Drones: The Risk Exposures to Your Business

While the military and hobbyists have been using unmanned aerial systems (UAS), better known as drones, for some time now, businesses are just starting to adapt the technology for their own uses. UAS are creating new opportunities—and new risks—for businesses to evaluate, and regulators and insurance carriers are scrambling to keep pace.

Regulation

The FAA currently considers UAS to be in the same category as manned aircraft, and the agency has released rules on the commercial use of drones that weigh less than 55 pounds:

• An operator may use a camera system to control a drone, but must also be close enough to see it if something unexpected occurs. Additionally, the operator must have a visual observer who remains in constant line of sight with the drone.
• Operators cannot fly the drone over anyone who is not directly participating in the drone’s operation.
• Drones may carry an external load if it’s securely attached and doesn’t adversely affect the controllability of the aircraft.
• Operators may transport property for compensation within state boundaries.
• Commercial drone operators need a remote pilot airman certificate with a small UAS rating, or be under the direct supervision of a person who holds such a certificate.
• Drones used for commercial purposes must be registered with the FAA.

UAS that are used only for recreation are still considered aircraft, and most of them must be registered with the FAA. Here are the basic guidelines for registering recreational UAS:

• UAS that weigh between 0.55 pounds and 55 pounds must be registered online. If a UAS weighs more than 55 pounds, it must be registered by paper.
• Once registered, the UAS operator will receive a registration number that must be placed on all applicable drones.
• Registration is valid for three years. Failure to register may result in regulatory and criminal sanctions.

The FAA also has regulations that apply to both commercial and recreational UAS:

• UAS must fly below a height of 400 feet above ground level and weigh 55 pounds or less.
• An operator must maintain a visual line of sight with his or her UAS.
• UAS cannot be flown within 5 miles of an airport, and must remain clear of all manned aircraft and obstacles.
• UAS cannot be flown near people or open-air stadiums.

Because the FAA currently considers UAS to be in the same category as manned aircraft, any attempt to damage or destroy one can result in federal penalties—up to 20 years in prison and $25,000 in fines.

With UAS, it’s often the loss of the payload—not the aircraft itself—that can be the most costly.

Physical Loss: Beyond the Aircraft

With UAS, it’s often the loss of the payload—not the aircraft itself—that can be the most costly. One of the most widespread applications to date has been in unmanned aerial photography. Businesses in real estate, agriculture, filmmaking and insurance all have interests in surveying and photographing land, and the cameras used to do so can get expensive.