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By: Zach Moura
In what is sure to be the beginning of a slew of cases litigating coverage for injuries caused by drones, the U.S. District Court for the Central District of California recently issued an opinion denying coverage under an aircraft exclusion in the drone operator’s Commercial General Liability (CGL) policy. Philadelphia Indemnity Insurance Company v. Hollycal Production, Inc., et al., 5:18-cv-00768.
The accident at issue occurred when Hollycal Production (“Hollycal”) used a drone to photograph an event. The drone collided with one of the attendees, Darshan Kamboj, blinding her in one eye. Ms. Kamboj subsequently filed suit against Hollycal, its owner, and the Hollycal employee that operated the drone. Hollycal tendered the defense of the suit to Philadelphia Indemnity Insurance Company (“Philadelphia”) under the CGL policy on which Hollycal was an additional insured. Philadelphia agreed to defend Hollycal under a reservation of rights, and then filed a declaratory judgment action seeking a determination that it had no duty to defend or indemnify Hollycal for the Kamboj suit.
Philadelphia moved for summary judgment, in part on the basis that the Aircraft exclusion in the Policy excluded coverage in pertinent part for bodily injury or property damage “arising out of the ownership, maintenance, use or entrustment to others of any aircraft, ‘auto’ or watercraft owned or operated by or rented or loaned to any insured.” Because “aircraft” was not a defined term in the policy, the Court looked to the Merriam-Webster’s Collegiate Dictionary definition of the word, along with the definition included in 49 U.S.C. § 40102(a)(6) and 14 C.F.R. § 1.1. The Court concluded that a “drone … is an aircraft under the term’s ordinary and plain definition.” Accordingly, the Court found that the Kamboj suit was excluded from coverage and Philadelphia had no duty to defend or indemnify Hollycal.
Drone operators will need to carefully review their insurance and ensure that they have appropriate coverage in place for their drone operations. As this matter makes clear, and as reinforced by recent reports of a drone striking the nose of an Aeromexico plane, an October near-miss of a drone by a passenger plane near London Heathrow, and the shutdown of London Gatwick airport last week because of suspected drone activity, there is substantial exposure arising from drone operations. Without the right insurance, operators may be left disastrously exposed.
If you have any questions or would like more information, please contact Zach Moura at [email protected].