Thinking about including an unmanned aerial vehicle as part of your business? What could be cooler than having a UAV deliver your product to customers? Many companies are already using UAVs or drones not only for delivery but also for video surveillance, property surveying for agriculture or unique promotional videos. Your business will want to consider the basic rules for drone operation—like having an experienced pilot and a well-maintained drone— as well as other ways to manage potential risks.
There are a number of risks if your business has a connection to drones. What happens if a drone crashes or if a bystander shoots it down? In the evolving high-tech world, there are also real threats of someone hacking into your remote system and interfering with your controls. If there is a crash, there is a possibility you might be liable for the property of others. Drones can be a significant investment, and you will want to protect your asset and yourself if someone blames you for some loss.
There is also a risk that a drone could accidentally harm someone. The technology is advancing, but people have been hurt by propeller blades or by drones flying too close to heavily populated areas. For example, at a concert in Mexico in 2015 in front of thousands of fans, pop star Enrique Iglesias reached out to grab a drone that had been used to take video of his performance, only to accidentally grab a propeller by mistake, partially severing his finger.
With advances in video and audio technology, drones can be used to capture minute details that could inadvertently infringe on another’s privacy rights. For example, a surveillance camera affixed to a drone could capture images in a fly-by that are downloaded and posted to YouTube without the permission of a private party.
Couple this with other risks, like damage to cargo (if the drone is used to transport packages) or accidentally trespassing on someone’s property, and it’s apparent how these cool new devices create potentially thorny legal issues. You might face liability if your business operates the drones, or if you hire an operator to perform the services for you.
Protect Your Business
There are a number of ways to protect your business. This includes paying attention to safe operation and maintenance. If you hire others to provide UAV services, you should be careful to include specific indemnification language in your agreement and require that vendors maintain proper insurance. Having the right insurance will also protect your business against unforeseen risks.
Having general liability insurance will not guarantee that you are protected. Standard policy forms exclude injuries and damages “resulting from the ownership, maintenance, or use of aircraft.” Even though the FAA issued regulations in 2016 relating to drones, which may be of assistance in the ultimate interpretation of insurance provisions that exclude aircraft, there are still uncertainties as to how and whether standard forms apply to drone liabilities. Nevertheless, in 2015, the insurance industry introduced new endorsements that specifically address “unmanned aircraft.” Many of the endorsements can be added by insurers to specifically exclude drone liability. There are other endorsements that extend coverage for UAV operations that are specifically scheduled in the endorsement. If your business will include or involve drones as part of its future operations, you will want to examine any proposed forms closely before the insurance is finalized to make sure that you are protected. These forms might or might not protect you against privacy, trespass or nuisance claims. If you are undecided as to whether you need cyber coverage for your business, keep in mind that the information gathered by a drone can be hacked or misused, and cyber liability policies might be the best way to protect against these risks.
Specialty Drone Insurance
With the emergence of more widespread drone use, there has been the development of specialty drone insurance products, particularly by insurance companies with significant preexisting experience in the aviation insurance market.
If your business model involves significant UAV operations, you are well advised to explore the specialty products offered by companies like Global Aerospace, Berkley Aviation, Lloyds and AIG with your broker. Consistent with the high-paced technical world, there is also more limited specialty drone coverage that can be purchased on a flight-by-flight basis. You can download an app from Verifly, for example, that provides up to eight hours of insurance coverage for specific drone operations based on various criteria that you provide in your response to prompts within the app.