Commercial drone users navigate web of regulations, consider specialty aviation insurance to cover losses

Businesses with commercial drone operations must follow federal aviation regulations and manage liability exposures as drone applications expand, experts say.

Claims professionals that fly drones for Travelers Cos. Inc. must adhere to Federal Aviation Administration regulations and the insurer’s rules, said Jim Wucherpfennig, Hartford, Connecticut-based vice president of property claims at the insurer.

The FAA’s Part 107 Small Unmanned Aircraft Systems regulations cover commercial drones weighing less than 55 pounds. Drone regulations also exist at the state and local level. 

Claims professionals can only fly drones at a certain height, and the devices “can’t fly in certain wind conditions, winter conditions, certainly never at night, and always within the line of sight,” Mr. Wucherpfennig said.

Pilot training and certification is critical, he said.

Concerns about liability risks may have slowed drone use among insurers, said Peter Fallon, national property practice leader at brokerage Risk Strategies Co. Inc. in Boston.

“Insurers don’t want to be liable if a drone crashes into a building and causes property damage” or injures people, he said.

Aviation insurers have developed drone-specific policy forms that are tailored to respond to the range of exposures that drone operators face, said Drew Johnston, Oklahoma City-based national aviation practice leader at Woodruff Sawyer & Co.

Third-party liability is the most significant exposure drone operators should consider, Mr. Johnston said. “This could be bodily injury or property damage liability,” he said.

FAA regulations have been designed to minimize drone operations over populated areas and near airports, but there’s still the possibility for pilot error or equipment malfunction, he said.