Aerial drones have been seen by many as a hi-tech toy or a curiosity, but the business applications for this new technology are expanding rapidly.
A recent regulatory change by the Federal Aviation Administration has made it much easier for businesses to operate aerial drones for commercial uses. Prior to the ruling, companies needed a waiver (a 333 exemption) from the federal government to use drones commercially. The need for this exemption has been dramatically reduced by the new regulation (FAA Part 107).
Under Part 107, a business technically only needs an operator who is at least 16 years old and has a remote operator certificate from the FAA. The drone used must also be registered with the FAA.
With the easing of regulatory requirements, the drones market is booming: estimates are that by 2026, 10 percent of the global civilian aviation fleet will be unmanned. Annual global spending on unmanned aerial drones is expected to double to $11.5 billion by 2023. It is estimated that in 2015, 1 million unmanned aerial systems (UAS) were already in commercial operation.
But with more and more businesses finding uses for aerial drones, questions are multiplying about the insurance liability that comes with the devices. Aviation insurers are developing policies, but with such a rapidly growing technology, drone owners and operators can expect a long period of ongoing adjustment.
New technology, new liabilities
The insurance issues from drone usage are like the technology itself: new, complex, and rapidly growing. A company might start exploring this new technology by hiring a drone and operator for a specific task. But an initial question to consider is whether to pay relatively big bucks for a professional service, or let Ted in accounting hire his daughter to do the relatively simple task?
If your answer is the first scenario, congratulations. You have avoided a potentially serious liability issue. As tempting as it may be to see this technology on the same level as a hobby or a trendy new gadget, a company cannot take a chance with a device that can fall out of the sky and hit unsuspecting bystanders.
Using a drone that was purchased for hobby use leaves a business vulnerable on many fronts. Most private homeowners policies do not cover aviation, so an amateur operator may have no insurance coverage. Using an inexperienced operator can add substantial risk to your company, such as interfering with other air traffic, endangering pedestrians, and invading someone’s privacy. Hiring a professional drone operator, with the proper certificates and insurance, is a smart investment.
Experts note that with such a rapidly changing technology that is still just beginning to get serious regulatory scrutiny, there can be sudden changes to insurance coverage as well. Insurers are still figuring out the new field, and will be for some time. Carriers are currently working with UAS associations and educational institutions to develop training and insurance standards.
So far, there has been no major accident caused by a drone. If that misfortune should happen, regulators and lawmakers may feel pressure to tighten restrictions on this technology. Insurers and operators would no doubt be affected by such changes.
Brokers who work with insurers and businesses to cover drone usage agree that the landscape is changing all the time. Businesses that want to take advantage of this growing technology will be best-served by working with a company experienced in this new field.