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Everywhere you turn these days the talk is drones, drones, drones. They supposedly have a million and one uses, including, we’re told, by Amazon for the delivery of packages. I’m dubious that Amazon will ever be dropping books from the sky onto my front porch. The awesome guy who delivers my newspaper every morning virtually always misses the driveway. And he’s throwing the paper from ten feet away -- and while on Earth.
In any event, while Amazon’s use of drones may be a ways away, the insurance industry’s is not. In fact, the day has come. There have been lots of headlines lately about various insurers being granted permission by the FAA to use drones in the claims and underwriting processes. Of course, for those of us who do work for insurers -- as employees or outside providers; which is practically everyone reading this – these stories have generated some unfortunate headlines, such as this one:
Such headlines aside, drones seem to have some legitimate uses for insurers. Consider this lead paragraph from an April 9th story posted on engadget.com under the headline “FAA Allows AIG To Use Drones For Insurance Inspections:” “The Federal Aviation Administration has been rather stingy when it comes to giving companies the OK to test, let alone employ, drones. After getting permission this week, AIG joins State Farm and USAA as insurance providers with exemptions that allow them to use the UAVs [unmanned aerial vehicles, i.e., technical term for drones] to perform tasks that are risky to regular folks -- things like roof inspections after a major storm. In addition to keeping its inspectors safe, the company says drones will speed up the claims process, which means its customers will, in theory, get paid faster. ‘UAVs can help accelerate surveys of disaster areas with high resolution images for faster claims handling, risk assessment, and payments,’the news release explains. They can also quickly and safely reach areas that could be dangerous or inaccessible for manual inspection, and they provide richer information about properties, structures and claim events.”
In an April 15th story on Insurance Journal’s website, about Erie Insurance’s receipt of FAA approval to use drones, a company executive had this to say: “‘Drones will help our claims adjusters get an early look at potential damage without putting themselves in harm’s way due to unsafe conditions, such as on a steep roof or at the site of a fire or natural disaster,’ [Gary] Sullivan [Vice-president of Property and Subrogation] said. Sullivan added, ‘The sooner we can get in and assess damage, the sooner we can settle claims and help make our customers whole again so they can move on with their lives. We’re proud to be one of the first insurance companies at the forefront of this next chapter in claims innovation.’”
There is another part of the story when it comes to insurance and drones – insurers providing coverage for individuals and entities whose drones cause damage to people or property. It is hard to imagine that the widespread use of drones won’t lead to such claims. And I’m sure we can all image some invasion of privacy claims being brought against drone users. The insurance industry has a long history of quickly responding to emerging risks with risk transfer products. The availability of drone insurance is no exception. Check out drone-insurance.com and riskoverwatch.com for just two sources of coverage.
This is just the beginning of the story when it comes to insurance and drones. Some supposed use of drones seem unlikely to come to pass – or at least not for a long time. But for the insurance industry, drones – both for their own use and as a business opportunity – are here and to stay.
Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit www.coverageopinions.info.
The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.
Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.
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