The Delaware Department of Insurance published a bulletin providing information on the allowable use of aerial imagery in insurance activities.
The Department recognizes the usefulness of unmanned aircraft systems (UAS) in insurance but also wants insurers to be aware of its limitations. While the images provided by UAS have been useful in many aspects of insurance, they can be limited in their inability to capture fine details. Insurers should be sure their underwriting decisions are supported by more than just aerial imagery, especially if the images aren’t conclusive.
When UAS imagery is part of the reason for a policy denial or nonrenewal, the insurer must provide a written explanation for the specific reasons for the denial. A cancellation or nonrenewal notice must be delivered or mailed at least 30 days before the effective date of cancellation.
Insurers giving vague reasons for cancellation or nonrenewal are not acceptable. The Department states insurers citing things such as “claims experience,” “underwriting judgment,” or “increase in hazard,” do not provide the insured with enough information to fix the reason for cancellation.
The Department has heard of some insurers canceling or nonrenewing a policy based on roof discoloration and wants to make clear that cosmetic issues are not valid reasons for cancellation. There must be clear evidence of roof degradation that increases the risk of loss to support the cancellation of a policy. If aerial imagery is inconclusive, there should be a physical inspection. If an insured disputes the validity of aerial imagery, the insurer should conduct a physical inspection.
Insurers failing to comply with these guidelines may face regulatory review and enforcement action.
The bulletin can be found here.