Developments like Amazon’s recent announcement that it expects “within months” to begin delivering packages via drone, coupled with the anticipated impact of 5G wireless technology on drone use, have captured headlines. How drones ultimately will be used is uncertain, but it’s clear that increased use of unmanned aircraft will likely alter the risk landscape.
From a risk-management perspective, it’s worth considering how drones could create new risks while also recognizing their potential value as a risk-mitigation tool. For example, one might reasonably infer that the longer a drone is in the air, the greater the likelihood that it will crash, lose or damage its payload, or in some other way cause injury.
Conversely, the ability of drones to take the place of people engaging in dangerous tasks—say, inspecting power lines—might generally be viewed as reducing risk.
Where drones are being flown also matters. Densely populated areas may present more ways than open spaces for drones to cause damage. In this regard, delivering packages in a city might be viewed as riskier than carrying out a rural real estate survey.
The wedding injury
Drones have caused injuries, and, naturally, some insurance claims.
One such case involved a photographer who operated a drone to capture pictures during a wedding. While airborne, the drone reportedly collided with a guest at eye level, causing the guest to lose sight in one eye. In this case, the insurer reportedly denied coverage based on the aircraft exclusion in its commercial general liability (CGL) policy.
The court agreed with the insurer’s definition of the word “aircraft,” finding that “the ordinary definition…does not require the carrying of passengers or cargo. Additionally, that a drone is unmanned and operated remotely does not make it less of an aircraft.”
Meeting and mitigating risks
Drones increasingly are being used by first responders in disaster and search-and-rescue scenarios. They’re also being used in applications that would typically require a person to go into a dangerous situation, such as climbing on a roof. In roofing and construction, drones are being used for measurements. Similarly, for insurance claims, risks are reduced by keeping adjusters off roofs—especially after large storms or catastrophic events in which a roof may be severely damaged.
Verisk’s Geomni business uses remote sensing and machine learning technologies to capture aerial imagery and deliver geographic and spatially referenced data providing detailed residential and commercial property information. By providing this data to feed analytics serving insurance underwriting, claims, and other uses, fixed-wing piloted aircraft and drones limit the need for people to risk injury by climbing on roofs or other structures.
Additionally, Verisk uses this imagery and data to inform its Roof Report, which is tailored for underwriters, offering high-resolution images and key data on commercial roofs.
Drone technology continues to improve, with consumer-level drones incorporating sophisticated obstacle avoidance sensors and “return to home” capabilities that engage if the signal to the pilot is lost. Such advances help to increase safety.
Drone prices also have decreased significantly. As drones become more affordable, more of them will likely be in the air, increasing the potential for something to go wrong.
ISO has developed endorsements to address drones for the following types of policies:
- commercial general liability and commercial liability umbrella/excess
- commercial inland marine
- commercial property, capital assets, and Agri-CAP®
- businessowners (BOP)