Consumer Advisory: Drones and insurance

Up, up and away! The Division of Insurance offers a bird's-eye view on drone insurance.

Five tips for getting covered for your drone.


DENVER (Dec. 29, 2015) – Congratulations. You followed the holiday trend and are a proud new drone owner. Now what?

Before you fly, make sure you know what you’re liable for -- and covered for -- if you crash it. 

The Federal Aviation Administration (FAA) estimated that more than one million drones would be sold for personal use this holiday season. Additionally, the FAA estimates that by 2020 more than 30,000 small unmanned drones will be used for business purposes. These numbers don’t even include the huge number of drones already in use -- from hobbyists to photographers, farmers to law enforcement.

Even if you haven't found yourself heading into the “drone zone” as many others already have, if the message isn't yet clear, operating drones -- whether for personal or commercial use -- pose a number of critical insurance issues to consider before taking flight, ranging from personal injury and property damage to privacy concerns. The Colorado Division of Insurance, part of the Department of Regulatory Agencies (DORA), shares the following tips to help you better understand your responsibilities as a drone owner. 

1. Before you take flight, first check your local, state and federal laws regarding drones.

Drones are defined as remotely piloted aircraft systems and are also known as unmanned air vehicles (UAVs) or unmanned aircraft systems (UAS). According to the FAA, pilots of unmanned aircrafts have the same responsibility to fly safely as manned aircraft pilots. In addition, state and local municipalities may have their own laws regarding drone use.

Federal regulators have already begun registering civilian drone users in an attempt to address air safety risks posed by these machines. This will allow authorities to trace a drone back to an owner, which means it's vital that you're in compliance with laws and regulations and have the appropriate insurance coverage. 

2. Either obtain insurance, or confirm that your current insurance covers drone accidents. 

Since UAVs are operated remotely, there's no risk to passengers or crew. However, drones present a significant risk to property and life on the ground in the event of an accident, and the concern is the liability for an accident caused by your drone. Drones can crash due to faulty and inappropriate operation, mechanical defects and component failure. If your drone crashes into someone else's vehicle or a person, the accident is your responsibility.  Losses and damages could involve bodily injury to humans and animals as well as buildings and other structures.

Using a private drone as a hobby is generally covered under a homeowners or renters insurance policy (subject to a deductible), which typically covers radio-controlled model aircraft. If your drone falls and damages a car (including your own), it may be covered if you have a comprehensive coverage auto policy. Generally, policies cover liability for an accident caused by your drone. Check with your agent or insurer to verify your policy contains this important coverage. In addition, look at the contents section of your homeowners policy, or talk to your agent, to see if your drone will be covered if it is lost, stolen or damaged. 

3. Your insurance may not cover privacy violations. 

Privacy is a legitimate concern when it comes to drone use. Drones are often equipped with on-board cameras and other data-collection capabilities. You may be excited to use a drone, but how would you feel about your neighbors owning and operating drones near your home?   Drones may capture private data that could be harmful or embarrassing if shared. Beyond intentional surveillance, drones may also unintentionally capture images during routine and unrelated flights. As a drone owner, remain mindful of privacy concerns. Insurers are developing policies to cover these liability exposures, so keep in touch with your insurer to make sure your use remains covered. 

4. Follow drone safety guidelines.

Hobbyists have been flying model aircraft for decades. However, advances in technology allow drones to hover quietly and fly far from their pilot. 

With some drones weighing up to 55 pounds, a fall from the sky can cause significant damage to property or bystanders. The FAA has issued these guidelines for drone hobbyists:

  *   Don't fly higher than 400 feet and stay clear of surrounding obstacles.
  *   Keep the aircraft in sight at all times.
  *   Stay away from manned aircraft operations.
  *   Don't fly within five miles of an airport unless you contact the airport and control tower before flying.
  *   Avoid flying near people or stadiums.
  *   Don't fly an aircraft that weighs more than 55 pounds.
  *   Use caution when flying your unmanned aircraft.

5. What if you’re involved in a drone accident.

Rules about drones are still being made. Widespread use of drones — private and commercial — poses various risks, ranging from safety to privacy of individuals. Risks arising from the use of drones could best be managed by property and casualty insurers, but only once defined drone operational requirements and performance standards are in place. Complete and clear drone regulation, by the states and the FAA, is necessary before insurers can meet policyholder needs.

Currently, the commercial use of drones is largely restricted and operations are authorized on a case by case basis. The FAA has started regulating commercial drones with proposed rules such as requiring pilots to obtain special pilot certificates, staying away from bystanders and restrictions on when and where they can fly. The proposed rules also prohibit drone delivery of packages. Since final rules have not been implemented, they are not being enforced.

Until the rules are clearer, if you find yourself a victim of a drone accident, follow the same procedures with your insurance the way you would with your car or your home. 

More Information

In areas like drone insurance, where requirements are evolving, it's important to check with the Colorado Division of Insurance (DOI) for up-to-date information. The DOI, part of the Department of Regulatory Agencies (DORA), is a consumer resource where insurance experts can answer your insurance questions and provide easy-to-understand information. Call 303-894-7490 or 1-800-930-3745 (outside the Denver metro area) or visit dora.colorado.gov/insurance.  

Other resources regarding drones / UAVs / UAS

Read all of DORA's helpful holiday-related "Take 5 to Get Wise" consumer advisories by visiting Take5.state.co.us.

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The Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA) regulates the insurance industry and assists consumers and other stakeholders with insurance issues.  Visit dora.colorado.gov/insurance for more information or call 303-894-7499 / toll free 800-930-3745. DORA is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado. Consumer protection is our mission. Visit dora.colorado.gov for more information or call 303-894-7855 / toll free 1-800-886-7675

 


Media Contact:
Vincent Plymell
Division of Insurance
p: 303-894-2261 | c: 303-910-9614