Attack of the Drones

Unmanned Aircraft, Insurance Implications & Opportunities

As you may know, unmanned aircraft commonly referred to as "drones," have been used extensively in military operations for many years.

Within a very short period of time drone use in connection with various commercial operations is expected to increase dramatically. While the FAA is set to develop a plan by September 30, 2015 to safely integrate civil drones into the U.S. airspace system, it estimates that about 7,500 commercial drones could be in use within five years of the new rules. Now however, even prior to finalizing such plan, the FAA has been granting permission to certain entities to use drones in their current operations, including search and rescue, colleges and schools, and other businesses including of course the manufacturers of drones.

The FAA also recently announced it has authorized six film and television production companies to use drones as a part of their operations. Additionally, other reported uses for drones include the following:

  • Agriculture – Use by farmers to capture aerial images which help assess crop health.

  • Inspection – To inspect structures for damage and other hazards, especially in areas that are difficult to access.

  • Weather And Environmental Data Collection –To collect weather data, including real-time collection of data from within hurricanes and tornadoes.

Those companies expecting to use drones include but are not limited to:

  • Package Delivery – Several major companies are reportedly testing drone technology for the purpose of delivering packages.

  • Providing web access – One company is reportedly working to develop solar-powered drones which would provide global web access.

  • Hospitals, laboratories , physician’s offices, medical clinics for the purpose of delivering laboratory samples and prescriptions

  • Auto-Parts stores for the delivery of some auto parts to dealers et cetera.

AND – as you can imagine, and even beyond imagination and creativity, all of the other potential uses for drones: photography, surveillance (legal and illegal), speedy delivery of pot and other interesting delivery items.

And knowing our fearless leader, Granite will be the first to deliver Certificates of Insurance , policies and invoices via drone.

In response to “drones” and present liability policy limitations, believe it or not, ISO has just released several endorsements to provide liability insurance for “drone liability.” These endorsements are effective in most states on June 15th, 2015 ---yes, 2015.

As you know, in California, though the filing will be released on 6/15/15, insurers have the right to elect to use new forms when they wish.


So what’s the big deal?

Is there any coverage for Aircraft in conventional Commercial General Liability Policies?

With regard to Coverage A – Bodily Injury and Property Damage Liability, the CGL Coverage Form and the Aircraft generally excludes bodily injury or property damage arising out of the ownership, maintenance, use or entrustment to others of any aircraft owned or operated by or rented or loaned to any insured.

Coverage B – Personal And Advertising Injury Liability does not contain an exclusion explicitly addressing aircraft.

And the ISO Commercial Excess Liability Coverage Form generally provides following-form coverage and specifies that the insurance provided will follow the same provisions, exclusions and limitations that are contained in the applicable controlling underlying insurance.


Most insurance agents and brokers, unless they are students of the business or are part of the CIC program will have no idea how to effectively deal with the liability exposure created by drones. It will take them longer to understand the issues, exposures and remedies.

You are already ahead of the competition, and we’ll keep you posted on all developments.

As you chat with your clients and prospects consider the possibility of the use of drones in their business or profession. Perhaps “insurance for drones’ is a feature that may be desirable to add to proposals, summaries of insurance and in the identification of exclusions, policy limitations in coverages that the insured has elected not to purchase or consider.