Commercial Use of Drones and their Risk Exposure

Man in hard hat and vest flies a drone over a farm to collect data on his crops.

They’re trendy gifts for your techy friends and family, but did you know that the commercial use of drones is growing in popularity as well?

Some examples, both large and small: Amazon has implemented the use of drones in the U.K. to deliver packages. Drones are also used by a company in Michigan to deliver frozen yogurt to Hope College in Holland, Michigan. 

How Commercial Drone Use Changed One Company’s Business Model

Commercial drone use could potentially change a company’s risk exposure completely, but also inadvertently change their business model at the same time. For instance, a manufacturing company that makes plastic baskets to hold strawberries recently purchased a drone. The company began using the drone to help the strawberry farmers they were selling the baskets to. How so? Well, the drone was used to scan the fields of strawberries of their current clients, allowing the manufacturing company to pinpoint certain areas of the fields that were growing better than others and give feedback on exactly where those areas were. The farmers were then able to do more research to see what they were doing differently in those areas. 

The farmers generated data on the production of the strawberries with the drone more efficiently than just walking the fields. All of the data captured using this drone helped the farmers in the production of their strawberries. 

This process changed the manufacturing company’s business model from just manufacturing plastic baskets to also becoming a consultant and big data firm for the farmers. By just using one piece of new technology — the drone — the manufacturer now had a way to evolve into a new company and create a new source of revenue.

How Commercial Drone Use Changed their Risk Exposure and Insurance Program  

First, they needed to have a plan and a knowledgeable advisor. Next, the advisor had to show the different types of policies and the types of exposures that were created by using drones as part of the business. Exposures for using a drone for commercial use can include:

  • Physical damage to the plant by the drone, cameras, sensors, ground station
  • Liability
  • Aviation Commercial General Liability
  • Aviation Products Liability
  • Non-owned Aviation Liability

The important takeaways if you are either thinking about using a drone for your business or are currently using one, are to follow all of the guidelines set forth by the FAA for drone use and make sure you are insured properly as well. Contact a BKS Commercial Risk Advisor to identify what you should know to make informed decisions on your coverage.

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