In 2015, the Federal Aviation Administration (FAA) approved its 1000th commercial drone permit and implemented a comprehensive drone registration requirement, underscoring the rapid growth of this industry.  Drones are now used for dozens of business purposes, from counting trees on commercial tree farms to inspecting oil pipelines.  A Connecticut realtor has even begun using drones to offer virtual house tours to potential buyers.

As drones proliferate, however, their owners and operators have encountered major concerns about the potential liability incurred by their use.  These liabilities range from the minor (broken windows) to the not-so-minor (power line damage, personal injury) to the potentially catastrophic (airline disaster).  In addition, there are significant non-physical liabilities raised by drone use, including invasion of privacy and the possible misuse or compromise of data collected by drones.

Insurers themselves have a keen interest in sorting out these liability issues; not only are they writing policies covering drones, they are using drones themselves to inspect roof damage, assess the impact of natural disasters and inspect crops, among other purposes.

The FAA is working on a more comprehensive regulatory framework for commercial drone use.  At present, according to The Wall Street Journal, permits for insurers’ drone use typically allow flight only over private or “controlled-access” property with permission from the owner, in daylight and in areas away from airports and urban centers.

Insurers still have a lot of work to do in this field.  In addition to modeling the risks associated with covering the commercial use of drones, they should be exploring how drones can help them identify and manage the risks they underwrite for their own clients.  One of the biggest challenges associated with using drones is in collecting, organizing and integrating the vast quantities of data they collect – a topic we will explore in an upcoming post.

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