Drone use is increasing by leaps and bounds in the United States and abroad. It seems that every day someone finds a new use for these unmanned aviation vehicles or UAVs. The agriculture sector is using drones to monitor crops, track livestock, survey irrigation systems and spray pesticides. The construction industry is using them to quickly survey properties and create 3-D models for new projects. Environmentalists use them to monitor animal populations, track migration patterns and manage habitat. And, of course, retailers such as Amazon are trying to develop drones that can deliver goods to customers in record time.
But with every new technology comes a certain degree of risk. And the liability exposure of drone manufacturers, resellers and users is still unclear. The Federal Aviation Administration recently clarified some issues by removing certain restrictions, including the 233 Exemption that required commercial drone operators to obtain special clearance from the FAA and the requirement that drone operators be licensed pilots. What this means, according to Braden Perry of the law firm Kennyhertz Perry in Kansas City, Missouri, is that “you can use a drone as long as it is less than 55 pounds and within eyesight of a certified ‘remote pilot in command.’”
What Kind of Drone Liability Issues Can Arise?
The potential liability for drone operators and manufacturers is very broad. Here are just a few examples of the kind of liability issues you might face.
Bodily injury and Property Damage
Any flying object has the potential to cause injury or property damage. Given that drones often weigh over 50 pounds and travel at speeds of up to 75 mph, the potential for catastrophic injury to a bystander in the case of mechanical failure is quite real. Injuries to third parties might also occur if a drone were to drop a package in mid-flight. And, of course, if the contents of the package were damaged in the fall both the manufacturer and the operator could be liable for replacement costs.
Invasion of Privacy or Violation of Intellectual Property Laws
Other potential exposures for drone operators include violations of privacy and/or intellectual property rights. For example, camera-equipped drones flying in residential neighborhoods might unintentionally photograph private citizens in their homes. Or they could inadvertently take photos of proprietary information when flying near a commercial property. If these photos were to fall into the wrong hands or wind up online, a legal claim could easily ensue.
Drones operators might also be liable for accidents that occur either in the air or on the ground. Imagine, for example, that a low-flying drone startles someone driving an automobile, causing them to crash. Or a drone might interfere with the navigation system of another aircraft, causing a collision that results in injury or even death. In either case, the drone operator and/or manufacturer could be liable for any property damage or injuries that occurred.
Like all equipment that operates on wireless technology, drones are susceptible to cyber attacks. With the right skills, a hacker could hijack a drone and steal its cargo, whether that’s data or real goods. Or they could steal the drone itself and use it to commit a crime, such as performing illegal surveillance or transporting contraband.
What Will Insurance Cover?
Most standard commercial liability insurance policies cover bodily injury and property damage (Part A) as well as personal injuries such as invasion of privacy, copyright infringement, libel, slander, and unlawful imprisonment (Part B.) However, most CGL policies exclude coverage for “aircraft” under part A.
But is a drone really an aircraft? According to federal statute and case law, the answer is probably “yes.” For example, the FAA defines an aircraft as “a device that is used or intended to be used for flight in the air.” Other definitions include “any contrivance invented, used, or designed to navigate, or fly in, the air.” And while some attorneys have successfully argued that drones don’t fit the strict definition of aircraft under the law, there’s no guarantee that your insurer will approve a bodily injury or property damage claim.
On the other hand, personal injury claims, which are indemnified under Part B of your policy, may be covered, at least for now. But since the insurance industry is still developing standards to address liability issues related to drones, you should speak with an expert to determine what coverage is available to you.
The Carmoon Group is on the cutting edge of the UAV industry, and we’re ready to help you get the business insurance coverage you need. Give us a call today to talk about your business model, and we’ll work on devising a plan tailored to your needs. Or if you prefer, just reach out to us online and we’ll get back to you right away.