Product Update

Drone Regulations, Third-Party-Over Action Claims, and Punitive Damages Discussions Updated in Construction Risk Management


This release of Construction Risk Management includes updated discussions of drone regulations for commercial operations, third-party-over action claims, and punitive damages, including states' positions on the legality of insuring them.

New FAA Drone Regulations

The Federal Aviation Administration (FAA) has taken a phased approach to integrating unmanned aircraft use for commercial purposes. The first set of drone regulations, introduced in 2015, allowed only a narrow set of circumstances for drone use, which meant commercial operators were required to obtain a waiver of the rules (part 107 of the Code of Federal Regulations) for all many types of operations. The most recent addition to the rules outlining permissible use and requirements, approved in December of 2020, with an effective date of March 16, 2021, expands the range of permissible commercial operations to include operations at night and operations over people if certain conditions are met, eliminating the need for a special waiver for those uses.

Third-Party-Over Actions

With the complicated laws surrounding the enforceability of indemnification agreements and the layer of statutory laws limiting such agreements, third-party-over actions (also known as "action-over claims") remain one of the more complex legal challenges to businesses and insurance companies alike. Understanding the contractual obligations that are being undertaken and making sure that such obligations are covered by insurance can be critical to a company's bottom line. "Third-Party-Over Actions" describes the anatomy of an action-over claim as well as how indemnity and additional insured status support these claims.

Punitive Damages

Multimillion-dollar punitive damage verdicts make the news on a regular basis. With the ever-increasing frequency of nuclear punitive damage awards, companies need to be on guard for the type of conduct that could result in punitive damages, which is complicated by the variation across states on this matter. "Punitive Damages" examines the various legal standards for recovering punitive damages and both sides of the constitutionality argument. "Insurability of Punitive Damages" examines states' positions on whether punitive damages should be covered by insurance.