Unmanned aerial systems (UAS or drones) are getting better (and cheaper) each day, which means that more and more businesses will be using drones to carry out everyday tasks. However, with respect to compliance and risk-management, when businesses hire third-party drone service providers, questions will surely arise regarding liability.

Technically, drones are considered aircrafts according to the Federal Aviation Administration (FAA)—meaning that whenever drones are flown for commercial purposes, from wedding photography to inspection of industrial smokestacks, their use is subject to Part 107 of the FAA regulations. That means that businesses that hire third-party drone service providers will need to carefully review those third-party service providers’ compliance with those regulations. For example: a utility company hires an unlicensed, inexperienced drone operator to inspect some power lines. After the operator hits a line and causes the drone to crash on a nearby highway, a deadly traffic accident occurs. Could the utility be sued? In this litigious age, it may very well happen.

What can you do? Before hiring a third-party vendor for drone-related operations, consider the following:

• Confirm and get in writing that only FAA-tested and licensed pilots will operate the drones on your company’s behalf.
• Be sure that the third-party vendor is properly insured for drone operations. Insurers often consider aviation a special risk category that requires a separate policy or an endorsement that provides coverage for drones as an addition to an existing policy.
• Consider requiring the vendor to add your business to its insurance policy as an additional insured –a very standard risk-management practice.
• Understand the basic rules and guidelines for drone operations yourself –this will keep your third-party service providers honest and help your business to avoid violating the regulations.

Of course, in addition to considering these points, your business will want to review what kind of coverage and other safeguards to implement with your risk management professionals.

Drones have great power to yield a wide range of benefits for businesses across all types of industry. However, businesses still need to take prudent steps to protect themselves from any potential liability that could accrue when third-party service providers take to the sky on the business’ behalf.

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