COVERAGE CORNER

NEW RULES TAKE FLIGHT, MORE DRONES IN SIGHT

By Kevin C. Amrhein, CIC

A year ago, I wrote a column for Primary Agent discussing the insurance concerns in an ISO CGL regarding a commercial insured’s use of drones.

At the time of this writing, the relevance of that article (and its referenced ISO form numbers) is unchanged. That said, some regulatory changes announced recently by the feds are noteworthy. In short, with the loosening of a few long-standing rules, it’s possible – dare I say, likely – that you as an agent will notice an expansion of drone use across different industries within your commercial book.

WHAT’S UP?

(Besides the drone, of course … ZING! *adjusts necktie*)

In late December 2020, the Federal Aviation Administration (FAA) released an executive summary describing significant changes regarding the commercial use of small drones. Much of the attention regarding the FAA’s announcement regards compliance with a controversial ID/monitoring system that will be phased in over the next several months. However, a few other changes described below took effect in March 2021. Agents should expect the results of these changes to be swift and, dare I say, risky.

FLYING OVER MOVING VEHICLES OR PEOPLE

For years, operators who did not receive specific exemption from the FAA were forbidden from piloting drones over moving vehicles or groups of people. The new rule, aptly titled Operation of Unmanned Aircraft Systems Over People (Final Rule), does the following: 1) establishes four categories of small unmanned aircraft and removes the exemption requirement depending on which category applies to the operator’s drone, and 2) applies those same categories to a drone with which its operator wants to fly over moving vehicles.

NIGHT FLIGHTS, NIGHT LIGHTS

For years, operators who did not receive specific exemption from the FAA were forbidden from piloting drones at night. Under the same rule discussed above, operators wanting to conduct night operations are now able to do so contingent on the completion of updated testing and/ or online training. Further, before taking flight, the drone must be equipped with operational anticollision lights that are visible for three statute miles and have a flash rate sufficient to avoid a collision.

It’s important to note that while these changes clearly reflect the FAA’s evolving efforts to ease restrictions, commercial operators must still be appropriately certified and in compliance with Part 107. Further, the FAA’s Visual Line of Sight Rule – a rule oft-criticized by businesses hoping to broaden their use of drones for services such as product delivery – remains in effect.

THE NEW LOOK OF YOUR BOOK

When I discuss drone technology in my classes, I enjoy hearing from agents how their insureds have sought-out the use of drones to improve operations. To some, strict regulations have historically hindered high hopes. However (have I mentioned that alliteration is my jam), I’m confident these rule changes will create new opportunities for insureds and their agents. For example, it’s easy to imagine how businesses involved in photography, surveillance, or media will benefit from the ability to fly over groups. Engineering firms could see the ability of piloting over traffic as a boon. Night flights could boost efficiency for industries like construction and utilities. Opportunities abound!

Too often, agents focus on the negative. We can’t help it – it’s the nature of our business. It’s not brilliant, but I’ll say it anyway: As more insureds take to the skies, their risks will evolve. Here are a few suggestions:

▲ Review the article from the April 2020 edition of Primary Agent titled “Commercial Drone Liability: Flight or Fight?” (Visit Issuu.com/ primary_agent for an archive.) The ISO form numbers and discussion on the CGL should serve as a primer before you review exposure changes and coverage with insureds.

▲ Review any communications your agency and carriers provide to your insureds regarding commercial drone use, and ensure that it adequately addresses exposures based on current rules.

▲ Reach out to carrier contacts to see if new rules are expected to impact underwriting or renewal restrictions and if so, what their suggested solutions are.

That’s all for now. Until the next round…cheers!

Kevin C Amrhein, CIC, is IA&B‘s education consultant. He works with our CISR and CIC programs, as well as our special topic seminars and live webinars. Catch him at one of our upcoming professional training offerings: IABforME.com