The California Central District Court ruled that a drone is still considered to be an aircraft, despite being unmanned and not carrying cargo. The case is Philadelphia Indemnity Insurance Company v. Hollycal Production, Inc. et al. No. 5:18-cv-00768, 2018.

Hollycal Production Inc. used a drone to photograph a wedding in April 2016. During the photography of the event, the drone struck a guest in the head. The injury ended up necessitating surgery and resulted in loss of vision in one of the victim's eyes. The injured guest sued Hollycal in state court. Hollycal filed a claim with its insurer Tokio Marine unit Philadelphia Indemnity Insurance Company, (Philadelphia) asking it to defend the suit and to pay any resulting damages. Philadelphia agreed to defend the company under a reservation of rights. Soon after, Philadelphia filed suit in federal district court, seeking summary judgment of whether Hollycal was entitled to coverage under the commercial general liability policy.

Philadelphia argued that the CGL policy specifically excluded injury caused by drones because there was no coverage for injury “arising out of the ownership, operation, maintenance, use, loading or unloading of any flying craft or vehicle, including. . . aircraft. . . “ or from any “propelled objects.”

The court ruled that Hollycal was not entitled to coverage under its policy due to the exclusion which specifically excluded bodily injury or property damage involving any aircraft the insured used. Hollycal argued that because a drone is not capable of transporting people or cargo, it did not fall under the exclusion. The court ruled that the drone was still an aircraft, relying on the ordinary definition of aircraft which does not require the aircraft to be passenger or cargo carrying. The court held that the insurer had no duty to defend or indemnify Hollycal.

Editor's Note: Although the insured did have a CGL policy, and thus recognized at least some of their liability exposures acting as wedding photographers. Perhaps the insured failed to update their policy when they started using drones, or simply misunderstood the exclusions in the policy, believing they were covered when they truly weren't. Insureds should know that separate coverage is necessary if they wish to procure coverage for a drone, which can be added by endorsement or procured through a specialty insurer, and if the exposures are known to the agent, they should address the exposures by attaching the ISO unmanned aerial endorsements.

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