Drone Liability vs. Hull Insurance: Which Do You Need?

Quick TL;DR

• Liability insurance pays for third-party injury and property damage you cause.

• Hull insurance pays to repair or replace your drone and listed equipment.

• Most commercial operators need both. Hobby pilots doing paid jobs can use short-term liability plus hull add-ons for expensive drones.

Drone Liability vs. Hull Insurance: Which Do You Need?

Executive summary

Deciding between liability and hull insurance is simple in concept but messy in practice. Liability protects other people and their property. Hull protects your gear. If you are doing commercial work, carrying only liability leaves you exposed to replacing an expensive drone. 

If you are a hobbyist who occasionally accepts paid gigs, short-term liability policies or hourly cover can be enough, but add hull or payload coverage if your drone or camera is worth thousands. 

This post explains the exact differences, real cost examples, typical exclusions, and a practical decision flow that tells you what to buy now.

What these policies actually cover

Liability insurance

• Pays for legal damages and defense costs if your drone injures someone or damages their property.

• Common coverages: bodily injury, property damage, legal defense, sometimes personal injury (libel, slander).

• Typical trigger: the drone caused damage or injury during a flight that you were operating.

Hull insurance

• Pays for physical repair or replacement of your unmanned aircraft and sometimes attached equipment.

• Can be written as agreed value or actual cash value. Agreed value means the insurer and you agree beforehand on the value to be paid for a total loss. ACV applies depreciation.

• Typical trigger: a crash, theft in transit, or accidental damage.

Payload and camera coverage

• Many hull policies exclude detachable payloads unless they are scheduled or specifically endorsed.

• If your camera, LiDAR, or SSD is worth a lot, you need explicit payload coverage.

Who needs what - quick rules

1. Commercial operators (real estate, inspections, agriculture)

   • Need liability. Almost always also need hull and payload coverage. Liability alone can pay for third-party claims, but it will not replace your drone so your business stops until you repair or replace.

2. Hobby pilots who never accept money

   • Liability is optional. Still recommended. Hull rarely needed unless you own an expensive drone.

3. Hobby pilots who sometimes take paid gigs

   • Consider short-term liability for gigs. Add hull or payload coverage if your gear is high value or if you cannot afford downtime.

4. Fleet operators

   • Buy a fleet policy that bundles liability, hull, and named pilot lists. This is cheaper than separate single-drone policies.

5. Special operations (BVLOS, deliveries, flying over people at events)

• Need endorsements. Underwriters weigh these activities heavily and often require operational controls, training logs, and mitigation tech.

Cost examples and why numbers vary

Costs vary greatly by use case, pilot history, location, and payload. Below are illustrative annual examples to use as a sanity check.

Why the spread?

• Urban operations are riskier than rural.

• BVLOS and flights over people raise premiums.

• Pilot experience and claim history directly affect pricing.

• Scheduling payloads or using agreed value increases hull premiums but avoids depreciation fights.

Real scenarios - which policy applies

Scenario A: Real estate shoot - drone clips a balcony and falls on a car

• Damage: Car repairs $8,500.

• Who pays: Liability covers the car owner’s damage and possible legal defense if there is a lawsuit. If you had hull, it would cover your drone repairs too. Without hull, you pay repair or replacement yourself.

Scenario B: Crash during inspection - expensive camera destroyed

• Damage: Camera replacement $12,000.

• Who pays: Hull with payload endorsement or scheduled equipment covers replacement. If only liability was purchased, you get nothing for equipment loss.

Scenario C: Drone flies beyond permission and causes damage

• Damage: Property damage plus violation of FAA rules.

• Who pays: Likely denied by insurer if policy conditions were breached. Both liability and hull claims can be denied if operations were unauthorized.

Key lesson: liability protects others; hull protects you. Both can be denied if policy conditions and laws were not followed.

Common exclusions that break expectations

• Unauthorized operations - flying beyond agreed permissions or without required waivers.

• Unlisted pilots - only named pilots are covered in many policies.

• Unscheduled payloads - high-value cameras not listed may be excluded.

• Commercial use on a hobby policy - hobby policies can explicitly exclude commercial operations.

• Intentional acts or criminal activity - standard exclusion.

• Wear and tear or manufacturing defects - not accidental damage from crashes.

Always read exclusions first. Exclusions decide what you actually get paid.

Decision flow - pick what to buy now

1. Are you paid to fly?

   • Yes: Buy liability plus hull with payload endorsement.

   • No: Go to question 2.

2. Do you own gear worth more than $2,000?

   • Yes: Consider hull or agreed-value payload coverage.

   • No: Liability only is likely adequate.

3. Do you fly over people, at night, or BVLOS?

   • Yes: Get endorsements and confirm underwriter accepts these operations. Expect higher premiums.

   • No: Standard coverage may be sufficient.

4. Do you operate multiple drones?

• Yes: Ask for a fleet policy. It reduces administrative burden and can lower per-drone cost.

Practical buying tips

• Schedule expensive payloads or buy agreed-value coverage to avoid depreciation disputes.

• Get quotes from specialty brokers rather than generalist insurers. They understand drone risk better.

• Keep training and maintenance records - they lower premiums and help in claims.

• Confirm named pilot language - ensure your regular pilots are covered without restrictive named pilot lists if you rotate staff.

• Understand deductibles - a low premium with a very high deductible may leave you paying too much after a claim.

• Ask about sublimits - items like data breach or pollution may have separate low limits.

How to handle a claim - short checklist

1. Stop flying and secure the scene if safe.

2. Gather evidence: photos, telemetry, flight logs, witness contacts. Export raw logs.

3. Notify your insurer promptly according to the policy notice requirement.

4. Keep receipts for repairs and invoices.

5. If denied, follow the insurer appeal steps and consider contacting your broker or the state regulator.

Documentation wins claims. Screenshots alone are often not enough.

FAQs

Q: Can I get both liability and hull on a short-term policy?
A: Yes. Some insurers offer hourly or one-day packages that include both, but they may have lower limits and strict conditions.

Q: Will my homeowner policy cover my drone?
A: Often not for aircraft operations. Many homeowner policies exclude aircraft or limit coverage for business use. Confirm with your insurer.

Q: Does Part 107 mean I do not need insurance?
A: No. Part 107 is certification only. Insurance covers financial risk.

Q: What is agreed-value and why does it matter?
A: Agreed-value means the insurer pays a pre-agreed amount for a total loss. It avoids depreciation disputes that occur with ACV policies.

Bottom line

• If you fly for money, buy liability and hull with payload protection.

• If you fly rarely and never for money, liability only can be enough but is still recommended.

• Always read exclusions and get named pilot language clarified.

• For expensive equipment or business operations, use specialty brokers and schedule gear with agreed value.

Read: HOW DRONE INSURANCE WORKS IN THE USA: A COMPLETE PRIMER

Svetlana - Drone Insurance Writer and Researcher
I write about drone risk management and insurance for US pilots. Not a licensed broker. For policy advice contact a licensed insurance professional.