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All I want for Christmas is a drone and a hoverboard – and an insurance policy

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Every holiday season brings a rush of the latest and greatest “it toys,” such as some limited edition Elmo or Star Wars anything. Rarely do these items need cautionary tags, let alone insurance.

However, drones and self-balancing electric scooters (also known as hoverboards or “Segways without a stick”) are not only causing parental worry, they have triggered discussions about insurance as a result of the safety issues and risks surrounding these hot gadgets.

Drones, officially defined as unmanned aerial vehicles, have been the source of military lore for years. More recently, they have made the crossover to commercial use. Research firms have estimated the market will grow to billions of drones within five years.

When it comes to consumer use of drones, insurance experts are raising cautionary flags on several levels. “If you are buying [a drone] for the holidays, you should contact your insurance agent,” cautioned Peter Foley, the American Insurance Association’s vice president of claims administration.

The Pennsylvania Insurance Department is one group that recently issued concerns about operating drones, as well as any content that they could obtain (many are equipped with cameras and can capture photos and data from overhead). The department said that “consumers should make sure they have insurance coverage they need before their drone takes flight.” In addition, it noted that “drones may capture private data that could be harmful or embarrassing if shared, whether intentionally or accidentally.” The department encouraged drone owners to talk to their insurer regarding privacy issues since many are still developing policies to cover liability related to privacy violations.

Don Griffin, vice president of personal lines at Property Casualty Insurers Association of America, said drone use is often covered under liability insurance (akin to a remote control airplane). But he expects eventually homeowners insurance policies will include specific coverage limits for drone-related accidents and additional coverage likely will be required to purchase drone coverage riders.

Futuristic hoverboards roared onto the scene this year, but they have been met with quick resistance in some locations. In Britain, the boards have been banned on all public sidewalks and roadways, and Scotland requires “third-party insurance” to operate one. New York City also prohibits their use on public streets, and airlines are refusing to transport them as a result of safety concerns. Amazon scaled back its sales of the boards and Overstock completely removed them from its site.

The boards have been blamed not only for causing accidents, but for spontaneously catching on fire due to battery charging. Such fires have caused significant property damage. The Consumer Product Safety Commission is currently investigating the devices after learning of 12 incidents in which boards caught fire. Individual policies for hoverboard use are currently offered by several companies but the future regulation is still very much in play.

So buyer, beware – and when in doubt, insure, insure, insure. 


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