Drone Damage

What happens when a UAV becomes the claim?

By Eric Gilkey

We’re used to hearing about drones being used to inspect damage, but what happens when the tool itself becomes the focus of a claim? We spoke with Matt Kenney, technical program manager for Donan, to find out more about the company’s drone forensics program, which addresses this very question.

Drone forensics sounds very futuristic, but it’s not about your company using drones to conduct investigations, is it?

We’ve been utilizing drones to conduct property investigations for several years, but drone forensics is all about assisting carriers by providing the expertise needed to investigate losses and accidents caused by drones. These losses might include a drone crash that causes damage to property or personal injuries, or a fire that originates in a drone battery and then causes further damage. We’ve invested in building drone expertise over the last several years, and this is really a natural extension into an area that is only going to expand as we move into the future.

What trends were you seeing that sparked the need for this? Were insurers looking for experts but not finding them?

Yes, we had insurers reaching out with questions about drone policy language and coverage for drone claims. We’ve also had clients contact us who weren’t sure where to even start with handling a claim related to a drone. It really is unchartered territory for most carriers. But a lot of what drove this service is an awareness that the drone industry is set for significant growth, and this is going to have an increasing impact on the insurance industry. The Federal Aviation Administration forecasts that 7 million drones will be sold in the U.S. by 2020; add that to a future of expanded commercial drone applications and potentially even routine drone delivery services, and you can see why it’s important to be prepared to investigate losses when drones malfunction or crash.

Describe one common and one not-so-common claims scenario when it comes to drone claims.

There is still a relatively low volume of drone claims. Most drone operators with expensive, professional-grade drone hardware often have the hardware insured, and claims are commonly filed for damage to the hardware. It can be difficult for carriers to determine the cause and extent of the damage and to get accurate estimates for repairs or replacement of the hardware. This is where they may want to partner with a vendor that has the drone expertise to confidently answer these questions. We’re already seeing frequent fires caused by defective drone batteries, inadvertent abuse, or improper charging of the batteries. The lithium polymer batteries typically used in drones are notorious for catching fire as a result of damage or defect.

Drone collisions or near misses with aircraft often make headlines, but the actual occurrences of collisions have been rare. However, this type of scenario carries a high risk of catastrophic damage and loss of life, thus the interest from media and the public.

What can claims and litigation professionals expect to encounter when it comes to claims involving drones, and how can they be better prepared?

Claims and litigation professionals will need to consider a wide range of factors when handling claims involving drones, including hardware and software issues; pilot training; weather; FAA, state, and local flight restrictions; and drone safety features—just to name a few. In many cases, data may be stored on the drone to recreate the events that led to an accident or malfunction, but retrieving and interpreting this flight data may require special tools and training. It’s important to forge a partnership now with a vendor that has the appropriate expertise to provide pertinent information related to claims involving drones, and that can help carriers determine whether there is subrogation potential.

Eric Gilkey is executive editor of CLM Magazine, a publication of the Claims and Litigation Management (CLM) Alliance. He may be reached at 513-273-8025, eric.gilkey@TheCLM.org.

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