How Insurers Are Using Drones

Hexacopter with Camera - Drone - UAV
••• Image courtesy of [Richard Newstead] / Getty Images.

Among the many types of businesses using drones nowadays are insurance companies. Insurers began experimenting with unmanned aircraft several years ago, and found them quite useful. Drones were particularly helpful in the adjustment of property claims. However, many insurers were reluctant to try drones because of cumbersome federal regulations. Fortunately, the FAA revised the rules in 2016, easing the requirements on drones used for commercial purposes.

Now more insurers will likely try drones. Eventually, drones may be as commonplace at an insurance company as computers and cell phones. 

Advantages of Drones

For insurers, drones offer a number of advantages. For one thing, they are small and easy to maneuver. Unlike manned aircraft, they don't require an airport runway for launching. Thus, drones are much cheaper to use than manned aircraft. Drones also have no onboard pilot, so they can travel to places that are unsafe for humans. Finally, drones move faster than humans. They can travel more quickly over a large geographic area than human "boots on the ground."

Uses for Drones

Here are some of the purposes for which insurers are using drones, or will likely use them in the future.

  • Roof Damage Inspections: One of the most common uses for drones by insurers is conducting rooftop inspections. Roofs are notoriously difficult and hazardous to inspect. An inspection is particularly dangerous if a roof is steep or has suffered fire damage. An adjuster can avoid climbing onto a roof by using a drone equipped with a camera. Images obtained with a drone can be very detailed. Moreover, a drone can photograph the entire roof, including parts of the structure that aren't accessible to a human.
  • Other Damage Inspections: Drones could be useful for inspecting damage to large structures, such as warehouses.
  • Boiler Inspections: States laws require periodic inspections of boilers and pressure vessels. Some insurers that offer equipment breakdown insurance are using drones to inspect boilers. Commercial boilers can be several stories high. They are difficult for humans to inspect because of their size and dark interior. 
  • Post Disaster Claims Inspections: Drones are valuable for inspecting areas affected by a major disaster, such as a flood or earthquake. Access to a disaster area may be restricted by civil authorities for several days. Even if access isn't restricted, the area may be too dangerous for adjusters to enter. Adjusters can use camera-equipped drones to capture still photos or videos of damaged property. These photos may be used to process claims.
  • Insurance Inspections: One possible use for drones is to conduct property insurance inspections. Drones could be particularly useful if the insured property is extensive or difficult to reach. For example, a crop insurer might use a drone to inspect a farmer's crops. Certain issues may be easier to spot from the air than from the ground. A drone's camera can be equipped with special lenses to detect problems that aren't visible to the human eye.
  • Fraud Monitoring: Drones could also be used to deter insurance fraud. For instance, an insurer could send a drone to take photos of an accident scene. It could then use the data it collected to verify details submitted by the insured in a claim.

Benefits for Insurers

Drones offer insurers a number of potential benefits.

One is a reduction in the cost of workers compensation claims. By putting drones, rather than people, in hazardous situations, insurers can prevent some on-the-job injuries. Another benefit is lower costs. Roofs can be costly for insurers to inspect. When roofs are steep, insurers must provide harnesses and other safety equipment to adjusters. Alternatively, an insurer might hire a contractor to perform the inspection. Insurers can eliminate these costs by using a drone.

Drones can also help insurers save money after a disaster. If a drone is used to capture images, fewer adjusters will be needed to inspect damage at the disaster site. The insurer may reap substantial savings on travel and lodging costs. Moreover, more adjusters can remain in the office to review the loss data and process claims.

Another potential advantage of drones is greater customer satisfaction. Drones can take more photos in less time than a human. By using drones to capture loss data, insurers can process claims more quickly. Policyholders express more satisfaction with their insurers when claims are paid promptly.

FAA Rules and Costs

Like all drone users, insurers must comply with FAA regulations. The current rules went into effect in August of 2016. They allow individuals and companies to use drones for work or business if the aircraft weighs less than 55 pounds. If the drone is equipped with a camera or another device, the combined weight cannot exceed the 55-pound limit.

Under FAA rules, drones may be flown during daylight hours only, and can fly no higher than 400 feet off the ground. The aircraft must remain in the visual line of sight of the remote operator. The person flying the plane must have fulfilled the requirements to become a certified drone pilot.

To comply with these rules, insurers will incur some costs. These include costs for registering drones, training adjusters (or other employees who will fly drones), and obtaining FAA certifications for all drone pilots. Insurers will also incur costs to obtain the drones themselves.

Other Risks  

Drones present a risk of third-party lawsuits against insurers. An equipment malfunction or an operator error could cause the drone to hit someone or something. The injured party could sue the insurer for bodily injury or property damage.

Insurers also face a risk of suits alleging invasion of privacy. Such allegations could be difficult for claimants to prove if the insurer simply flew a drone over their property. However, insurers use drones to collect data. If they fail to properly secure that data, and information is stolen or misused, insurers could be subject to lawsuits.