Walmart announced this week that it is testing a pilot program in North Carolina for the delivery of food and household items using automated drones, joining other retailers who want to improve their drones. In a related development, the Federal Aviation Administration (FAA) last week named Amazon Prime Air an "airline", an important step in Amazon's efforts to expand into delivery-for-drones. Amazon joins Wing, its subsidiary Alphabet Inc. and UPS as a company that has received FAA approval to operate unmanned aerial vehicle systems ( ie drones) in accordance with federal regulations. Given the rapid increase in commercial drone use, companies have understandably expressed concern that their drone technology will expose them to a new set of risks, including damage to the drone itself, as well as third party claims for property or physical damage caused by a proprietary or proprietary drone ( and other claims by third parties such as invasion of privacy). In view of these risks, it is important that companies using drones receive the insurance necessary to protect themselves against such risks, and that they examine all coverage options if a drone-related loss occurs to maximize their chances of recovery. 1
It is important that coverage for drone-related losses is also found in other types of "traditional" insurance. . For example, liability for "bodily injury" or "property damage" is covered under the standard CGL policy if "bodily injury" or "property damage" is due to an "event". Most CGL policies define an "event" as an "accident". Drones can, of course, cause accidents. However, CGL guidelines often include an exception for damages that "arise as a result of" the use of an "aircraft" (and courts have ruled that even if drones are unmanned and remotely controlled, they are still "aircraft"). The FAA designation as "air carrier" may further complicate coverage by possibly providing additional coverage and exemptions. Despite this, CGL approvals are available that can provide drone coverage.
Similarly, D&O policies may cover third party claims as such policies generally protect against alleged "wrongdoing" by board members and officers (and sometimes the company), which may cover actions arising from property or physical practices. damage, or to the invasion of human integrity. In addition, companies can also look at their E&O policy, which can provide coverage for claims related to incorrect reproduction of "professional services", which may include drones. Similarly, EPL policies can cover employment-related claims arising from an employer's use of drones to monitor employees' activities and work performance.
Drones evolved beyond their military origins to become ubiquitous commercial tools. The FAA reports that more than 1.6 million drones were registered in the United States as of July 2020. According to Goldman Sachs Research, drones are expected to quickly exceed $ 100 billion. Drones are already monitoring war zones, patrolling national borders, generating climate data, mapping previously inaccessible topographies, analyzing crop and cattle health, and searching for defects in miles of pipelines. Perhaps ironically, insurers also use drones to adjust insurance claims. With companies such as Amazon, Walmart and UPS competing for a market advantage in the ever-growing package delivery space, drone deliveries can also soon become normal. It is therefore key for policyholders to understand how to deal with the unique risks associated with their drones and to have a plan to maximize their coverage options in the event of a drone-related loss.