Filed Under:Risk Management, Corporate Risk

10 steps to mitigating drone risks on construction sites

Many contractors and insurers are using drones for damage inspections and to gather other information, but this technology comes with its own set of unique risks. (Photo: iStock)
Many contractors and insurers are using drones for damage inspections and to gather other information, but this technology comes with its own set of unique risks. (Photo: iStock)

Whether being used to measure supply stockpiles, inspect roof work, or track construction progress, unmanned aircraft systems (UAS), or drones, are becoming increasingly commonplace at construction sites.

As with most emerging technologies, the risk landscape for drone operations at construction sites will take time to fully emerge. Already, exposure concerns have moved beyond bodily injury and property damage to privacy and other less obvious concerns. 

This past August, the Federal Aviation Administration (FAA) issued its final regulations for drones weighing less than 55 pounds. With these regulations in place, the commercial use of drones will undoubtedly grow, as well as the risk exposures.

According to the FAA, by the end of 2016, more than 600,000 drones will be deployed for commercial use in the United States, three times the number of registered manned aircraft.

Contractors and project owners using drones on jobsites, or considering their possible use, should understand the potential exposures, the options for managing them, and strategies for mitigating that exposure. Liberty Mutual has developed an interactive infographic to help companies better manage drone risks at construction sites.

The following information and recommendations were presented by Liberty Mutual Insurance in the Minimizing Drone Risks on a Construction Site session at the 2016 IRMI Construction Risk Conference.

drone operators in warehouse

The use of drones on a wide variety of job sites brings some unique risks that must be addressed. (Photo: iStock) 

Learning the exposures


Here are potential exposures from drones on construction sites, based on the insurance industry’s claims experience to date:

  • Third-party bodily injury and property damage - Example: A drone injures a worker at a jobsite or damages a piece of construction equipment.
  • Violation of another’s rights - Example: A drone trespasses on somebody’s property without permission.
  • Cyber - Example: A construction site’s neighbor is videotaped without permission and the images are posted on the internet.
  • Contractual liability - Example: A contractor is named in a suit filed by a pedestrian who was injured by a drone operated by a vendor hired to survey the jobsite. The vendor’s contract transferred liability to the contractor.
  • First-party - Example: A contractor totals its drone, equipped with a $20,000 infrared camera.
  • Product liability - Example: A construction company makes modifications on a drone and later sells it to another company. While flying the drone, the buyer loses control, injuries a pedestrian and claims it was the special modification that caused the crash.

Some of these scenarios are more likely than others, but the list highlights the range of potential exposures a company faces when operating a drone.

Related: More drones-for-hire coming to U.S. skies under landmark rules

Drone and operator

Businesses can hire another company to operate drones for them or decide to purchase and operate their own fleet. (Photo: iStock) 

Managing the risk


There are two approaches contractors and project owners can take to manage risks from drone use on construction sites: 

  • A company can decide it will work with a third-party drone operator rather than independently own and operate its own UAS. For some contractors and project owners, this is an effective way to gain the benefits of drones while minimizing their risks. Should a company take this approach, it can work with its broker and insurer to review the drone vendor’s insurance coverage and adequacy of limits, and transfer risk through contract language.
  • Should a contractor or project owner decide to own and operate drones, they can work with their broker and insurer to:
    • Add unmanned aircraft (UA) liability coverage to the company’s Commercial General Liability (CGL) policy.
    • Purchase a separate aviation/drone policy.

Brokers and insurers can help contractors and project owners review each of these options to decide the best approach to managing drone risk.

Related: 10 risks and misuses for drones

Drone flying over industrial site

Contractors using drones over construction or industrial sites should take specific steps to mitigate their risks. (Photo: iStock) 

Mitigating the exposures


Whether a contractor or project owner works with a drone vendor or directly owns and operates UAS, there are 10 important steps for mitigating risks on a jobsite:  

  • Develop a written policy for drone use. The circumstances under which a company allows drone operations should be spelled out in a written policy and supervisors should be trained for such situations. The policy should address drone operation by both licensed employees and vendors the company may hire. 
  • Create a safety procedure. Absent a written drone safety procedure, the risk of a crash or other incident involving the company increases significantly. The procedure should incorporate the FAA’s regulations and also address:
    • The parties responsible for risk assessment, flight planning, and safe drone operation and maintenance.
    • Where the drone should be operated and how to protect workers and the public from injury.
    • Privacy considerations, including gathering any needed permission.
  • List the flight operations crew members. The required qualifications and licensing of drone pilots, observers and other crew should be detailed.
  • Require a preflight meeting before every flight.

man working on drone

In addition to having a flight plan, pilots should ensure that the drone they are using is in good working condition. (Photo: iStock)

  • Require a pilot self-evaluation. The pilot’s fitness to fly can spell the difference between an incident-free flight and a multimillion-dollar claim. Before flying, the pilot should answer a series of questions about his or her readiness, including:
    • Do I have any illness that might affect my performance?
    • Am I taking any prescription or over-the-counter drugs?
    • Am I experiencing any stress?
  • Make sure the pilot is up to speed. It may have been a while since the pilot flew, so she or he should assess his or her knowledge of the drone and the manufacturer’s recommendations regarding its operation.
  • Assess the condition of the drone.
  • Evaluate the site for any structures that might impact communication with the drone, any trees or power lines in the flight path, and any adverse weather.
  • Plan for people and property. How will workers on the site be managed during the flight? Can critical equipment in the drone’s flight path be protected against damage should the drone strike that object?    
  • Have a contingency plan. While many newer drones are programmed to return to an emergency landing area if they run out of power, a faulty GPS could send the drone elsewhere.

drone flying outside

Despite their size, drones provide a lot of valuable information for users, but companies must understand and take steps to mitigate any risks. (Photo: iStock) 

The benefits can outweigh the risks


Even though a drone might be small enough to sit on a desk, it can have many serious risk exposures.

It’s crucial that contractors and project owners effectively protect against those risks by understanding, managing and mitigating them.

Resources:

— Liberty Mutual has created an interactive infographic on managing drone risk at construction sites – including links to a guide on preparing to use drones on a construction site and a pre-flight drone checklist.

— FAA regulations on drones

— Federal guidance on privacy

Related: 5 things insurers need to know before using drones

Continue reading to learn about the new FAA rules concerning drones...

drone flying over water

New rules unveiled by the FAA in late August are designed to protect other aircraft, as well as people and property on the ground. (Photo: iStock)

FAA final rule highlights:


Drone operators must register the drone with the FAA, undergo a background check, obtain a remote aircraft pilot’s license, and follow all FAA regulations for drone use.

Drones must be operated:

  • During daylight or during twilight with anti-collision lights.
  • Within the visual line of sight of the remote pilot in command.
  • Away from airports, unless air traffic control grants permission.
  • No more than 400 feet above ground level, with exceptions.
  • When there is a minimum weather visibility of three miles from the pilot’s control station.
  • Not over people, except for those in the drone operation crew.

The remote pilot in command is responsible for:

  • Assessing the operating environment.
  • Determining the appropriate number of crew members and outlining their tasks.
  • Managing and supervising the crew.
  • Conducting a preflight drone inspection.  

Aldo Fucentese is division underwriting manager for the area of Liberty Mutual that provides a range of property and casualty products to large contractors, subcontractors and project owners. He can be reached at aldo.fucentese@libertymutual.com.

Michael Mills is a technical director who provides risk engineering consulting to large contractors, subcontractors and project owners. Contact him at michael.mills@libertymutual.com.

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