Summary: In December 2014 ISO filed a number of forms that apply specifically to drones, also known and unmanned aircraft. These forms become effective June 1, 2015. This article discusses the limited coverage endorsements CG 24 50 06 15 and CG 24 51 06 15. For a thorough discussions on drones and related issues, See Drones.

Introduction

Drones are the latest technological product to become an insurance concern. They can be incredibly useful to police, firefighters, and others, but they can also be a large liability issue. The Federal Aviation Administration is working to establish regulations as to how and when they can be used. The CG 24 50 is designed to provide limited coverage for drones when added to the CGL form. The CG 24 51 form is identical other than that it does not modify section B, exclusions for personal and advertising injury liability.

A. Exclusion 2.g. Aircraft, Auto Or Watercraft under Section I – Coverage A – Bodily Injury And Property Damage Liability is replaced by the following:

2. Exclusions

This insurance does not apply to:

g. Aircraft, Auto Or Watercraft

(1) Unmanned Aircraft

“Bodily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft that is an “unmanned aircraft”. Use includes operation and “loading or unloading”.

This Paragraph g.(1) applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the “occurrence” which caused the “bodily injury” or “property damage” involved the ownership, maintenance, use or entrustment to others of any aircraft that is an “unmanned aircraft”.

This Paragraph g.(1) does not apply to “unmanned aircraft” described in the

Schedule, but only with respect to the operation(s) or project(s) described in

the Schedule.

Analysis

This endorsement removes the aircraft, auto, or watercraft exclusion from the CGL form and makes significant changes. The changes are identical to the language found in the CG 21 10, the exclusion for unmanned aircraft. What is different is the fact that this exclusionary language does not apply to unmanned aircraft that are listed in the schedule as long as they are used for the specified project that is listed as well. The form requires the insured to schedule both the aircraft and the operation or project, and well as a limit of insurance. If the aircraft is not scheduled, there is no coverage, and the exclusionary language applies.

First, it excludes injury or damage from the use, maintenance, or entrustment to others of an unmanned aircraft. “Unmanned aircraft” is a defined term now, and is defined later in the policy as any aircraft that is not designed, manufactured, or modified after manufacture to be controlled from a person within or on the aircraft. This is an aircraft that is controlled by a person on the ground, using handheld controls in order to maneuver the vehicle to wherever the operator wants the craft to go. Drones can also fly autonomously, something that separates them distinctly from hobby radio controlled aircraft. Any use is excluded, including loading and unloading. Loading and unloading become a concern if the drone is used to carry cargo or load or unload vehicles; certain drones can carry a significant amount of weight and could be used for such activities. Drones, or unmanned aircraft, are different than commercial airliners and radio controlled hobby aircraft.

The exclusion applies even if the claims arise from any alleged negligence or other wrongdoing by the insured of any supervision, hiring, employment, training or monitoring of others by the insured which cause injury or property damage involving the drone. For example, a university hires someone to fly its drone over the homecoming game and videograph the event. While making the video, the operator diverts from the event and flies low enough over the audience to cause alarm in the crowd and buzzes pedestrians. Should a spectator file an injury claim against the operator and the university, the university would have no coverage for such actions once the endorsement has been added. This form would allow the university to schedule the drone and the project, videotaping the homecoming game, for example, so that coverage would apply.