Although only one Schinnerer policyholder has been approved by the Federal Aviation Administration to use unmanned aircraft as part of the firm’s provision of professional services, the insurance industry is moving forward on preparing coverage for drone use. The issue is not one of professional liability insurance coverage; the Schinnerer program covers the professional liability of firms using drones. But the insurance industry has been concerned with general liability exposure intrinsic in the commercial use of unmanned aircraft.
Now the Insurance Services Office, Inc. (ISO), the private organization that develops coverage standards for the insurance industry, recently developed and filed a variety of general liability insurance endorsements addressing unmanned aircraft exposures.
The ISO endorsements, filed with a June 2015 implementation date, treat standard aircraft and unmanned aircraft exposures separately, allowing insurers to decide whether and how to cover unmanned aircraft liability independent of how other aircraft exposures are treated. Exclusionary endorsements can be used to remove all coverage for bodily injury and property damage or can separately or inclusively exclude coverage for personal injury (such as invasion of privacy) and advertising injury caused by drone use. Alternatively, insurers can include coverage for one or both of these exposures for designated drones when used at specified locations identified in advance. The schedules can be used to stipulate coverage only for specific unmanned aircraft at specific projects, or for broader categories such as “unmanned aircraft weighing less than 10 pounds” as negotiated with the underwriter.
Although the Federal Aviation Administration approves only specific drone uses by specific users, once appropriate regulations can be established, many companies—including mapping, surveying, engineering, and other design firms—are ready to put drones into use. Some are already using drones on overseas projects, where regulation is minimal.
Coverage for the non-professional exposures of firms depends on the insurance carrier’s underwriting tolerance and the needs of its clients. To allow for maximum flexibility with this newly emerging exposure, the Insurance Services Office introduced various exclusion and coverage options to give insurers when writing risks that use drones in their operations. Firms that are anticipating the use of drones when such use becomes legal should check with their brokers about their general liability coverage and the new ISO endorsements.