Online retailers have changed the way we shop. No longer do we spend hours in line queuing for a can opener or, perhaps more appropriately in current times, an air fryer. Nowadays, at the click of a button, we have items expeditiously delivered straight to our door. And soon, it will be straight to our door without a human touch.

Last year, certain retailers began trialling drone delivery, marking the dawn of a new era of deliveries.

This latest development is one the insurance market cannot ignore. The drone insurance market is growing, and it looks like it will continue to do so as technology develops and retailers rely on drones to deliver parcels.

So, what insurance do you need when using a drone in the UK?

As of 2024, the UK has implemented a comprehensive set of drone laws regulated by the Civil Aviation Authority (CAA) to ensure the safe and responsible operation of drones. The CAA regulates drone usage and local authorities may have specific requirements and regulations for drone flights within their jurisdiction. Additionally, there may be local bylaws regulating flights over crowded areas, sensitive sites, and restricted airspace.

The insurance you need depends on the size of your drone and what you use it for. In short, if you fly a drone that weighs less than 20kg for fun, recreation, sport, or as a hobby, you can choose whether or not to have insurance. If the drone is over 20kg, you need insurance. If you fly for work/business purposes, you need insurance.

The CAA requires commercial drone operators to hold an “adequate level of insurance,” which includes public liability and aviation-specific liability.

The public liability insurance needs to be compliant with EC Regulation 785/2004. The Regulation applies to all air carriers and to all aircraft operators flying within, into, out of, or over the territory of a Member State to which the Treaty applies (and the UK is caught within it).

According to the Regulation, a drone operator must purchase at least 750,000 Special Drawing Rights when operating an aircraft up to 500kg. Special Drawing Rights (SDRs) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund. At the time of writing, 750,000 SDRs equate to around £784,967.15. Specialist insurers will write insurance on a minimum coverage basis which will apply at all times to allow for fluctuations in the currency conversion rate of SDRs.

Failure to comply with the Regulation can result in fines and/or revocation of permissions to fly within the UK and European Union.

In practice, drone insurance comes in varying forms. As noted, it is mandatory to have public liability and aviation-specific liability insurance, but, in reality, commercial drone operators will want wider reaching cover. For example, accidental damage insurance would come in handy as it covers the cost of repairing or replacing your drone if it’s accidentally damaged. Theft insurance may also be a prudent investment in a world where criminals find ways to intercept drones to use them for illegal activity. Another common insurance is flyaway insurance. This provides coverage if your drone is lost due to flyaway, which occurs when your drone suddenly loses contact with the controller and flies away uncontrollably. The cost of commercial drone insurance in the UK varies depending on a variety of factors, such as the type of drone being used, the level of coverage required, and the intended use of the drone.

One thing is for sure – drones are no longer being used by hobbyists for fun. This next-level tech will no doubt become a more prevalent feature in our every day lives and it will be interesting to see how insurance products evolve to support it.