Homeowners Liability Exclusions for Unmanned Aircraft
January 9, 2017
Summary: Over the past few years drones have become wildly popular among individuals and businesses alike. They present new liability issues for all concerned, and many are concerned about such issues. Traditionally the homeowners policy has had an exception for model or hobby aircraft. With the popularity of drones, ISO has created Aircraft Liability Definition Revised to Remove Exception for Model or Hobby Aircraft, HO 34 02 02 17, to allow carriers to remove the exception for drones and similar aircraft. This endorsement is effective for use in February 2017 and is effective in the following states from March through May.
| EFFECTIVE DATE | STATE |
| 3/1/17 | AZ, CO, DE, GA, IA, ID, KS, KY, MS, NM, OK, OR, SC, SD, TN, UT. |
| 4/1/17 | AL, AR, GU, MN, MO, ND, NE, NV, OH, VI. |
| 5/1/17 | DC, IL, IN, ME, NJ, PA, RI, WV, WY. |
Another endorsement, Personal Injury for Aircraft Liability Excluded, HO 34 03 is similar in nature in that when the personal injury endorsement is added to a homeowners policy, this endorsement can be added as well in order to exclude liability for personal injury caused by unmanned aircraft. Effective dates are broken down similar to the HO 34 02, although the states are not exactly the same.
| EFFECTIVE DATE | STATE |
| 3/1/17 | AZ, CO, DE, GA, IA, ID, KS, KY, MS, NM, OK, OR, SC, SD, TN, UT. |
| 4/1/17 | AL, GU, MO, ND, NE, NV, OH, VI. |
| 5/1/17 | DC, IN, ME, NJ, RI, VT, WV, WY. |
DEFINITIONS
Definition B.1. is replaced by the following:
B. In addition, certain words and phrases are defined as follows:
1. "Aircraft Liability", "Hovercraft Liability", "Motor Vehicle Liability" and "Watercraft Liability", subject to the provisions in b. below, mean the following:
a. Liability for "bodily injury" or "property damage" arising out of the:
(1) Ownership of such vehicle or craft by an "insured";
(2) Maintenance, occupancy, operation, use, loading or unloading of such
vehicle or craft by any person;
(3) Entrustment of such vehicle or craft by an "insured" to any person;
(4) Failure to supervise or negligent supervision of any person involving such
vehicle or craft by an "insured"; or
(5) Vicarious liability, whether or not imposed by law, for the actions of a
child or minor involving such vehicle or craft.
b. For the purpose of this definition:
(1) Aircraft means any contrivance used or designed for flight including but not limited to unmanned aircraft, whether or not model or hobby;
(2) Hovercraft means a self-propelled motorized ground effect vehicle and
includes, but is not limited to, flarecraft and air cushion vehicles;
(3) Watercraft means a craft principally designed to be propelled on or in water
by wind, engine power or electric motor; and
(4) Motor vehicle means a "motor vehicle" as defined in 7. below.
All other provisions of this Policy apply.
Analysis
This endorsement leaves the definition of aircraft, hovercraft, motor vehicle and watercraft liability intact. What it changes is the definition of aircraft. Aircraft is now defined as any contrivance used or designed for flight including but not limited to unmanned aircraft, whether or not model or hobby. The original definition stated that aircraft was a contrivance meant for flight except model or hobby aircraft not used or designed to carry people or cargo. This endorsement removes that exception and clearly excludes aircraft such as drones or any other aircraft, manned or unmanned. There is no endorsement at the moment to provide coverage for such unmanned aircraft.
SECTION II – EXCLUSIONS
With respect to the Personal Injury Coverage provided by Endorsements HO 24 82 and HO 24 10, the following is added to Section II – Exclusions in Endorsements HO 24 82 and HO 24 10:
This insurance does not apply to: "Aircraft liability".
For the purposes of this exclusion, "aircraft liability" means:
a. Liability for "personal injury" arising out of the:
(1) Ownership of such aircraft by an "insured";
(2) Maintenance, occupancy, operation, use, loading or unloading of such aircraft by any person;
(3) Entrustment of such aircraft by an "insured" to any person;
(4) Failure to supervise or negligent supervision of any person involving such
aircraft by an "insured"; or
(5) Vicarious liability, whether or not imposed by law, for the actions of a child or minor involving such aircraft.
b. For the purpose of this definition, aircraft means any contrivance used or designed
for flight including but not limited to unmanned aircraft, whether or not model or hobby.
All other provisions of this Policy apply.
Analysis
This endorsement adds language to the endorsements that provide personal injury coverage, the HO 24 82 and the HO 24 10. It adds the language for aircraft liability from the HO 00 03 to the form, and adds the definition of aircraft used in the HO 34 02, any contrivance used or designed for flight including but not limited to unmanned aircraft, whether or not model or hobby.
Remember that personal injury is defined as false arrest, detention or imprisonment, malicious prosecution, wrongful eviction from or entry into or invasion of the right of private occupancy of a room, dwelling or premises, oral or written publication in any manner that violates a person's right of privacy. A drone could be used to prevent someone from leaving their home; it could also record an individual performing any activity, even through a window, and the pilot could then post the video on the internet disparaging that individual as well as violating their right to privacy. Great concern has been expressed over the ability of drone pilots to attach video cameras to the drone and record neighbors, strangers, or those in a crowd without the direct knowledge or permission of the subject in question.
While the changes in these two endorsements may seem minor, they are significant coverage changes. Drones present a very large, and as yet untested, exposure, and until a volume of claims data has been accumulated, it is unknown territory that the industry does not want to cover on a broad basis.