Several years ago, drones, or unmanned arial vehicles (UAVs), were the hot new technology. It took a bit to determine how to ensure drones were being used safely, and that the general public wasn’t at risk from errant drones falling from the sky, running into people or taking unauthorized videos on the sly. We have a variety of articles that we’d written as drones were coming into vogue listed below.
Since then, the FAA has solidified regulations for drone users, and there are over 1 million registered drones in the United States alone. Drones may be used for strictly recreational purposes, or they may be used for nonrecreational flight such as roof inspections, real estate sales, taking photos for a nonprofit agency, or taking pictures of a school team to post on the school website, and others. Recreational flying is considered flying the drone for your own personal enjoyment. Commercial flying is allowed for drones under 55 pounds and the rules of 14 CFR Part 107 apply.
Recently, there have been several reported sightings of drones over various parts of the East Coast, concerning residents. Over 5,000 tips have been received, but of those tips, only 100 are under investigation. Most were airplanes, either commercial or private, and there are many that were also commercial, hobbyist, or even law enforcement drones. No anomalies have been identified. On December 19th the FAA announced restrictions barring drone flights over a number of infrastructure locations in New Jersey out of an abundance of caution. The reports of lasers being pointed at aircraft has increased by 269% over last year. Such activity is dangerous to the aircraft and is a violation of federal law.
However, it does raise some questions - if a drone goes out of control and injures a person or damages property, whether it’s a hobby drone or a drone used commercially, is there any coverage? Over the past several years a number of endorsements have been created for the commercial liability forms, commercial property forms, the inland marine forms, and the homeowners forms. These endorsements outline what is and isn’t covered regarding unmanned aerial vehicles, or drones.
"Unmanned aircraft" means an aircraft that is not:
1. Designed;
2. Manufactured; or
3. Modified after manufacture;
to be controlled directly by a person from within or on the aircraft.
Neither the homeowners policy nor the personal auto policy provide a definition of unmanned aircraft, although the homeowners policy does provide for model or hobby aircraft not used or designed to carry people or cargo as follows:
“Aircraft means any contrivance used or designed for flight except model or hobby aircraft not used or designed to carry people or cargo”
Overview of Coverages
For example, in the CA 27 05, Unmanned Aircraft Exclusion for General Liability Coverages, coverage is excluded for any bodily injury or property damage arising out of the ownership, use, maintenance or entrustment to others of any aircraft that is an “unmanned aircraft”.
The endorsements for the CGL form provide exclusions for any bodily injury or property damage arising out of the ownership, use, maintenance, or entrustment to others of any aircraft that is an “unmanned aircraft”, and use includes loading and unloading.
The CG 21 66 excludes coverage for aircraft handled by volunteer workers but makes an exception for unmanned aircraft.
The CG 34 20 provides limited coverage as scheduled on the form to the Owners and Contractors Protective Liability Coverage Part. The CG 34 21 excludes coverage for unmanned aircraft from the Railroad Protective Coverage Part, while the 34 22 provides limited coverage to the Railroad Protective Coverage Part as scheduled on the form.
The CP 04 14 provides limited coverage, as scheduled, to the Builders Risk, Building and Personal Property coverage forms, Business Income form, Causes of Loss -Special form, Condominium Association and Condominium Unit-owners forms as well as the Extra Expense form.
There are two inland marine forms - the IH 99 29 provides limited coverage for unmanned aircraft for the Contractors Equipment Coverage form, the Machinery and Equipment Coverage Form, and the Miscellaneous Articles Coverage form, and the operations and aircraft must be scheduled. The IH 00 61 provides property coverage for the aircraft listed in the declarations.
The homeowners endorsements exclude coverage - under the HO 34 02 liability for maintenance, ownership, use, loading or unloading is excluded, as is entrustment of the craft to another person, failure to supervise and vicarious liability for actions of a child. Under the HO 34 03 personal injury that results from aircraft liability is also excluded. This endorsement can be added to a policy when the HO 24 82 and HO 24 10 endorsements have been added to the policy.
The available forms may be found here:
CG 34 22 Limited Coverage for Designated Unmanned Aircraft - this form is attached to the Railroad Protective Liability coverage part
UPDATE 12/23:
The FAA has expanded temporary flight restrictions due to the reports of unusual activity. The restrictions prohibit drone operations over 30 areas in southern New York and Long Island. Restrictions were already in place in 22 areas across New Jersey. The restrictions will last until January 19th.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.