First and foremost, there is the risk of high-speed collisions with people and property, which can cause serious injury and damage. While many drones include sensors for detecting and avoiding objects, there is no control over a drone that has malfunctioned or lost power and accelerates to the ground over hundreds of feet. Even with fully functioning and well-operated drones, there is risk of nuisance claims from people who claim that the presence of UAVs disturbs enjoyment of their dwellings. Moreover, since drones used in property management would primarily be used for surveillance, there is risk of invasion of privacy if a drone records adults in places and situations where they expect a right of privacy. Over the past year, media outlets have reported on complaints from public safety departments that privately operated UAVs (generally those of hobbyists) have interfered with responses to public emergencies. Some commentators have also expressed horror at the remote prospect that a privately-operated drone could interfere with a commercial airliner, causing a crash and killing hundreds. Under the FAA rules, drone operators are to alert air traffic authorities whenever they are within five miles of an airport, and also need to stay away from the airport’s immediate airspace. The remote possibility of a collision between an airliner and a drone less than 55 pounds operating under 400 feet would be similar to the commonplace collision of airliners with birds. Coverage and costs When considering whether to integrate drones into a property management operation, don’t forget that they can operate largely unregulated: indoors, beyond the reach of FAA control over the nation’s airspace. Hotels, arenas, and convention centers use footage from UAVs to market the size and amenities of their facilities, and drones can be used to monitor safety and security in warehouses, terminals, and other structures with ample airspace. PAGE 2 Drones: The risks and rewards Continued 512.328.1851 | benekeai.com Sheila E. Salvatore, Editor | Editor@AdjustersInternational.com Copyright © 2018 Adjusters International, Ltd. All Rights Reserved. E15-1015 Insurance products for the first- and third-party risks for the use of drones (property and liability risks, respectively) are now available in the surplus lines market, and beginning to emerge among admitted carriers. The Insurance Services Office (ISO) the most widely-used property/casualty advisory organization, has led the way to address the drone coverage available from mainstream insurers by developing and filing policy endorsements explicitly excluding or providing coverage for losses to or arising from UAVs. These endorsements include: • A series of policy options approved in 2015 that would, in effect, exclude or provide liability coverage for bodily injury, property damage, and/or personal injury, or some combination thereof; • An inland marine policy form released in 2016 for providing first-party physical damage coverage for a drone; and • Endorsements for providing UAV physical damage coverage under commercial property and businessowners policies, both commonly used to insure rental properties. A complement, not a substitute For all the potential benefits of UAVs for property managers, practical and regulatory constraints on their operation will require, in most cases, that they only be used as a complement to, not a replacement for, conventional surveillance and monitoring technologies. As long as drones are required to operate within an operator’s line of sight, there will need to be CCTV to monitor building security from a control center if they operate out of sight. Without a waiver, the prohibition against flying over unshielded people will severely restrict the use of drones over parking lots and other open areas. With the ability to conduct more thorough surveillance at lower cost than human inspectors and security personnel, drones are likely to become part of the property manager’s common toolkit very soon. Insights for Your Industry® is published as a public service by Adjusters International, Inc. It is provided for general information and is not intended to replace professional insurance, legal and/or financial advice for specific cases. PROTECTING YOUR PROPERTY ®
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