The Drone Economy

The use of Unmanned Aircraft Systems, also known as “drones,” in the U.S. is becoming a regular part of business operations.  Drones are being used in real estate development and construction, by architectural firms, engineering firms, and are being used by college students to support various disciplines of study. Roofing companies are using drones for inspections. Companies like Amazon are interested in using drones for deliveries. The possibilities are endless.

The increased use of drones by businesses and college students has the attention of the Federal Aviation Agency, the division of the Department of Transportation responsible for ensuring the safety and efficiency of the nation’s airspace. On February 15th a framework of new safety regulations was released that allows for the continued use of small unmanned aircraft systems within certain guidelines. A “small” UAS is one that weighs less than 55 pounds. It can be used during daylight hours, flown up to 400 ft and the operator must maintain a visual line of site of the small UAS. The operator of a small UAS must be at least 17 years old, pass an aeronautical knowledge test and obtain an FAA UAS operator certificate. To maintain the certificate the operator must pass the aeronautical knowledge test every 24 months. Safety regulations include the following:

  • If there is a risk of collision, the UAS operator must be the first to maneuver away.
  • The operator must discontinue the flight when continuing would pose a hazard to other aircraft, people or property.
  • A small UAS operator must assess weather conditions, airspace restrictions and the location of people to lessen risks if he or she loses control of the UAS.
  • A small UAS may not fly over people, except those directly involved with the flight.
  • Flights should be limited to 400 feet altitude and no faster than 100 mph.
  • Operators must stay out of airport flight paths and restricted airspace areas, and obey any FAA Temporary Flight Restrictions (TFRs).

Drone Liability Coverage

Many carriers are applying a broad interpretation of the aircraft exclusion in the General Liability policy and are not providing businesses with adequate liability coverage for the operation of a UAS. Thus far they have not been amending this exclusion. Therefore a separate UAS Liability policy is required to address this gap in coverage. UAS Liability policies are available in the aviation marketplace.

It is important to discuss the use of drones with your insurance consultant and secure adequate liability coverage for your business. Contact your RCM&D representative for more information.

Further reading

Business Insurance: FAA wants to speed approval process for commercial drones

Reference article

Federal Aviation Administration: Press Release – Dot and FAA Propose New Rules for Small Unmanned Aircraft Systems