A Comprehensive Look at Potential Drone Related Liability and Insurance Coverage Implications

January 19, 2016

In May, I posted an article regarding the burgeoning use of commercial drones and potential liability associated with state enacted privacy legislation.  The popularity of that post, coupled with my interest in both drones and insurance, lead me to think about what other potential drone associated liability exists, and how those liabilities relate to insurance coverage and other risk-transfer mechanisms.

As an undergraduate business major, a brainstorming exercise I learned involved writing down all of one’s ideas on a topic (good or bad) over the span of five minutes.  Below are the top 10 issues related to potential drone liability and their tie to insurance resulting from this exercise.  During the coming months, I will discuss each of these issues in greater detail.  I hope you will join me on this journey.

1. Invasion of privacy claims against drone operators (commercial general liability coverage);
2. Data breach claims against drone owners/operators if resulting data is hacked (commercial general liability coverage; specialty data breach coverage; directors & officers coverage for claims pertaining to data security policies and procedures);
3. Drone crash resulting in property damage to a third-party (commercial general liability coverage);
4. Drone crash resulting in bodily-injury of a third-party (commercial general liability coverage);
5. Drone crash resulting in damage to the drone itself (first party property coverage);
6. Class action shareholder litigation alleging improper implementation of drone program by management (directors and officers coverage);
7. Novice drone operator results in personal injury or property damage at a homeowner’s residence (homeowners’ coverage);
8. Drone related incident leads to the grounding of a company’s drone delivery fleet (business interruption coverage);
9. Product liability claims against drone manufacturers if one of their drones malfunctions (product liability coverage)
10. Risk transfer/indemnification agreements with third-party drone operators for companies that implement drone usage but do not perform this function in-house.