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Drone Insurance? It’s Coming Your Way From Above

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By: Todd Halterman April 19, 2017 0

drones and insurance 2017New technologies are impacting many different industries – and have been as long as commerce has been taking place. Whether it be when JC Penny and Sears and Roebuck were selling products to gold miners in the 1850’s or when Henry Ford was selling the Model T in the first half of the 20th century companies that adapt to technological change are the companies that succeed in the long term.

At this time technological advances are coming from companies like Uber and Lyft who are turning the taxi cab industry on its head. It also is coming from companies like Tesla and Google who are developing technologies that allow a car to drive itself. Drones are the one technology that is especially impacting the insurance industry and will be impacting the industry for the foreseeable future. Here are a few ways that drones will benefit the industry and present challenges going forward.

Benefits to the insurance industry.

With the emerging use of drone technology, there are enormous amounts of people who are taking the risk of being liable for accidents that happen when they use drones whether for personal or commercial use. When the drones are used for commercial purposes, the coverage is usually and addition to a standard commercial general liability insurance policy. Personal coverage is normally sold as a stand-alone policy in several different forms. Insurance carriers also want to use drone technology to aid them in several aspects of their business. Most of the ways in which an insurance carrier can benefit from are related to processing claims and preventing fraud.

Speed up processing claims and lower prices

How drones aide in processing claims is by allowing the insurance adjuster the ability to get a birds-eye view of the property and surrounding location involved in the claim. This can be especially beneficial after a natural disaster. Take for instance when a tornado or hurricane occur, an adjuster can come to a neighborhood and use the drone to survey the area before walking the neighborhood to inspect the impacted properties. This can allow the adjuster to know which properties are most damaged and which area of the property he needs to pay special attention to. Some experts even anticipate a day in the future when a drone is sent to the location and the adjuster never has to leave the office. This can turn the processing of a claim from a time period of a month it as little as a few days to possibly even a few hours after the occurrence.

The more efficient the drones allow an insurance carrier to process a claim the more it will impact their bottom line. This, in turn, will lower what they are able to charge for premium. The less they can successfully charge in premium the better the impact will be on the entire business community.

Prevent fraud

According to a Fox Business article about the ways drones impact the insurance industry “Fraud costs property & casualty insurance companies as much as $32 billion per year, or about $0.10 of every dollar paid out in loss and loss adjustment expenses”.  This is a substantial amount of claims that if eliminated could allow the industry to lower prices for consumers and increase profits for investors enormously.

One way in which they can aid in preventing fraud is by allowing insurance carriers to more easily prevent customers from claim damage after an incident that commonly has plenty of damages. A natural disaster is the most common time when a homeowner may claim damage to their property that was actually caused previously and was not a covered loss. Drones can allow the carrier to more frequently capture images showing the state of the property.

Challenges for the insurance industry

Start-ups will pop up to compete with traditional insurance companies

The main negative drones will bring to the insurance industry is that new startups will form to service customers in ways the industry currently is not.

Verfily is one company that has already developed to service the drone market. This company offers drone users the opportunity to buy coverage on demand via an application on their mobile device. The policy can be purchased for the amount of time you will be using the drone and no longer. This will allow recreational drone users and some small businesses to insure their drone usage, but not have to purchase coverage for a time when the drone is sitting in storage.

Insurers will have a hard time determining the expertise of the drone user

The most similar industries to drone usage is the aviation and car industries. Both of these industries have fairly strict standards for allowing people to operate either a plane or automobile. This will dramatically change the amount of risk an insurance carrier is taking on when they offer drone insurance coverage. There currently is no industry standardized license for operating a drone. Some Businesses are offering classes and certifications in the proper use of drones. Some see in the future for there to be a class of licenses for drone use for commercial use the same way commercial driver’s licenses are now required for the shipping industry. Whether or not the licenses or certifications will become legally required is still up in the air. This will more than likely be determined by the state court systems and first in the state legislatures.


Walt Capell

On a recent episode of the Shark Tank, a company presented to investors who specialized in providing extensive training to drone users. Dart Drones founder Abby Speicher scored a deal on the February 24th episode with Billionaire Tech Entrepreneur Mark Cuban. The deal was for $300,000 in exchange for only 10 percent of the company. This enormous investment shows you the enormous need for this type of certification in the drone industry.


Like many things in life, every problem for one person or business presents an opportunity for someone else who has a solution to the problem. Nowhere is this more evident than in the drone industry. In the insurance industry, successful companies will eventually realize that there is money to be made in offering coverage to this industry and by using the technology for their benefit. Those companies that are the quickest to adopt this technology and offer coverage for it users will position themselves to be the leaders in this potentially high growth portion of the insurance sector.

Walt Capell started General Liability in 2005. General Liability is a rapidly growing national insurance agency with a strong reputation for forward-thinking, out-of-the-box products and solutions for business owners. Walt would like to use his experience as a small business owner and insurance expert to benefit the next generation of leaders.

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