Earlier this month, Canada’s transport minister announced that a drone had collided with a commercial aircraft, the first confirmed collision of its kind in North America. Thankfully, the aircraft sustained only minor damage and was able to land safely. But this recent incident, which many commentators believed was inevitable given the proliferation of consumer and commercial drones, highlights the potential risks associated with drone operations.

One way to mitigate retailers’ risk of drone liability is through insurance. However, the path to coverage is not always as straightforward as it seems because commercial drone operations present a variety of insurance coverage concerns (for further discussion of key coverage issues, see our prior article).

Common coverage questions include:

  • What kinds of exposure do retailers face from operating drones, and is there coverage available, either through standard forms or specialized policies?
  • Does my company need a specialized policy to address drones? Is coverage for drones excluded under my company’s existing liability or property policies? Assuming coverage exists, are the limits adequate?
  • How do FAA regulations and other local ordinances impact potential coverage for drone operations?
  • Are my company’s officers and directors protected in the event an employee-operator causes an accident? What if the company operates drones through a third-party vendor or “on demand” service?
  • What can I do to ensure that my company is adequately covered for physical damage to drones and/or third-party liability arising from drone operations?

As with any insurance coverage issue, the answer to these questions depends on many variables, including the type of business, the drone operations at issue and the relevant policy language. A nationwide retailer implementing autonomous drone delivery systems, for example, may have vastly different potential exposure (and corresponding insurance needs) than a smaller retailer using targeted drone flights on a single property. Regardless of the situation, however, retaining experienced coverage counsel and other insurance professionals can assist retailers in assessing potential risks associated with existing or proposed drone operations and help maximize recovery in the event of a claim.