Is it a bird? Is it a plane? No, it’s a drone!
It may not be long before drones are as important to agents as their smart phone and car keys. But before you ‘release the drones’, there are a few insurance matters to consider.
The real estate industry has been one of the first to embrace new technology. So, when drones hit the market, many agents began tapping into the technology by hiring professional drone operators to produce impressive fly-overs and fly-throughs to help sell property.
In 2016, the Civil Aviation Safety Authority relaxed regulations around commercial drone use which has meant that agents (or their contractors) have been able to operate certain types of drones themselves. The result has been more agents taking to the skies, especially as the cost has gone down. You can pick up a remotely piloted aircraft system (RPAS), or drone, for under a hundred dollars and produce some cost-effective imagery.
Drone technology is changing the face of many industries and it may not be long before flocks of drones in the sky are commonplace. A report by PwC says that the global drone technology industry will be worth US$127 billion by 2020 and Australians will spend an estimated US$3.1 billion on drone-related tech by 2021.
Based on figures from the Australian Association for Unmanned Systems, there are more than 1,200 commercial operators in Australia who hold a remote operator’s certificate. In addition, there are 7,700 individuals or companies that provide drone services under the ‘excluded category’ (which includes any RPAS device under 2kg and flown for commercial reasons). And according to the Australian Transport Safety Bureau (ATSB) the number of drones in Australia doubled between 2016 and the close of 2017.
‘Commercial usage’ can extend to any drone flown for purposes other than sport or recreation, which means that even if the drone is not being flown directly for income or is not the core service of a business, it can still be classified as a commercial operation. For example, a PM may use a drone to conduct a roof inspection and, although the drone isn’t being used to sell the PM’s service, this type of operation would be considered commercial.
Currently the most popular RE use for drones is in marketing property. As they say, a picture is worth a thousand words and aerial photography and video is adding an edge to property sales and marketing. Agents and owners are using drones to offer potential buyers/tenants new angles on properties and the surrounding areas to better tell the ‘lifestyle’ story. Instead of relying on clichéd descriptions like ‘stunning views’ or ‘close to everything’, the opportunity is there to actually prove the claims with quality footage shot from drones. Drones can also capture footage inside the property, allowing potential buyers/tenants to actually see the layout of the home or commercial premises and its condition.
There is also growing use of drones to conduct inspections. Drones can get a close-up look at aspects of a property that may otherwise be inaccessible or expensive to survey (for example, requires scaffolding or a cherry picker). Sending a drone to inspect a roof, chimney or trees overhanging a home is far safer than scrambling up a ladder and dangling precariously from the guttering trying to get a look. Particularly useful if the property is more than one storey. A visual record of the state of a property can also help a PM explain the need for repairs and maintenance to an owner or body corporate.
In the future there may be even more opportunities to use drones to help streamline operations. Imagine being able to send out a drone with the spare keys to a property on your rent roll instead of getting in your car and driving there. Or sending in the drones to conduct rent inspections – the drone filming and photographing all aspects of the condition of the rental. Or even open houses: the drone arrives with the keys, the potential buyer/renter lets themselves in and takes a tour under the watchful eyes of the drone (with commentary being broadcast or interactive discussions with the agent), locks the home again and returns the keys to the drone to bring back to base – great for after-hours show throughs or for properties away from the agent’s base.
What happens after “we have lift off” and it becomes more a case of “Houston, we have a problem”?
As with all technology, launching a commercial drone into the skies comes with its own set of risks. First and foremost is the risk of accident and third party liability. If a drone is operated for any purpose other than sport or recreation, it may attract the risk of ‘strict liability’ implications under Section 10 of the Damage by Aircraft Act. In a nutshell this means that the drone operator or owner can be held legally responsible for damage or loss caused by their acts or omissions with no requirement for a third party to prove fault or negligence.
What goes up must come down. The problem is when the drone doesn’t come down as it should. According to a report from QBE, one in 50 drones crash. This equates to one crash occurring for approximately every 2,000 hours of operation. Concerningly, QBE claims data shows crash rates are currently doubling every year (21 per cent compound annual growth rate). With each crash comes the risk of causing bodily injury or property damage. Another risk is that of ‘near encounters’ with other aircraft – a particular problem in our capital cities – and the ATSB is forecasting the number will continue to rise exponentially as more drones share airspace.
Another factor that drone operators need to take into consideration is privacy. As drones are used for surveillance or data collection, they are generally fitted with cameras and/or video recorders and sensors (referred to as the payload). Drone operators should check if they need permission from owners for flying over private property or require council approval for flying over parks and public streets.
The collection of footage could result in a privacy violation if that footage is used in an ad, broadcast or telecast – and there have been some prime examples of this happening in the RE industry. A couple of years back, a woman from Mt Martha was snapped sunbaking topless in her backyard by a drone and the picture appeared on the sales board of the million-dollar property next door. Awkward… and potentially costly. FYI: For those who take their privacy very seriously (and for those agents who are more protective of their listings than a lioness with a new cub), there are also anti-drone guns on the market that disable incoming drones when the gun is pointed at the unwanted aerial intruder. We kid you not, but the guns are really designed for military purposes not to ward off competition!
A less obvious risk for piloting drones is that of cyberattack. Drones collect data which may be of value to a cybercriminal, making them a target for hacking. There is also the possibility that control of the drones could be taken and the machines used for unlawful purposes.
The takeaway? If you are going to use drones in your RE business, you should make sure that you have insurance that specifically covers their use. There is dedicated insurance that EBM can offer our RE clients and their contractors who operate drones. So ask your account manager about RPAS Cover. Armed with the right cover, you can ‘release the drones!’ and take your RE business to new heights.