Roads? Where We’re Going, We Don’t Need Roads
June 23, 2015
Author: Darin Mills, Marketer
If you have been keeping up with the news at all this past year, you’ve noticed that drones are stealing a lot of headlines. Whether they’re gathering military intelligence, delivering pizzas in Russia or landing on the White House lawn, they have certainly grabbed our attention. They have also grabbed the attention of businesses all over the world because the application of this technology spans across many industries. Farmers are monitoring the health of their crops, State Farm claims adjusters will soon be surveying roof damage from street level and Amazon is already making promises of 30 minute home delivery.
For those in the Transportation industry, the benefits of Unmanned Aerial Vehicles (UAVs) are obvious. UAVs can take the most direct route from point A to B, lower fuel costs and emissions, and fly over traffic jams and other hazards that have traditionally slowed delivery. In addition to the transportation of goods, UAVs can be used as a source of security at terminals, aid in the recovery of stolen loads, and help locate/deliver parts and equipment. With all of these benefits, businesses are eager to move forward with this technology; however, regulators are entering this new era with caution.
Concerns with UAVs include issues of privacy, airspace, and liability. In February, regulators took the first step in addressing some of those concerns. The Federal Aviation Administration, which is a division of the DOT, released a framework of proposed regulations designed to ensure the safe operation of UAVs. Among the various proposed rules is wording that would allow for commercial use of UAVs under 55 pounds, for daytime use only, in the visual line of sight of a certified operator. These and other rules in the proposal obviously limit potential applications for UAVs but it is a clear step forward. As technology improves and operators show they can maneuver the drones safely out of their line of sight (using onboard cameras), there is no doubt these regulations will expand. There was one somewhat surprising item missing from the proposed regulations; insurance requirements.
It is safe to assume that at some point, the DOT will require a certain level of liability insurance be in place for owner operators of UAVs. Even without that regulation, many drone users are seeking insurance to cover them in the event that they crash the expensive device and/or damage someone else’s property with their drone. Insuring these smaller flying devices for both liability and physical damage has been an easy transition for many insurance companies who already insure company or private airplanes. Other insurance companies may be willing to modify or remove the aircraft exclusion that is typically found on your General Liability and Umbrella policies.
While some may still believe that the use of drones in the transportation industry is a futuristic idea, it is clear that day will be upon us soon. Trucking companies are constantly presented new technologies to lower costs, improve operations and ultimately advance their businesses. Management teams are tasked with performing cost benefit analysis to determine which of these products can move their company forward. Those that evolve first are a step ahead of their competition. Realistically, most trucking companies won’t find an immediate need for drones in their operations, however, we may only be a few years away from regulation allowing for drones over 55lbs and longer flights. When that day comes, we will certainly see distribution models change.
- Judy Greenwald, “Drone Insurance Cover Set to Take Off” Business Insurance
- Jack Gibson, “Risk Management & Insurance Commentary, Tips and Tactics” IRMI Update
- Press Release, February 15, 2015 Federal Aviation Administration https://www.faa.gov/news/press_releases/news_story.cfm?newsId=18295