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Drone Insurance

Drone Insurance

One of the hottest gifts (aside from those combustible “hoverboards”) this past Christmas was, of course, drones. Price drops made owning a drone easier than ever.

Many businesses are getting into the act, realizing how drones can be used to give them a new perspective on job sites and work activities.  You can now see what once could only be seen in expensive ways: helicopter or airplane flyover, satellite pictures and data.

Personal or business ownership of a drone does affect your insurance coverage, though currently not as much as it might in the future. At present the coverage is easy to obtain under most current policies, and doesn’t cost much to add. That may change sooner rather than later.

Drones Are Equipment

For business policies, drones are insured under an inland marine floater or contractor’s equipment policy.  If the drone is rented or leased it can be included under the leased and rented equipment limit as long as it does not exceed that limit of coverage.

If the drone is owned, it is placed under scheduled equipment and added to the policy by name, serial number and cost at the same rate as other tools on your policy. The drone is subject to the same coverage and exclusions, coinsurance, deductible and valuation as any other piece of owned equipment (usually actual cash value).

If you don’t currently have equipment coverage for your business, check with your insurance broker to see if the drone can be added as a floater. While there may be some small amount of throw-in coverage for equipment under a business owner’s package (BOP) it may not be enough to sufficiently insure your drone in case of damage or theft.

Drones Can Be A Liability

Just as a drone can be considered a tool, it can be covered under a general liability policy without any hassle. If you have purchased a drone or are considering purchasing one, there are some things you should consider:

  1. Privacy issues. Using a drone to invade the privacy of an individual or business would be excluded under the Commercial General Liability (CGL) Coverage Form (CG 00 01), specifically:Drone Exclusions
  1. Governmental action. Due to the increasing prevalence of drones for commercial and personal use, the FAA has instituted strict regulation of what they call Unmanned Aircraft Systems (UAS). Failure to register your drone can result in civil penalties of up to $27,500 and criminal penalties can result in fines of up to $250,000 and/or 3 years imprisonment. Neither the fines, nor the legal fees are covered under the standard CGL policy.

You can find out more about governmental regulations with regard to UAS at Know Before You Fly.

What To Expect In the Future

Since the introduction of low cost business and recreational drones, purchase and use of these aircraft have skyrocketed. With more usage comes more understanding of the unique legal dilemmas surrounding drones.

As public and private usage concerns make their way through the legal system, insurance policies will begin to respond the way they always do: adding exclusions, increasing premiums, and/or requiring drone-specific coverage for individuals and businesses. Businesses and homeowners will start to see questions about drone ownership and usage on upcoming renewal applications, and increased premium related to these devices.

Your Hayes Brokers are here to help you navigate the world of drone ownership as it relates to your personal or business insurance. Call today to discuss whether you have the proper coverage, and how it may affect your insurance in the future.


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