Drone Use Presents New Risks

Originally used for defense by the military, drones are increasingly being used by a variety of industries. With increased use comes the potential for more risks.

Brandon Almond, an attorney with Troutman Sanders, discussed common risks associated with drones during the annual Professional Liability Underwriting Society (PLUS) conference held in San Diego recently.

Industries currently using drones include:

• Construction company and land surveyors
• Event photographers
• Law enforcement
• Insurance adjusters
• Entertainment

By 2020, the Federal Aviation Authority (FAA) estimated that combined, total hobbyist and commercial drone sales will rise to 7 million.

Almond said anti-drone technology is growing, too – there are five companies that are currently testing the use of pulse guns, weighted nets, and hawks to snatch drones out of the sky.

The damage a drone can cause can be significant. A two-pound drone can bore a hole in a plane wing, he said. A pending legal case involves an eye injury sustained by a guest caused by a drone being used by the wedding photographer. A drone causing damage at a commercial event could be catastrophic.

Besides bodily injury and property damage, there are cyber risks. Drones could capture sensitive information, such as design plans. There may be claims of an invasion of privacy.

“You have the right to be free from observation from your home,” Almond said, adding that intrusion within 20 feet of a home could be considered trespassing.

FAA civil fines can be steep, he said, totaling up to $27,000 per violation. Fines for criminal violations can be up to $250,000 and three years in prison. A real estate firm was fined $1.9 million for taking aerial images of properties for years in Chicago and New York that violated FAA rules. The matter was settled for $200,000.

“It shows the reach the FAA has,” said Almond.

Since its still considered a new area of technology, business owners may not be savvy when it comes the risk associated with drones. Currently, Almond said there is no specific coverage for drones. Commercial general liability policies and professional policies may be amended to cover drones and can include coverage for regulatory to fines up to $50,000.

The potential market nationally for drone insurance is estimated to be $500 million, he said.