Drones are in the air and in the news. This technology currently outpaces many of our standard coverage forms. Gary Reinhardt, Esq. and Managing Partner of KPM LAW’s Coverage & Fraud Department discusses the main concerns insurers are facing when interpreting coverage for this expanding technology.
For instance, standard homeowners’ and CGL policies contain an auto and aircraft exclusion. This prevents coverage for the ownership, maintenance, use or entrustment to others of any aircraft owned, operated by, rented by or loaned to an insured. This exclusion even applies if the allegations pertain to improper or negligent supervision.
Is a drone really an aircraft? ISO, for instance, recently defined “aircraft” although the endorsement is not common. This definition says that an aircraft is anything not used for carrying passengers or cargo, except for model or hobby aircraft. This exception in the definition may avoid the aircraft exclusion for the homeowner using a drone; just as an “occurrence” with a model or hobby aircraft might result in coverage.
However, if the drone is camera-equipped and used in a manner that invades the privacy of someone or results in “personal injury” (as opposed to “bodily injury”), a more difficult discussion arises. Intentional act exclusions and the implications of privacy invasion must be studied to determine coverage for the homeowner.
A commercially used drone may not fall within the exception as the drone may not fit the categorization of “model” or “hobby.” Because of this, many carriers are drafting specific drone insurance. Others are trying to fit drone liability issues into the CGL by drafting endorsements. These policies and endorsements address the auto/aircraft exclusion, but still must deal with privacy issues and even the possible corporate espionage claim.
Finally, coverage issues may arise when an insured, homeowner or business, takes matters into his own hands to rid himself of a drone. If an insured intentionally damages a drone, does your policy have the exception to the intentional act exclusion, for the reasonable belief that the insured’s intentional act was done to protect person or property? If so, is intentionally damaging a drone “reasonable” or even “protection”?
Until drone coverage becomes more commonplace and more comprehensive, these are some of the main issues you will face when interpreting coverage for this expanding technology. Trust KPM LAW to guide you in in your handling of such claims.