Drones: High tech solution or high risk proposition?

Published on Thu, 07/16/2015 - 00:31
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Did you ever think you’d see flying robots cruising over your vineyards, collecting aerial images and data for analyzing the health of your grapes? It sounds like something straight out of a science fiction movie, but this future is now!

Unmanned aircraft systems (UAS) – more commonly known as drones – are all the rage with hobbyists, and they’re opening new possibilities for business owners. They’re used by construction companies to conduct building inspections; by realtors to provide a birds-eye view of a home’s exterior and interior features; by firefighters to monitor hot spots in forest fires; and by nature and wildlife videographers to capture stunning vistas never seen before.

The drone market is exploding.

According to the Federal Aviation Administration (FAA), small UAS are the most dynamic growth sector within the aviation industry today – and commercial demand is a big factor driving that growth.

For the wine industry, drones offer a new high tech tool for managing vineyards more efficiently. One huge challenge facing vineyards across the globe is rising temperatures and declining rainfall, something California knows all about. As a result, vintners are being forced to find creative ways to battle these threats, and drones are providing an innovative way to monitor vineyards and determine where water, fertilizer, and energy use can be adjusted to save resources.

But commercial drone use is still in its infancy, with a host of potential regulatory, legal, and liability risks – and even more unknowns.

When it comes to entrepreneurial innovation, government regulation is never far behind. In 2013, the Drone Aircraft Privacy & Transparency Act was passed to create a regulatory scheme for the private use of drones, including privacy protection, data collection, and enforcement. The FAA has been given the daunting task of integrating this new generation of flying robotics into our airspace, and the agency is currently developing policies and standards to deal with increasing drone traffic, operational and airspace safety concerns, environmental concerns, and other issues. So official rules and regulations are a work in progress.

Then there are the potential legal landmines with invasion of privacy, personal injury, and property damage issues. Can a property owner protect his property from a trespassing drone? Can a drone operator be charged with stalking, harassment, invasion of privacy, spying, or other criminal laws? Will state laws mirror federal law? The legal landscape regarding drones is also a work in progress.

Even for insurance companies, the use of drones is uncharted territory.

Many of the same legal concerns with using drones are also insurance liability and coverage concerns, and insurance companies are working to develop policies to cover exposures presented by drone use. Insurance carriers will likely want information such as the intent or function of a company’s drones, their takeoff and landing locations, whether they’ll be operating over a populated area, and how any information gathered will be used.

Business owners looking to buy insurance coverage for their drones could find the market a little unsteady and changing rapidly. But in general, you’ll want to consider liability, personal injury, invasion of privacy, property, and workers’ compensation coverage. If you’re launching a new vineyard and funding it with investors, you should consider Directors’ and Officers’ liability insurance to guard against financial loss due to operational mismanagement.

For winery owners who want to benefit from advances in technology, drones could be one solution. But keep in mind that when it comes to the regulatory, legal, and liability risks, you’re still operating in the Wild West.

Need advice? Heffernan's Vintners & Growers Practice has more than 20 years’ experience insuring the wine industry.