Unless you are already the owner and operator of a drone, you might not know that the FAA finalized rules regarding drones in August 2016. The FAA fully expects that within a year of these regulations being issued, that over 600,000 units will be in commercial use – from 20,000 drones that were registered by mid-2016. While drones might have been a novelty just a couple of years, the increasing affordability to medium and small business, and to hobbyists, make airborne drones highly attractive. Because drones are classified as unmanned aircraft, it is necessary to get some kind of regulatory grip on the situation before the friendly skies become the crowded skies.

Insurance Issues

The FAA is the sole regulatory body that can authorize the use of drones for business, and currently very few models are approved by the FAA for commercial use. These models are under 55 pounds but over half a pound, and there are strict rules regarding restricted airspace, and the waivers needed to fly there. Drone pilots must also pass an FAA administered test and be vetted by the FAA before they are allowed to fly either commercially or as a hobbyist. The insurance industry has identified a number of areas that will be impacted by the use of drones, and is keeping track of the states with pending legislation on drone liabilities. Some of the areas currently under scrutiny in state legislatures are:

  • Personal Injury
  • Nuisance
  • Property Damage
  • Privacy Issues
  • Hacking/Hijacking
  • Accident/Liability

Just as no insurance company will ensure an unlicensed driver, you will not be able to obtain a policy unless you have a licensed pilot who has passed the FAA course and can provide proof of training. Your drone policy covers damage to the actual equipment – specifically the hull, rotors, guidance system, and electronics. Your policy will also need to cover the operating crew, manufacturer’s liability, third-party liability, property damage, personal injury, and medical payments. Certain things will not be covered, including unlicensed pilot, intentional violation of privacy, reckless endangerment, and other perils. Right now there are relatively few companies that are offering to cover drones in commercial use, it is considered a specialty policy much like ensuring a regular manned aircraft.

Boiling It Down

What this all comes down to is you can’t just order a drone from Amazon, take it out of the box and fly wherever and whenever you please. A visit from federal agents is not something you want to have happen to your business, nor are the fines that generally accompany that. There are still liability issues that are not yet crystallized when it comes to the use of drones in business. Whether it’s delivering a package, surveying a pipeline, over flying a forest fire, shooting for motion pictures or television, or showcasing real estate, the equipment and technology are too new. Your E&L independent insurance agent will keep you up-to-date on any developments in insurance or legislation, so that you can keep your assets securely covered.