To start: yes I happily purchased a State Farm PAP for my Mavic, and no, I do not have any insurance industry experience other than spending a lot for it........Feel free to bash my reasoning/numbers
Too good to be true? So State Farm is the only major insurance company to insure non commercial use of quad's against loss, theft and damage, INCLUDING damage, loss or theft resulting from flying said quad. (Waiting for that mid flight hacking theft
). This is all being done under their standard Personal Articles Policy. They basically charge the same rate for insuring your quad against flight loss/damage as they do for a laptop, camera, or jewelry (so they are assigning the same risk factor to a flying quad as other personal items). Who was smoking what when this was decided!?.........I digress.
So my PAP says that sports equipment is excluded if loss/damage results from product defect or dampness of atmosphere, among other things. Does crashing your quad in the water count as atmospheric dampness? If your art is being professionally restored or exhibited you're not covered, but flying your quad,.....sure no problem....
Ok, back to some very crude back of the envelope numbers; so you pay a max of $60 to insure your $1000 quad. I've read that insurance companies generally aim for a loss ratio of 40-60%, that is the total of paid out claims on an annual basis is 40 to 60% of annual premiums collected. Makes sense, want to make a profit after expense/overhead. So for each $1000 claim paid out they want to offset it with 33 "non-claimed" premiums. This assumes a 50% loss ratio and all $60 applied to just a quad. Is this realistic for non-commercial quads during flight? Got me, but I sure wouldn't want to be that underwriter. I have dealt directly with underwriters who insure hang gliding schools, jet ski rental operations and kiteboarding schools, and it is interesting to see how they make it work (of course that's all about liability versus property loss so different issues I guess).
My basic understanding is that the companies insuring commercial drone operators generally do not insure quads against damage/loss during flight operations, but when/if they do, they charge large premiums relative the quad cost, this on top of hefty liability premiums. Yes/no? And this is for mostly experienced commercial pilots under stringent operating controls, as opposed to many hobby beginners who barely glance at the quick start guide.......
I sure hope the State Farm PAP/quad policies survive but wouldn't be surprised to see them go away or change significantly. No doubt the hobby quad biz is growing very rapidly and most of the traditional insurance biz is low growth/highly competitive. Perhaps State Farm wants to be first in on that growth, loss ratio's be damned. Interesting time in the UAS world.
There needs to be a lot of successful non-crashing pilots out there for every claim filed! Wonder how many claims have already been filed??
Too good to be true? So State Farm is the only major insurance company to insure non commercial use of quad's against loss, theft and damage, INCLUDING damage, loss or theft resulting from flying said quad. (Waiting for that mid flight hacking theft
). This is all being done under their standard Personal Articles Policy. They basically charge the same rate for insuring your quad against flight loss/damage as they do for a laptop, camera, or jewelry (so they are assigning the same risk factor to a flying quad as other personal items). Who was smoking what when this was decided!?.........I digress. So my PAP says that sports equipment is excluded if loss/damage results from product defect or dampness of atmosphere, among other things. Does crashing your quad in the water count as atmospheric dampness?
If your art is being professionally restored or exhibited you're not covered, but flying your quad,.....sure no problem....Ok, back to some very crude back of the envelope numbers; so you pay a max of $60 to insure your $1000 quad. I've read that insurance companies generally aim for a loss ratio of 40-60%, that is the total of paid out claims on an annual basis is 40 to 60% of annual premiums collected. Makes sense, want to make a profit after expense/overhead. So for each $1000 claim paid out they want to offset it with 33 "non-claimed" premiums. This assumes a 50% loss ratio and all $60 applied to just a quad. Is this realistic for non-commercial quads during flight? Got me, but I sure wouldn't want to be that underwriter. I have dealt directly with underwriters who insure hang gliding schools, jet ski rental operations and kiteboarding schools, and it is interesting to see how they make it work (of course that's all about liability versus property loss so different issues I guess).
My basic understanding is that the companies insuring commercial drone operators generally do not insure quads against damage/loss during flight operations, but when/if they do, they charge large premiums relative the quad cost, this on top of hefty liability premiums. Yes/no? And this is for mostly experienced commercial pilots under stringent operating controls, as opposed to many hobby beginners who barely glance at the quick start guide.......
I sure hope the State Farm PAP/quad policies survive but wouldn't be surprised to see them go away or change significantly. No doubt the hobby quad biz is growing very rapidly and most of the traditional insurance biz is low growth/highly competitive. Perhaps State Farm wants to be first in on that growth, loss ratio's be damned. Interesting time in the UAS world.
There needs to be a lot of successful non-crashing pilots out there for every claim filed! Wonder how many claims have already been filed??
