Insurers Can’t Cancel Policy After Drone Roof Inspection, Per Delaware Commissioner

Insurers are increasingly using drones to assess risk. However, one state’s Department of Insurance has pushed back against the practice.

According to the Delaware Department of Insurance, insurers in the state cannot use drones to cancel policies.

Instead, as reported by Delaware Online, insurers must provide concrete evidence before taking adverse action against policyholders.

The ruling could change the way other states handle drone-collected evidence.

How Insurers Use Drones

Insurers have been using drones – officially known as Unmanned Aircraft Systems – for years.

Drones became popular with insurers during the COVID-19 pandemic, when employees were unable to access customers’ property.

In the years following the pandemic, however, insurers have continued to use drones to assess properties and evaluate risk. Drones are particularly valuable for assessing roof conditions.

Before assigning a policy to a home, for example, the insurer might collect visual evidence of the roof using a drone. The insurer checks the roof for visual damage. A roof with visual damage could have a higher risk of causing a major insurance claim in the future.

Insurers could also use drones before policy renewal. The insurer could use a drone to conduct an annual inspection of your property, then use that information to decide whether to cancel or renew your policy.

Overall, drones have helped insurers be more efficient. Drones simplify the underwriting process, allow for more accurate assessments, and make it easier for insurers to calculate risk. They also reduce the need for expensive, on-site inspections.

Watch Groups Report a “Dramatic Increase” in Drone-Related Cancellations

Insurers are using drones to cancel thousands of policies across the United States.

According to non-profit insurance industry watchdog United Policyholders, for example, there’s been a “dramatic increase” in reports of customers’ policies being cancelled because of drone footage.

In some cases, drones spot legitimate roof damage that could increase risk. In other cases, however, drones spot moss, debris, and other items with little impact on risk.

A CBS 8 report, for example, found multiple instances of insurers using drone imagery to cancel policies:

• One insurer threatened to cancel a homeowner’s policy after a drone spotted moss on the roof. The homeowner needed to take care of the moss in order to avoid cancellation.
• Other insurers reported cancellations – or threats of cancellation – after drones spotted debris on the roof. Others report similar cancellations after drones spotted debris in the backyard. Debris is a safety hazard because it increases the homeowner’s liability risk.
• One homeowner even claims their insurer cancelled their policy after a drone spotted a drained pool in the backyard.
• One California homeowner received a notice from her insurer that her roof was near the end of its life expectancy. An independent inspection of that roof, however, showed it still had 10 years of life remaining. The insurer dropped coverage regardless.
• A homeowner in Boston claims he was “blindsided” after his insurer demanded he make extensive repairs to his property following a drone inspection. That homeowner had owned his home and stuck with the same insurance company for 40+ years without an issue. A drone inspection revealed moss, branch overgrowth, and damaged shingles – all of which needed to be repaired to avoid policy cancellation. The homeowner trimmed back the trees, but his insurer canceled his policy regardless.
• As United Policyholders explains, some insurers use drones to spot undeclared trampolines. A standard homeowners insurance policy doesn’t cover trampolines because of the safety risks associated with them. If you have a trampoline in your backyard and didn’t declare it, you could face insurance issues.

All of this seemingly adds up to a simple conclusion: insurers are looking for reasons to cancel policies, and they’re using drones to help find those reasons.

Insurers in Delaware Must Provide More than Visual Evidence to Cancel a Policy

The Delaware Department of Insurance recently established new guidelines governing the use of drones by insurers in the state.

Specifically, the Delaware Department of Insurance requires insurers to provide concrete or substantial evidence of degradation before canceling a policy or taking other adverse action.

In other words, insurers can’t simply use footage from a drone to cancel a policy. They must perform a real, boots-on-the-ground analysis of the property to verify its condition before taking adverse action.

The Delaware Department of Insurance acknowledged that drones have made the industry more efficient. However, they also wanted to protect the rights of consumers and prevent insurers from using unfair practices.

Delaware Announces New Drone Guidelines for Insurers

Insurers in Delaware can continue to use drones for various tasks. However, the Delaware Department of Insurance has established specific guidelines governing the use of those drones.
Those guidelines include:

• Insurers must provide clear, specific reasons when cancelling a policy or failing to renew it based on drone imagery.
• Insurers cannot use vague language like “claims experience” or “underwriting judgment” to justify cancelling a policy or failing to renew it.
• Homeowners must receive a notice of cancellation at least 30 days in advance.
• Homeowners have the right to access any drone imagery used by insurers to cancel a policy or take other adverse actions.
• Homeowners can dispute the findings of drone imagery and request an in-person inspection. Insurers must perform this inspection if requested.

The goal is to create greater transparency – and greater consumer rights – for Delaware homeowners.

Delaware’s guidelines could also help other states set the standard for drone imagery, creating a fair balance between efficient insurance practices and consumer rights.