"Is it a bird, is it a plane…is that drone insured?”
As their price has fallen to as low as £25, so “drones” have become increasingly useful tools for commercial SME enterprises along with ever-increasing popularity as recreational gadgets. This rise in volume and accessibility has sparked concerns over the risks of ‘unregulated amateurs’ operating these aircraft - as the Civil Aviation Authority has been at pains to define drones. The Civil Aviation Authority has warned recreational drone users they face jail if they endanger aircraft, and launched its “DroneCode” awareness campaign in an effort to prevent such occurrences. The issue is a recognised ‘hot topic’ in the aviation sector and elsewhere e.g. it has recently been considered by the House of Lords European Union Committee. Here, we consider the potential impact on the insurance sector too.
Non-commercial operators do not currently require any form of licence or registration to operate a drone weighing less than 20kg (as most do). A standard weight, unregulated drone falling from the sky has been likened to an iron being thrown at a passer-by at 50 mph… save that the drones also have unguarded rotor blades.
There are increasing media reports of collisions with:
Other, larger aircraft, leading to potentially large property damage claims and multiple death / catastrophic injury claims e.g. a widely reported near-miss at Heathrow airport in 2014, and a recent flurry of near-misses at Heathrow, Glasgow, and Warsaw;
Property, motor vehicles, or any other structure such as electricity cables, causing fires or explosions e.g. a prosecution in Scotland of a TV repair shop owner for a drone being flown over… a Trident nuclear submarine base;
People! e.g. Enrique Iglesias reportedly undergoing reconstructive hand surgery for lacerations and a fracture after grabbing a camera drone during a live performance; injuries sustained by an Australian triathlete upon whom a drone fell; a US TGI Fridays customer cut by a mistletoe carrying drone; or the drone which crashed into a Virginia Bullrun causing chaos and injury.
It is perhaps unsurprising that there is a US website dedicated solely to drone related injury claims.
Recognised factual causes of collisions, each needing to be assessed for negligence or other liability, include: loss of battery power; software failures; poor flight operator control; or drones being attacked by birds.
The legal issues arising are equally varied e.g. liability under negligence; by reference to aviation rules; to data protection (a large proportion of drones carry video cameras); harassment; human rights; privacy; nuisance; and trespass. It is important that insurance cover for all of these legal liabilities is properly considered at this early stage, both by insurers and their insureds.
Whether these laws are presently developed so as to cope with drone issues is itself also doubtful.
Recreational drone users may not be sending their drones out on military operations, but may be unwittingly entering a legal minefield.
The low volume of claims and prosecutions against drone operators to date is seen to be as a consequence mostly of their lack of traceability; drones do not have individual identifying codes painted on, as other aircraft do. The House of Lords recently called for the compulsory registration of all commercial and civilian drones, through an online database which the general public could access. This would likely increase the ability of members of the public to bring claims.
However, drones operated for leisure purposes are not presently required to have specific drones-related third party liability insurance, and the House of Lords’ report considers it to be disproportionate to introduce mandatory liability insurance in this field.
In the event that third party claims are made against recreational operators, they will therefore likely look to their existing, non-specific insurances to meet their liabilities or to defend criminal prosecutions, whether under Public Liability insurance or more specific covers such as Data Protection.
Many policies, such as home cover, include a general exclusion for deliberate loss and illegal acts which may assist insurers in this respect. The Air Navigation Order 2009 sets out detailed rules as to the operation of drones, for example, that the drone must remain within the direct and unaided sight of the operator, and that ‘surveillance drones’, i.e. simply meaning those bearing recording equipment - as many now do, must not fly within 50 metres of any vessel, vehicle or structure which is not under the control of the operator; or within 50 metres of any person (other than take off/landing or in relation to persons under the control of the person in charge of the aircraft)… to name but a few of the more detailed requirements.
Where the drone-related facts in question are capable of being shown to be illegal then the policy exclusion for illegal acts will likely bite but in reality, the issue in many instances is likely to be that the facts may not be adequately proven unless and until ruled upon by a court, and there have been very few drone situations reach that stage to date. Whilst many collisions will likely be in breach of the aviation rules governing drone flights, since by definition they will have plainly come ‘within 50 metres’ of a person etc, there will be potential difficulties for insurers in that the facts to be proven will not usually be on the question of where the drone ended up as much as why it ended up there. For example, if mechanical failure or bird attack on the drone, hacking of the signal or other such reason applied, then the policyholder will probably assert that they have a defence to any criminal charge and/or any allegation by insurers that the cause of the drone problem was negligent, still less deliberate or illegal.
Some insurers have more precise wording in their policy exclusions for liability, whether referring to drones as ‘aerial devices’ or some other terminology, and one must consider whether each element of the potentially applicable policy cover contains a sufficient link to the relevant exclusion.
The way ahead
Pending developments as to compulsory, specific drones insurance, if general insurers wish to exclude liability for drones, the safest way to do so then is to be express and clear about that, rather than relying only upon more general provisions in the policy wordings but also to take a step back to consider any and all liabilities which might arise from drone usage and whether the intended exclusions apply adequately to those.
For victim support organisations, it may be a time to press for stricter regulation and compulsory, specific drones related insurance, so as to reduce the risk of victims being left uncompensated.
Insurers may wish to encourage the ABI to lobby for both compulsory registration of all drones and for specific insurance for their use. By comparison, the compulsory motor insurance scheme in the UK was not introduced until 1930… by which stage the Ford Model T had already had its heyday and ceased production!
Steps taken now, before the use of recreational drones becomes even more widespread, to consider in full the benefits, implications, and terms for compulsory drone insurance would allow for full consultation as opposed to a knee-jerk reaction to a large scale drone accident with an ultimately uninsured operator or an unwitting insurer being asked to meet a very large claim for a risk it never really intended to insure.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.