Unmanned Aerial Vehicles: Liability and Insurance

Increasing deployment of unmanned aerial vehicles (referred to as drones in this chapter) in industrial and commercial contexts and particularly their foreshadowed usage in urban transport and delivery in high-density population areas brings into sharp focus various risks and associated liability issues. The speed at which drone applications and technology are advancing has created ongoing challenges for insurers. However, as with all emerging risks, there are also some significant opportunities. This chapter outlines some of the challenges that insurers face and sets out some of the approaches that insurers have taken to underwrite risks relating to drone operations. Given the current lack of regulatory conformity, it appears that insurance will have a role to play in not only responding and providing cover for the risks as they are currently understood (and for which data is available) but also in shaping, refining and predicting the ongoing and future risk environment. Globally there are differences in opinion or approach in relation to compulsory third-party liability insurance for drones. This is not surprising. Inevitably there will be significant variations in drone regulations and insurance requirements from country to country as regulatory authorities struggle to adapt current and prospective laws to new technology and to resource the regulation of this exponentially growing sector, with each country having their own social, economic and political priorities. This chapter considers also current approaches taken to this issue in several jurisdictions and examines the arguments for and against compulsory third-party liability insurance for drones, with particular reference to developments in Europe, the United Kingdom, the United States and Australia.