Eyes in the sky:

The emerging risks presented by drones

What could a security expert, celebrity wedding planner, animal rights activist and prison warden possibly have in common? All have had to deal directly with the evolving safety and privacy concerns created by drones, or Unmanned Aircraft Systems (UAS).

Originally limited to military and government use, the intent of drones was to go places man would rather not.

Today, off-the-shelf drones are taking private individuals to places they never imagined.

The applications—and potential abuses—are staggering. Drones that are used to monitor crops can also be used to peek behind privacy fences or lengthen the reach of paparazzi. The drone-deployed nets used to safely capture untamed animals can also be misused to harvest rare species. And the flying machines that deliver crucial medicine to inaccessible areas can be equally effective at delivering contraband behind prison walls.

Managing the Risk – General Guidelines

The genie is out of its bottle – drones are here to stay. Our job is to continue to evaluate, mitigate and protect against the potential risks and liabilities created by both the legal and illegal use of drones. Regulation of UAVs is evolving, with the United States expected to issue comprehensive regulations for both commercial and recreational use sometime in 2016. In the meantime, suggested standards of safe drone usage include:

  • operators maintaining a visual line of sight (VLOS) on the machine at all times
  • limiting drone size to under 55 pounds
  • avoiding operation near airports, sporting venues or other large gatherings.

Of course, one quick search of the news and we know these standards aren’t always followed.

Managing the Risk: Risk Transfer Strategies

The most obvious potential drone-related risk is collision or third-party damage or injury and the resulting liability. As such, operators should maintain adequate Liability coverage, and for commercial applications, cover both physical loss of the hull and product liability.

Nevertheless, quantifying the potential risks is challenging: the insurance industry continues to grapple with breach of privacy and privacy protection issues, data collection concerns, and harassment, spying, and other potential criminal activities. As such, most insurers currently exclude these specific exposures on their standard General Liability policies.

Given these insurance industry challenges, if you’re a drone operator yourself, common sense usage and awareness of privacy issues remains your best defense against potential liability.

Moving Forward

Because drones present so many risk management challenges and are an ever evolving technology, MJ will continue to keep track of regulations, requirements and new coverage requirements. If you’re already operating drones, either for personal or professional reasons, please make sure your agent is aware of this so an adequate plan can be designed for your protection.

And if you’re interested in a more in-depth look at drones, their uses, misuses and counter measures against their abuse, we recommend you check out this thought-provoking article in The Atlantic: Playing Defense Against the Drones.