only in areas where it’s not likely to break anything or hurt or bother anybody, Shaw says.

“But, if you’re flying for commercial purposes, or flying often, or flying in an area where there is property to damage or people who could get injured or who could sue you for violating their privacy, you probably don’t want to rely exclusively on your homeowners policy,” he says. “You’re far better off with a policy specifically designed to cover drones.”

No insurance policy, though, will cover you for deliberate acts, such as trying to hurt someone or spy on others.

Where else to find drone insurance

Look for coverage elsewhere if you don’t have home or renters insurance, or if you want more protection than a home or renters insurance policy provides.

Club membership

One way to get drone insurance is to join a remote-controlled aircraft club that offers insurance. Annual membership in the Academy of Model Aeronautics comes with:

  • $2.5 million of personal liability coverage.
  • $25,000 in medical coverage if you’re injured.
  • $10,000 in accidental death coverage if you die or are dismembered while flying a model aircraft.
  • $1,000 to cover the drone if it’s damaged by fire or vandalism or is stolen.

The club’s insurance kicks in after any other coverage you have, such as home insurance, pays out.  Annual academy membership is $75 for adults up to age 65 and $65 for those 65 years and older. By joining the academy, you can meet other members in your area. Many local clubs maintain flying sites and sponsor events.

On-demand drone insurance

Verifly is a new company that sells drone insurance through an app. With traditional insurance, you buy a policy to cover you for months or a year at a time. With Verifly’s on-demand insurance, you buy coverage only when you need it. Starting at $10 an hour, the policy provides $1 million of liability insurance if the drone damages property or injures someone, and $10,000 if you’re sued for invasion of privacy. It does not cover damage to the drone itself.

“The coverage is hourly rather than yearly because that’s how these things are used,” says CEO Jay Bregman. He started the company after becoming a semi-professional drone operator and finding a lack of affordable drone insurance options that didn’t have exclusions for coverage.

To buy coverage, you download the app and select a flight area. The hourly price is based on the location and current conditions, such as wind speed. Verifly plans to offer coverage nationwide; now it’s available in the U.S. except in the District of Columbia, Illinois and New York.

Tips for drone operation

Along with getting drone insurance, follow the law and safety guidelines:

  • Register your drone. You must register with the Federal Aviation Administration if the drone weighs more than 0.55 pounds. If it weighs more than 55 pounds, you’ll need to fill out a paper registration; otherwise you can do it online.
  • Follow safety rules. Keep the drone in your line of sight and within 400 feet of the ground. If you plan to fly within 5 miles of an airport, federal law says you must first contact airport management and the traffic control tower. You can learn more from Know Before You Fly.
  • Avoid flying over private property or crowds without permission. Let neighbors know if you plan to fly nearby. “When they can’t tell who’s operating the drone, most people will assume someone is spying on them,” Shaw says.

Barbara Marquand is a staff writer at NerdWallet, a personal finance website. Email: bmarquand@nerdwallet.com. Twitter: @barbaramarquand.