2 Main Drone Coverages for Public Entities

By Robert Dufkis
Posted: October 11, 2018

It’s a Bird. It’s a Plane. Oh no... it’s Just Another Drone.

It seems everywhere you look there’s another drone in the sky. Are all those drones used for recreation, government work or private company use? Well, the answer is yes. The real question public entities should be asking themselves is: are their drones properly covered? And the answer is likely, no.

Drones are so specialized that the exposure is excluded from the general liability coverage and a specialized drone policy will need to be placed. So, how do you properly insure the municipal drone exposure? Let’s run through a high-level overview of the two main drone coverages – First-Party/Physical Damage and Third-Party Liability.

First-Party/Physical Damage coverage is when you file a claim with your own insurance company. For example, the village’s drone crashes and the village files a claim with their own insurance company to be reimbursed for the cost of the drone.

For First-Party coverage drone policies include, but are not limited to:

  • The drone itself (also known as “Hull” coverage)
  • The drone’s payload which could include attached cameras, sensors, etc.
  • Ground equipment which helps control and operate the drone

Essentially, a public entity’s property policy wouldn’t cover a drone. And although drones, their payload and equipment may be somewhat expensive, relatively speaking, the real financial exposure is in the third-party or liability coverage.

Third-Party Liability coverage is when a third party files a claim on your insurance. For example, a drone crashes into a private home and falls onto an individual. The roof is damaged, and the individual was rushed to the hospital with injuries. The property owner and individual can sue the municipality for their damages and bodily injuries.

For Third-Party coverage drone policies include, but are not limited to:

  • Liability arising from the ownership, maintenance or use of a drone. Coverage includes, but may not be limited to:
    • Property damage
    • Bodily injury
  • Standard Liability limits begin at $1,000,000 but can easily and affordably be written up to $10,000,000 and above

Public entities are the most critical operators of drone technology – think about fire & rescue, FEMA, law enforcement, natural disaster inspection, traffic control/motor accident assistance, etc. Public Entities become more comfortable using the technology, they’ll also need to understand how to protect themselves and their drones.

If your public entity owns and operates a drone and you’d like to learn more about the insurance options, please contact one of our municipal experts!

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