Coverage On-the-Fly: On Demand Drone Insurance Explained

Global Aerospace Editorial Team, August 23, 2017
UAS / UAV Insurance

The use of unmanned aerial vehicles (UAV) or unmanned aerial systems (UAS), better known as drones, is increasing rapidly. The Federal Aviation Administration (FAA) has forecasted that hobbyists alone will account for the purchase of 4.3 million drones in 2020 in an industry that PricewaterhouseCoopers LLP estimates will be worth roughly $127 billion at that time.

Drones are also being used commercially with increasing frequency. From agriculture and real estate to industrial photography and inspection, companies are finding endless ways to leverage the new perspectives that drones provide.

However, with high-flying enthusiasm comes the down-to-earth reality that operating a drone involves inherent risk. While a policy can cover the drone itself, the more pressing issue is liability. The most obvious danger is that the UAS will crash, causing property damage or personal injury. But, there are other risks including liability for invasion of privacy if a drone should capture video or still images of subjects who have not agreed to be filmed.

Consequently, it is crucial that operators insure drone flights. Policies specific to UAS use are now available in what is a very fast-growing insurance category.

On Demand Drone Insurance

Getting the Right Drone Coverage: Working with an Aviation Specialist is Critical

As you might expect in a relatively new niche like drone insurance, there is significant confusion and a fair amount of misleading information about risks, liability, and available coverage. Some of the most common questions from UAS operators are:

  • Do I really need drone insurance?
  • The company I’m working with requires drone insurance—what are my options?
  • Can I fly a drone without having to buy a long-term insurance policy?
  • Is drone insurance expensive?
  • Why are the prices for drone insurance high compared to the relatively low cost of a drone?

Do I Really Need Drone Insurance?

The first question is often asked by recreational drone operators, who hope that their homeowner’s or renter’s insurance policy will cover their UAS. Every policy is different and you should talk with your agent. However, in general, damage to another person’s property or injury to a bystander caused by a drone is not addressed in these policies, and they almost certainly will not cover anything deemed a “business” use.

How Much Does Drone Insurance Cost?

As for options and cost, the good news is that there are policies that can be purchased on an hourly basis for as low as $10/hour. They provide up to $10,000,000 in liability coverage and $10,000 in accidental invasion of privacy coverage. And while $40 for four hours of coverage can seem pricey when the drone involved may have been purchased for a few hundred dollars, that’s because the purpose of the policy is to cover liability arising from the use of the drone, not the cost of the vehicle itself. Note: Drones over 35 pounds may require a traditional policy. For those looking for an annual policy, coverage can be obtained from several companies, including Global Aerospace, that runs from around $600 for $1m in liability coverage up to limits in excess of $50m.

Enabling Spontaneous Flight with On Demand Drone Insurance

Drone pilots, especially amateur operators, will attest that one of the most appealing aspects of drone use is that it allows them to experience the joy of flight anytime, anywhere. Unfortunately, that spontaneity can cause issues when it comes to drone insurance. Many operators, including those who fly commercially, do not have a policy that covers them on an ongoing basis, and obtaining insurance has not historically been something you could do on-the-fly.

To help solve this dilemma, the concept of on demand drone insurance has been created. Using a smartphone app, UAS operators can purchase a policy that goes into effect immediately and provides coverage for a set number of hours in a specified location.

How On Demand Drone Insurance Works

The Verifly app by Thimble can immediately insure drone use, with a policy that is underwritten by the aviation specialists at Global Aerospace. The process is fast and intuitive:

  1. Specify the flight area. The app automatically assesses the risk in the quarter-mile coverage area based on factors like the presence of structures, population density, and weather conditions. The app will even warn you if you are looking to fly in a restricted space.
  2. Get a real-time price quote. You know immediately how much you’ll pay for what level of coverage.
  3. Choose your policy. With Verifly drone insurance, for example, you can receive up to $10,000,000 in liability coverage and $10,000 in invasion of privacy coverage with prices starting at $10/hour. Policies are available for one-, four-, and eight-hour blocks.
  4. Receive proof of insurance on the spot. Your policy downloads to your device instantly.

It’s surprisingly easy to get excellent hyper-local insurance coverage when you need it, where you need it. The policy is identical to what you would receive in a more traditional transaction, and fully backed by Global Aerospace.

In a business setting, the cost can be passed on to the client so there is ultimately no out-of-pocket to the UAS operator. And for amateur pilots, there is tremendous comfort in knowing that incidents that might occur involving the drone will be covered for a small fee relative to the large liability.

Rules and Regulations for Drone Operation

There are, of course, rules, regulations, and common sense guidelines that should be observed when flying a drone. These include Part 107 of the FAA regulations covering drones weighing less than 55 pounds. For example, the UAS should be operated:

  • Away from populated areas
  • During daylight hours
  • At a height that does not exceed 400 feet above the ground
  • Within visual line of sight of the operator and/or a designated spotter

The combination of careful operation and on demand drone insurance helps ensure that everyone in the area of a drone flight—from pilot to bystanders to property owners—is protected should a problem arise. We’re pleased that Global Aerospace’s collaboration with Thimble on the Verifly app is an affordable way to purchase powerful peace of mind.