Imagine receiving a letter from your homeowner’s insurance company stating that they’ve taken aerial photos of your property using a drone, those photos show your roof is in poor condition, and your coverage won’t be renewed unless you repair or replace it.
This is occurring in some areas of the country, spurring questions about whether the practice constitutes an invasion of privacy and how homeowners can avoid unpleasant surprises. The personal lines insurance specialists at B. F. Saul Insurance explore this emerging trend and provide insights to help you stay informed and prepared.
Why Insurers Gather Property Details
As climate change has fueled more severe storms and a dramatic increase in insurance industry losses, insurers have begun collecting more information about a homeowner’s property than they did historically, at a more granular level.
While homeowners are accustomed to an insurance company inspector assessing the home in person, most don’t expect their carrier to fly a drone over the property. However, insurers are more likely than ever to use technology when inspecting a home for underwriting purposes. During the COVID-19 pandemic, many insurers began conducting inspections virtually. And as recent news articles have reported, some are now using aerial images taken via drone or satellite to collect information about the homes they insure.
These reports have raised questions about privacy issues related to using technology to assess a home’s condition, especially in the context of larger concerns about how companies collect and use data about their customers. One KMPG report noted that data privacy is a concern for 86% of consumers.
However, insurance policies typically state that the homeowner agrees to allow the insurer to perform inspections under the contract. And though privacy laws vary by state, it’s likely that most homeowner’s insurance contracts include broad enough language to allow the use of drones or other technology to gather information about a home’s condition.
In some cases, this level of scrutiny works to your advantage. If it’s evident that your roof was replaced recently, you might receive a more competitive rate. Insurers also have stated that having aerial images on hand can help them respond more effectively in the aftermath of incidents that cause widespread damage, such as hurricanes and wildfires.
How New Techniques Are Creating Controversy
Aerial images of a property are typically taken by drones or satellite, then analyzed using AI-enabled computer models that flag potential problems. As with any emerging technology, it’s not considered an error-free technique. In fact, there have been cases where an insurer claimed its aerial images showed certain property conditions which the owner refuted.
For example, a Wall Street Journal article reported that an insurer dropped a California homeowner’s policy because aerial images showed her roof had reached the end of its life expectancy. An independent inspection reportedly showed the roof still had 10 years of life left, but the insurer still dropped the coverage.
If aerial photos are distorted—through shadows cast by the sun or nearby tree branches, for example—they can yield an inaccurate view of the property, giving the insurer a false impression of the home’s condition. Or if the images on file are out of date, they might not reflect the property’s current condition. As the technology and its use evolves, the accuracy is expected to improve, reducing the odds that an insurer will mischaracterize your home’s condition.
It’s important to point out that most states have laws governing the use of drones, especially near major airports. For instance, the airspace around Washington, D.C. is highly restricted, with special flight rules applying to the 30-mile radius surrounding Ronald Reagan Washington National Airport. Flying an unmanned aircraft within the 15-mile radius inner ring is prohibited without authorization by the Federal Aviation Administration, while flying a drone within the outer ring is only allowed under certain conditions. If you live in this region or near another restricted airspace, it’s possible your insurer isn’t permitted to fly a drone over your home.
What You Should Do
While you probably can’t prevent an insurer from using drones or other technology to obtain information about your home, there are steps you can take to reduce the odds that an inaccurate evaluation will impact you.
- Maintain complete, accurate records of all maintenance and renovation work. Since the roof is a hot button for insurers, weighing heavily into your premium rating, if you repair or replace it you should keep a copy of the contractor’s receipt and the contract that outlines the materials used. (For example, slate is viewed as very durable, so even an older slate roof might be considered in good condition.) These records could help you refute an insurer’s findings and potentially avoid the need to make unnecessary repairs or change carriers.
- If your insurance company notifies you that they’re increasing your premium based on an inspection finding—or will only renew the policy if you make certain upgrades—ask to view their report to confirm the details. Believe it or not, it’s even important to confirm they’re viewing the correct house.
- Keep your insurance advisor informed of any home renovations, especially upgrades that improve your home’s condition or safety. You probably wouldn’t have thought to do that in the past, but today it’s considered a best practice that could reduce your premiums.
Based on our experience with many insurance companies, we don’t anticipate that they’ll begin conducting home inspections annually, even via technology, as it would prove cost prohibitive. There is no need to fear that at every policy renewal, you could be notified the insurer just completed a drone inspection and is requiring you to make costly updates. However, as these technologies become more common and less expensive, some insurers might use them to conduct an initial evaluation of the properties they insure in certain regions or nationally.
Turn to B. F. Saul for Objective Advice
As an independent insurance advisor, B. F. Saul Insurance keeps you informed of industry trends that could impact you and serves as your advocate if you experience a covered loss or receive a notification about your property. Our personal insurance specialists will review insurance company inspection reports, advise you on your best next steps, and advocate on your behalf with the carrier. If an insurer plans to drop your policy based on inspection report findings, we can determine if it’s to your advantage to shop the coverage and consider changing carriers.
Contact B. F. Saul Insurance to learn how an independent insurance advisor can help protect what you value.
Lanie Raphael is a seasoned insurance professional with over 30 years of experience in the industry, with experience in both commercial and high-net-worth insurance. Throughout her career, Lanie has held executive-level roles at prominent insurance companies such as Fireman's Fund, AIG, and ACE Private Risk Service in a variety of disciplines including risk management, product development, operations, and marketing. In the past decade, she transitioned to the independent agency side, assuming leadership roles that involved direct client interaction and working closely with referral sources. As president, she is responsible for leading all aspects of financial reporting and budgeting, business development, and executive recruiting at B. F. Saul Insurance.