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The Development of Drones:The Regulations, Risks, and Coverage Issues Associated with Evolving Aviation Technology

Carol P. Michel, Frederick N. Sager, Jr.Kyle R. Jackson, Sr.

Weinberg, Wheeler, Hudgins, Gunn & Dial, LLC

I. Introduction

We live in a time where “Marty McFly” and “Doc Brown” would feel at home. As the technology of today’s world continues to advance, it feels as though we have traveled “Back to the Future.” Interestingly, the fantasy involved in the mid-80s box office hit series has, beneficially or not, become today’s reality. In 2015, our nation marveled at how successfully the movie predicted the creation of many of today’s most appreciated technology including flat screen televisions, video conference calling, biometric identification, 3D movies, and most pertinently, Unmanned Aerial Vehicles (“drones”).1 What the writers of the iconic film failed to predict, or at least include however, is that with increased technology also comes increased liability.

Drones are aerial vehicles that are controllable without an in-craft or onboard operator. Instead, drones are controlled from the ground through various mechanisms including ground control stations, computers, handheld remote controls, and even cellphones. Drones vary in size, shape and model – ranging from being large enough to arm with weaponry and land on airstrips, to small enough take-off from the palm of your hand.

Despite drones’ original design for military recognizance and attacks, arguably, their greatest trait is their hobbyist allure. Over the last ten years, the joy of flying and owning drones has ballooned. In fact, in 2016 alone, the drone market is expected to be valued at $10-11 billion.2 Further, drone use has expanded so much, that companies such as Amazon.com are beginning to promise drone delivery services as soon as 2017.3 To be clear, however, despite all of the discussion regarding current drone technology, today’s possibilities hardly scratch the surface of the industry’s capabilities.

Nonetheless, as innocent as drones may appear, they are obviously much more than mere toys; to the contrary, drones are military technology now available to the public.4 Further, drones have the ability to reach places that many cannot go, and they can do so nearly undetected. Understandably, people fear the unknown, yet traveling undetected is only one fear posed by drones among many issues of which to worry. Additional fears regarding drones include perverse and terroristic operator misuse, crashes, mechanical and software failures, privacy intrusions, and irresponsible piloting – the list of concerns is endless.

To address these endless concerns, on December 14, 2015, the Federal Aviation Administration (“FAA”) announced its updated regulations of drone use, and specifically its newest requirement for small drone registrations.5 Yet, although the new regulations provide for a number of more strict regulations including altitude restraints, temporary flight restrictions, and

the FAA’s power to prosecute, these regulations wholly fail to address the common concerns of products liability, trespass, and privacy intrusions.

Accordingly, this article seeks to educate and advise all potentially interest parties of the variety of regulations, risks, and coverage issues present with evolving aviation technology, particularly given the increasing prevalence of drone usage by non-skilled individuals.

II. Current Regulation of Drones

A. Federal FAA Drone Regulation (Condensed)

Pursuant to the new FAA regulations, drone owners and operators will not need approval by the FAA to fly a model aircraft for recreation or hobby; however, all new purchasers must undergo proper registration for models weighing less than fifty-five (55) pounds, and proper certification if flying drone models weighing greater than fifty-five (55) pounds.6 This registration is implemented through the aircraft owner’s community-based aeromodelling organization – an entity put in place by the FAA.7 Moreover, the new FAA regulations require that all drones be flown a sufficient distance from populated areas and be kept within clear, unassisted “visual line of sight of the operator.”8 Further, the FAA regulations forbid flights made for business purposes without first obtaining special approval.9 Generally speaking, commercial drone use is also prohibited under the FAA guidelines; however there are limited exceptions which can be granted, in most cases to movie companies, members of the agricultural and farming industry, and members of the real estate industry. However, this list of business types is not exhaustive regarding business purposes worthy of exception.

Currently there are three methods by which drone operators can obtain approval for flying drones for business purposes:

1. Special Airworthiness Certificates – Experimental Category (SAC-EC) for civil aircraft to perform research and development, crew training, and market surveys. However, carrying persons or property for compensation or hire is prohibited. For more information, please contact the Airworthiness Certification Service, AIR-113, at 202-267-1575.10

2. Obtain a UAS type and airworthiness certificate in the Restricted Category (14 CFR § 21.25(a)(2) and § 21.185) for a special purpose or a type certificate for production of the UAS under 14 CFR § 21.25(a)(1) or § 21.17.11

3. Petition for Exemption with a civil Certificate of Waiver or Authorization (COA) for civil aircraft to perform commercial operations in low-risk, controlled environments.12

To determine whether a drone’s flight is considered hobby or recreational as opposed to satisfying a business purpose, the FAA has provided the following chart:13

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Hobby or Recreation Not Hobby or RecreationFlying a model aircraft at the local model aircraft club.

Receiving money for demonstrating aerobatics with a model aircraft.

Taking photographs with a model aircraft for personal use.

A realtor using a model aircraft to photograph a property that he is trying to sell and using the photos in the property’s real estate listing.

A person photographing a property or event and selling the photos to someone else.

Using a model aircraft to move a box from point to point without any kind of compensation.

Delivering packages to people for a fee.

Viewing a field to determine whether crops need water when they are grown for personal enjoyment.

Determining whether crops need to be watered that are grown as part of commercial farming operation.

Generally, Congress has afforded the FAA the authority and broad discretion to take enforcement action to protect the safety of common airspace in a manner that concurrently ensures safe operation of drones.14 Accordingly, regardless of whether a drone satisfies the statutory definition or operational requirements promulgated by the FAA’s newest regulations, if a drone is “operated in such a manner that endangers the safety of [national air space], the FAA may take enforcement action consistent with Congressional mandate.”15 More specifically, the FAA’s regulations fall into three basic categories: “(1) how the aircraft is operated; (2) operating rules for designated airspace; and, (3) special restrictions such as temporary flight restrictions and notices to airmen.”16 General rules addressing operation of drones and operating drones in designated airspace typically include prohibitions on careless or reckless operation, carrying of “droppable objects” and, most notably, “right-of-way” restrictions such as the requirement that every drone give way to any manned aircraft and the requirement that no drone be operated within five (5) miles of an airport without first properly notifying an airport operator or control tower.17 Additionally, as also noted in past versions of the FAA’s regulation of drones, there is a 500-foot altitude limit for all drone flights. Finally, the third category pertains to rules associated with temporary flight restrictions and notices to airmen. In this category lies the notable regulation that drones cannot be flown near airshows or over stadiums hosting public events.18

Although the regulations listed and detailed above are a condensed summary of the FAA’s new guidelines for drones and other model aircrafts, the regulations discussed above are the regulations anticipated to be most commonly applied to drones and model aircrafts.

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B. National Outlook

To date, only twenty-six (26) states have adopted legislation regarding drone usage, however, in 2015, roughly forty-five (45) states considered a total of 168 bills related to drone usage.19 Among the forty-five (45) states considering legislation, twenty (20) – Arkansas, California, Florida, Hawaii, Illinois, Louisiana, Maine, Maryland, Michigan, Mississippi, Nevada, New Hampshire, North Carolina, North Dakota, Oregon, Tennessee, Texas, Utah, Virginia, and West Virginia – passed a total of twenty-six (26) pieces of legislation.20 Further, five (5) more states – Alaska, Georgia, New Mexico, Pennsylvania, and Rhode Island – each adopted resolutions related to drone usage.21 Moreover, in Virginia, Governor Terry McAuliffe signed an executive order establishing a commission on drone usage.22 Additionally, Kentucky has pre-filed a bill regarding drone usage for its 2016 legislative session, leaving the remaining twenty-four (24) states – Alabama, Arizona, Colorado, Connecticut, Delaware, Idaho, Indiana, Iowa, Kansas, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Oklahoma, South Carolina, South Dakota, Vermont, Washington, Wisconsin, and Wyoming – remain silent on the matter.23 Finally, because the legislation currently in place among the twenty (20) states listed above vary greatly – ranging from the establishment of study committees to more serious legislation such as protections of privacy and restrictions of flight – detailed explanations of the legislation in place in the states that house our office locations can be found below as examples of how drone usage is being addressed nationwide.

C. Florida Drone Regulation

Florida, like many other leading states, has enacted legislation that limits or prohibits certain drone usage.24 Florida’s Senate Bill 766 prohibits a person, state agency, or political subdivision from using a drone to capture an image of privately owned real property or of its owner, tenant, occupant, invitee, or licensee without his or her written consent if a reasonable expectation of privacy exists.25 Senate Bill 766 does, however, authorize the use of a drone by a person or entity engaged in a business or profession licensed by the state but only for purposes of performing reasonable tasks within the scope of practice of the business or state license.26 The businesses included within this exception are property appraisers, utility companies, aerial mappers, cargo delivery systems, and others who show substantial need.27 Finally, Senate Bill 766 authorizes and provides for a cause of action to aggrieved parties to initiate a civil lawsuit and obtain compensatory and punitive damages, or injunctive relief for violation of the statute.28

D. Georgia Drone Regulation

In 2015, Georgia drafted and passed a resolution to establish a House study committee regarding the use of drones.29 The study resulted from House Bill 5, which sought to lay out who can use drones, why they can use drones, and where drones can be used.30 To ensure success of the study, the committee selected researchers and aviation experts, among some of the nation’s best, who are at the helm of drone development.31 The goal of the committee and its eventual, subsequent legislation is to create laws that detail the control and reasonable use of this new technology without simultaneously stifling the growth and advancement of drones.32 Although the state of Georgia has high aspirations for becoming a leader in drone regulation, there is still plenty to be researched before any legislation will be put into practice.

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E. Nevada Drone Regulation

Nevada, took a different approach in its 2015, legislative session. With its legislation, Nevada has become an innovator of sorts by being one of the first states to expound upon federal regulation by explicitly regulating who may operate drones (registered users) and setting forth the state’s obligation to create a registry for all drones under the Department of Public Safety, where money permits.33 Moreover, Nevada, in light of the expected expansion of drone usage, took further proactive steps by revising its definition of “aircraft” to include drones.34 Assembly Bill 239 also authorizes the use of drones by law enforcement agencies without a warrant in situations that create exigent circumstances, call for search and rescue, instances of imminent threat to life and safety of individuals or the public at large, state emergencies or disasters, or with informed consent of the person being subjected to drone usage.35 Additionally, public agencies may also operate drones but only where they have first registered the drone, operate in accordance of FAA regulations, and do not use their drone to assist law enforcement. Interestingly, Nevada’s Assembly Bill 239 also sets forth an explicit ban against “weaponizing” drones and declares that flights “at a height of less than 250 feet over the property” of another will be deemed trespass.36 Moreover, Nevada’s Assembly Bill 239 also provides a more stringent “proximity” rule by banning flights with 2.5 miles (as opposed to five (5) miles) of all airports and “critical facilities.”37 Finally, like Florida, Assembly Bill 239 authorizes and provides for a cause of action to aggrieved parties to initiate a civil lawsuit and obtain compensatory and punitive damages, or injunctive relief for violation of the statute.38

III. Trespass to Land/Privacy Issues

Another national issue necessary of legislation is the realistic fear of trespass and privacy invasions that may likely result from the ability of a small, often undetectable device that intrudes upon the land and privacy of another. While many of these issues could be resolved through application of traditional Fourth Amendment privacy rights, those rights may only be asserted against state or governmental action. Accordingly, regulations against invasion of privacy – which currently are widely inexistent – could do nothing more than provide for criminal prosecution or clear statutory intent for purposes of negligence per se. Instead, the principles of trespass to land and various privacy issues are most properly addressed pursuant to common law jurisprudence and will address causes of action against drone operators, even when acting in compliance with FAA flight regulations.

A. Trespass

To be liable for direct or indirect trespass, a person must “intentionally enter upon land in the possession of another or the person must   intentionally   cause some ‘substance’ or ‘thing’ to enter upon another's   land. . . .   That is, the intent to do the act which leads to the trespass is the requirement, not the intent to actually trespass.”39 Further, the commonly misperceived notion that “ownership of the land extend[s] to the periphery of the universe . . . has no place in the modern world.”40 Rather, only land within “the immediate reaches above the land” is considered the owner’s; all other land is part of the public domain.41 Accordingly, intentional drone usage that causes entrance upon the land or airspace of another within “the immediate reaches above

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land” may suffice as a trespass – the remedy of which will be compensatory (and potentially punitive) relief for the damage caused by the drone operator.

B. Intrusion Upon Seclusion

A privacy intrusion upon seclusion occurs when a plaintiff successfully proves that a defendant intentionally “physically or electronically intrud[ed] into [his/her] private quarters.”42 One of the greatest concerns involving drones is their built-in cameras, or the foreseeable addition of cameras to a drone. The fear that results from the existence of these cameras is the foreseeable, perverse misuse of spying on the privacy of others. To date, only one case illustrates the possibility of this cause of action. Boring v. Google Inc., a case involving images captured for purposes of “Google (Aerial) Satellite View,” “Google Street View,” and “Google Maps,” held that Google had not invaded the individual privacy rights of those captured in Google’s images where, primarily, it lacked intentionality to capture images of the individuals in its published views.43 Presumably, however, any drone operation intentionally used in a manner to intrude upon another’s private quarters will be well within the common law’s purview regarding privacy intrusions upon the seclusion of a person’s private quarters.

C. Public Disclosure of Embarrassing Facts

Similarly, a prima facie case for public disclosure of embarrassing facts requires a plaintiff to prove “(1) the publication, (2) of private facts, (3) that are offensive, and (4) are not of public concern.”44 In like fashion concerning intrusion upon seclusion, any subsequent publication of the private information recovered by a drone operator if considered offensive and not of public concern, will most properly be handled by the common law cause of action of public disclosure of embarrassing private facts.

D. Publicity Placing Others in a False Light

Recovery under publicity that places others in a false light requires: “(1) the false light must be highly offensive to a reasonable person; and (2) the defendant must have acted either knowingly or in a reckless disregard as to the falsity of the publicized material and the false light in which it would be placed.”45 With the FAA’s near-blanket approval of citizen journalist46,47 drone use, it seems inevitable citizens will equip their drones with high-powered cameras to get pictures and video otherwise unavailable to professional journalists and subsequently make those images available to the highest bidder.48 Consequently, a large concern that goes unaddressed by the FAA’s guidelines is the foreseeable misuse of this capability and the capturing of images of people who were simply in the wrong place, at the wrong time. Nonetheless, upon proof of the knowledge of the perpetrator or the reckless disregard of the falsity of the publicized material, plaintiffs may properly recover damages under this common law cause of action.

IV. Risks of Litigation & Exposure for Drone Manufacturers

The most obvious area of potential legal liability issues when discussing drones is in the products liability arena. Occasions involving crashes, collisions, or injuries resulting from the use and operation of drones will almost certainly invoke litigation against a drone manufacturer.

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Accordingly, strict products liability, as well as assertions of manufacturing defects, design defects, and failure to warn, are all likely claims to be raised against drone manufacturers. Fortunately, each of these likely claims fall within the realm of what can be considered as “normal” commercial aviation claims and a typical defense to these types of claims will likely suffice the claims arising from drone usage.

A. Manufacturer Defect Claims

The most likely claim to be asserted resulting from drone related injuries, are claims pursuant to traditional manufacturing defect theories. Pertinently, this type of claim, if asserted, would most likely resemble an ordinary claim against the manufacturer of a commercial aircraft wherein the plaintiff would bear the burden of proving by a preponderance standard that it is more likely than not that a defect existed within the manufacturing of the drone.49 Accordingly, in prevention of such claims, manufacturers of drones that lack in complexity or, inversely, require a highly knowledgeable user should pay special attention to quality requirements in the manufacturing of their products to lessen the likelihood of damage to people or property resulting from use of the drone. Typical manufacturing defects might include faulty control systems that permit the drone to fly out of control into a person or building causing injury or damage. Another might be a defect in the drone that impacts its airworthiness causing the drone to crash thereby causing injury or property damage.

B. Design Defect Claims

Another claim against manufacturers that can be highly anticipated should injury result from drone usage are claims asserted under defective design.50 Although defective design claims should be evaluated under the theories commonly applied to ordinary defective design claims, there is a strong possibility that state and FAA regulations regarding the new limitations on drones may create a heightened level of scrutiny of the design of drones.51 Particularly, these new regulations create possibilities where manufacturers could face per se design defects, not because of what was designed into the drone, but instead, because of what the drone’s design lacks – an altitude cutoff sensor. In support, the FAA has placed a 500-foot altitude limit on the flying of drones,52 and a plausible argument, therefore follows that, “because the design of ‘drone x’ lacks the software or some form of a cutoff sensing mechanism – a feature already available to manufacturers – the manufacture has breached its duty to design ‘drone x’ in a manner that complies with rules set forth by the FAA.”53 A prime example, provided in a WIRED article written by Kevin Poulsen, explains how the company responsible for the drone that landed on the White House lawn on January 25, 2015, implemented design changes to prevent similar occurrences by its drones.54 There, the manufacturer used a “mandatory firmware update” of its drones, to install technology known as “geofencing,” thus making it impossible to fly within a 15.5-mile radius of the White House.55 “Geofencing” is explained in greater detail as follows56:

Geo-fencing (geofencing) is a feature in a software program that uses the global positioning system (GPS) or radio frequency identification (RFID) to define geographical boundaries. A geofence is a virtual barrier.  

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Programs that incorporate geo-fencing allow an administrator to set up triggers so when a device enters (or exits) the boundaries defined by the administrator, a text message or email alert is sent. Many geo-fencing applications incorporate Google Earth, allowing administrators to define boundaries on top of a satellite view of a specific geographical area.  Other applications define boundaries by longitude and latitude or through user-created and Web-based maps.

The technology has many practical uses. For example, a network administrator can set up alerts so when a hospital-owned iPad leaves the hospital grounds, the administrator can disable the device. A marketer can geo-fence a retail store in a mall and send a coupon to a customer who has downloaded a particular mobile app when the customer (and his smartphone) crosses the boundary.

As this technology is readily available and already in use, it would be incumbent upon manufacturers to include the use of this technology in their design plans and to configure this technology to appropriately comply with state and FAA flight restrictive regulations, so as to avoid per se design defect liability.57

C. Failure to Warn Claims

Lastly, a third claim anticipated to be asserted against drone manufacturers are claims regarding the manufacturers’ failure to warn. In large part, these claims can be anticipated at no fault of the manufacturer directly, but rather, indirectly when a manufacturer fails to properly remind operators of state and FAA restrictions in place against the operator. It follows therefore, that plaintiffs will likely argue that manufacturers, who are in the best position to understand and interpret these regulations, possesses a heightened duty to warn operators who may not be aware or fully understanding of the restrictions imposed upon drone operators. Unfortunately, the new FAA regulations are dense and highly-detailed,58 and although plaintiffs may make an effort to understand these regulations, the nature of these regulations and how they may often conflict with stricter, state regulations are likely beyond the level of understanding expected of the majority.59 Therefore, because these regulations are so difficult to understand, even for the sophisticated user, the common defense of “sophisticated user” in commercial or general aviation manufacture failure to warn cases will likely be severely diminished.60 Accordingly, the most recent regulations issued by the FAA – and any greater restrictive regulations later legislated by the state – may foster the imposition of a heightened duty upon manufacturers to warn and instruct the operators of the drones not only of their drones’ inherent dangers, but also of the state and federal regulations in place. Manufacturers might also consider offering training classes to first time purchasers in the use and lawful operation of the drone.

V. Owner/Operator Liability

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A. Liability of Private Drone Owners/Operators

1. Generally

Generally, private operators and owners of drones can also anticipate being subject to suit in the same manner and on similar bases as private aircraft owners or pilots. Logically, the same doctrines of negligent operation apply under common law and state statutes, and in fact, may even make negligence easier for a plaintiff to prove, given the arguably defined “standard of care” outlined within state statutes and FAA regulations.

2. Negligence Per Se

Most obvious of potential causes of action, is the likelihood of claims against drone owners in negligence per se if violation of a state statute or FAA regulations can be causally connected to the injury caused by a drone accident.61 Although the FAA regulations are silent regarding a particular or explicit private right of action, they are nonetheless considered statutory regulations susceptible to negligence per se analysis.62 Specifically, a claim in negligence per se requires: “(1) violation of a regulation; (2) [that causes] the type of harm that the regulation was intended to prevent; and (3) injury to a member of the class of persons intended to be protected by the regulation.”63

3. Negligent Entrustment/Permissive Use

Also as likely, is a claim of negligent entrustment – synonymously known in some states as the permissive use doctrine. Generally, negligent entrustment predicates liability on the negligent act of an individual who “lend[s] his [vehicle] to another to drive, with actual knowledge that the driver is incompetent or habitually reckless.”64 Arguably, if an airplane can be negligently entrusted,65 so too may a drone for purposes of liability. Accordingly, “the negligence in entrusting the [vehicle] must concur, as part of the proximate cause with the negligent conduct of the [operator] on account of his incompetency and recklessness.66 This claim, however, also extends to any person who has control over the use of the vehicle and is negligent in entrusting it to another.67 Stated differently, parents who purchase and allow use of drone operations by children who are either too young to appreciate the risks and dangers involved with drone operation or, who allow children that they know or should know have the propensity to be reckless in nature, or otherwise require supervision, appear to be the class most susceptible to liability under the doctrine of negligent entrustment.68

4. Dangerous Instrumentality Doctrine

Closely related, an additional claim that may be pursued against private operators and owners is a claim under the dangerous instrumentality doctrine. The general rule of the dangerous instrumentality doctrine enforces that, “the owner of an instrumentality which [has] the capability of causing death or destruction should in justice answer for misuse of this instrumentality by anyone operating it with his knowledge and consent.”69 Further, the dangerous instrumentality doctrine is “premised upon the theory that one who originates the

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danger by entrusting the [vehicle] to another is in the best position to make certain that there will be adequate resources with which to pay the damages caused by its negligent operation.”70 Accordingly, it is likely that instances of drone usage that cause death or destruction of property will give rise to a cause of action in negligence pursuant to the dangerous instrumentality doctrine.

B. Liability of Commercial Drone Owners/Operators

Given that drones have become common fixtures in toy stores, hobby shops, and through internet shopping, their affordability and accessibility will likely reduce the number of claims against individual owners who cannot support the realistic costs of litigation. Instead, commercial drone operators – the parties with deeper pockets – will grow over time as the likely defendants in drone-related liability. As noted above, however, commercial drone use is presently prohibited by the FAA without special permission. Consequently, because commercial use remains presently limited, companies, like Amazon, that specialize in home delivery services, are working to address changes in FAA regulations to accommodate commercial drone use, but so far without success.71 Should these efforts eventually become fruitful, an influx in litigation against commercial operators is highly anticipated upon injurious instances.

C. Liability of Commercial Aircraft Owners/Operators

Since drones began booming in the consumer market, there have been hundreds of reports detailing incidences where drones have nearly missed hitting aircrafts.72 In fact, in just twenty (20) days spanning from August 1 to August 20, 2015, more than seventy (70) close calls occurred from California to Maine.73 Accordingly, this should be of great concern to owners and operators of commercial airlines because to the extent a crash, collision, or other event involving an aircraft and a drone spawns injury upon passengers or patrons, or significant property damage, the owners and operators of commercial aircrafts could face litigation for failure to avoid airborne drones, failure to train operators to avoid airborne drones, and failure to employ the proper technology to detect airborne drones, inter alia.74 Encouragingly, however, unlike where aircraft owners are commonly found liable for bird strikes, it seems highly plausible that given the required human operation of drones, should liability arise from aircraft/drone-related accidents in suits brought by the passengers or patrons of commercial airlines, some form of comparative fault analysis will take place.75

D. Liability for Air Traffic Controllers, Airports, and Municipalities

Air traffic controllers and airports that employ controllers may also be subject to liability for, inter alia, failure to warn, failure to detect, and failure to keep clear the flight path of landing aircrafts.76 This same liability may also be extended to the municipality in ownership of the subject airport. As potential drone collisions are most commonly compared to bird strikes, the most applicable case precedence is the United States Supreme Court’s decision in Exec. Jet Aviation v. City of Cleveland77 wherein the owner and operator of a jet who flew through a flock of birds brought suit against the city that owned and operated the airport, the airport manager, and the air traffic controller for failing to keep clear his flight path. Inevitably, a sky filled with drones will pose similar issues and support similar lawsuits, even despite the FAA regulations’

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clear restriction against drone operations within five (5) miles of an airport.78 As litigation under these facts becomes more prevalent, airports, airport owners, and air traffic controllers will all be on notice of the increased possibility of collision with drones. It is incumbent upon all to take action now to prevent these incidents from occurring.79

VI. Insuring Drone Operation

A. Current State of Coverage

When evaluating the current state of drone-related insurance, issues of coverage can often be divided into the areas of “hull” insurance (damage to the drone), general liability, and privacy related issues.80 Consequently, the companies seeking to insure the abundance of issues likely to arise from drone operation will have to deal not only with the manufacture of drones, but also the users of drones who operate the product perversely.81 Currently, the FAA’s regulations fail to make any mention of insurance requirements for drone regulation, the absence of which could likely be the result of anticipated compulsory insurance at the state level, similar to automobile insurance.82 Although a number of foreign countries already require liability insurance in order to fly privately owned drones, the United States does not.83 Notwithstanding the FAA’s current abstention from required insurance, although never done before, there is much debate that the FAA regulations may contemplate eventually promulgating an insurance requirement as the market experiences risks and incidences involving drones, and courts properly address where liability should fall and which parties may best incur the resulting costs.84 The FAA does, however, require insurance for common carriers.85Accordingly, insurance companies, more so than the FAA, are anticipated to be most responsible for the expected growth of drone population and whether insurance should be required.86 The presumption is that no major company will be willing to produce drones without fully understanding its liability coverage.87 Moreover, private policy options could potentially to contain provisions against committing intentional torts of trespass and invasions of property, and violations of these policies will result in lost coverage which, if insurance policies requirements are ever, though unexpected, promulgated by the FAA, will likely mean indefinite suspension of the ability to fly drones.88 Accordingly, the market for drone insurance is ripe.

B. Models of Current Drone Insurance

In assessing current models of drone-related insurance, two companies are at the forefront of optimization: AIG Aerospace89 (“AIG”) and Transport Risk Management90 (“TRM”). AIG provides both hull and general liability coverage as its division, while TRM divides its coverage into private and government use. Nonetheless, both policies provide similar offerings in that they cover a number of commercial and recreational activities, damage to the drones themselves, and third-party use of the drones for liability ranging up to, and in special cases above, $100 million.91 Neither of these companies, however, currently offer coverage for instances of land or privacy intrusions.92 Most importantly, many states specifically address exclusionary clauses with regards to aircraft insurance. In essence, these clauses provide that aviation liability insurance cannot exclude coverage based upon an aircraft’s violation of civil air regulations pursuant to federal, state, or local laws and ordinances.93 However, an aviation liability policy may contain exclusions or conditions relating to the certification of an aircraft or

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of the pilot [or operator] in a stated category by the FAA, or establish requirements and thresholds for pilot experience prior to offering coverage.94 Moreover, an aviation liability policy may also contain exclusions or conditions related to limitations on the use of the aircraft.95 Following a model compliant with state law regarding exclusions will be the most prudent practice for entities seeking to provide drone insurance.

C. Coverage Considerations

Expectedly, there are a number of considerations necessary to be assessed by underwriters prior to issuance of coverage. Undoubtedly, there is a void in the insurance market regarding the coverage of drone-related incidents, namely due to a lack of available recorded data.96 Moreover, until privately owned drones receive their clear and unequivocal inclusion into the nation’s airspace by the FAA and its regulations, more respected agencies like the National Transportation Safety Board are likely to continue to abstain from data collection that is outside of its jurisdiction.97 Accordingly, though companies are already providing offerings, it seemingly remains premature to estimate, to a scientific certainty, feasible coverage options.98 Consequently, it is imperative that before offering coverage, insurance companies use the best data available for determining coverage options when considering insuring private drone usage: (1) data from foreign drone use, wherein liability insurance is already required and; (2) crash and accident data available through U.S. military non-combat drone tests.99 Other factors to be assessed include risks and liabilities associated with personal injury, damage to property, invasion of privacy, and even workers’ compensation.100 In light of these risks, coverage should also include an assessment of the knowledge, training and experience of the operator, as well as the expected locations of flight and altitudes of flight – essentially, FAA compliance.101 Drone operation training and experience requirements may also be considered. Moreover, as already commonly practiced in aviation insurance, Commercial General Liability policies should continue to be the “first line of defense” with regards to coverage over many of the common claims of personal bodily or property damage. For private owners of drones, however, this type of coverage may likely latch through an operator’s home insurance policy.102 Commercially, as businesses begin to inquire into using drones and as private aviation insurance begins to be offered to private drone operators, in order to limit and control the accepted risks for purposes of drone coverage, offering individual “drone endorsements” is seemingly the most prudent action.103

VII. Conclusion

The production, operation, and insurance of drones creates an industry that is growing and evolving at a rapid pace, both privately and commercially. With the industry already reaping massive profits, those profits will inevitably be coupled with massive liability concerns. Although the FAA, through updates to its drone regulations over the last two years, continues to address drone use in its regulations to maintain the nation’s airspace in avoidance of injury and damage, the FAA is presently unable to keep up with the pace of technology and the consumer market of drones. A plethora of potential common law theories of liability may come into play with the misuse of drones or their malfunction. Thus, the insurance industry and litigation forces will likely come in to play to address the risks associated. Recognition now of those risks will serve to address potential areas of concern and liability as the technology develops.

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It stands, therefore, that with evolution of drone technology and regulation, an evolution of aviation insurance practices should also supplant the current model for the handling of drones in the insurance realm. In essence, the expansion of insurance for private drone use should mirror the development of drone technology, the coverage of which should foster clearer, more understandable regulations that fit within the confines of common insurance plans. Although it is no surprise that some insurance companies have already begun, or are beginning to create small markets for drone-related insurance, it should also be considered to supply increased coverage for manufacturers and coverage against drone collisions for owners and operators of commercial aircrafts, airports, municipal owners of airports, and air traffic controllers. Ultimately, as drone regulation continues to evolve and mature, so too will the types of coverage offerings to be made by insurance companies. In the interim, it seems most prudent of insurance companies to capture this market with pioneering coverage models while the industry is still in its infancy.

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1Endnotes:

Alejandro Alba, These are the 2015 Predictions ‘Back to the Future 2’ Got Right, Wrong, NEW YORK DAILY NEWS (Oct. 21, 2015), available at http://www.nydailynews.com/news/national/2015-predictions-back-future-2-wrong-article-1.2063197; see also Roger Yu, ‘Back to the Future’ Creators Foresaw Media Drones of Near-Future, USA TODAY (Oct. 22, 2015), available at http://www.usatoday.com/story/money/2015/10/21/back-future-creators-foresaw-media-drones-may-take-air-next-year/74337504/.2

THE DRONES REPORT: Market Forecasts, Regulatory Vendors, and Leading Commercial Applications, BUSINESS INSIDER (May 27, 2015), available at http://www.businessinsider.com/uav-or-commercial-drone-market-forecast-2015-2.

3 Amazon Unveils Futuristic Plan: Delivery by Drone, CBS NEWS (Dec. 1, 2015), available at http://www.cbsnews.com/news/amazon-unveils-futuristic-plan-delivery-by-drone/.

4 Ian G. R. Shaw, The Rise of the Predator Empire: Tracing the History of U.S. Drones, UNDERSTANDING EMPIRE (2014), available at https://understandingempire.wordpress.com/2-0-a-brief-history-of-u-s-drones/.

5 DEP’T OF TRANSP., FED. AVIATION, ADMIN. Press Release – FAA Announces Small UAS Registration Rule (Dec. 14, 2015), available at https://www.faa.gov/news/press_releases/news_story.cfm?newsId=19856.

6 DEP’T OF TRANSP., FED. AVIATION ADMIN., DOCKET NO. FAA-2006-25714, UAS Operations in the U.S. National Airspace System (Feb. 6, 2007), available at https://www.faa.gov/uas/media/frnotice_uas.pdf.

7 Id.

8 Id.; see also DEP’T OF TRANSP., FED. AVIATION ADMIN., Interpretation of the Special Rule for Model Aircraft (July 25, 2014), available at http://www.regulations.gov/#!documentDetail;D=FAA-2014-0396-0001. “Unassisted” in this context means natural vision without assistive technology beyond that of corrective lenses or ocular surgical corrections.

9 Id.

10 DEP’T, supra note 6; see also DEP’T OF TRANSP., FED. AVIATION ADMIN., NOTICE 8900.227, Unmanned Aircraft Systems Operations in the U.S. National Airspace System (July 30, 2013), available at https://www.faa.gov/documentlibrary/media/notice/n_8900.227.pdf.

11 DEP’T OF TRANSP., FED. AVIATION ADMIN., ORDER 8110.56A, Restricted Category Type Certification (Sept. 30, 2008), available at http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgOrders.nsf/0/8a7ec0175bddab15862575a2005be4bc/$FILE/8110.56-RevA%20.pdf; see also DEP’T OF TRANSP., FED. AVIATION ADMIN., ORDER 8110.4C, Type Certification (March 28, 2007), available at http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgOrders.nsf/0/d21193af2d37a8ba862570ab0054c104/$FILE/8110.4C_CHG5_Incorporated.pdf.

12 DEP’T OF TRANSP., FED. AVIATION ADMIN., Section 333 (Jan. 5, 2016), available at https://www.faa.gov/uas/legislative_programs/section_333/; see also DEP’T OF TRANSP., FED. AVIATION ADMIN., Petitioning for Exemption under Section 333 (Jan. 5, 2016), available at https://www.faa.gov/uas/legislative_programs/section_333/how_to_file_a_petition/; DEP’T OF TRANSP., FED. AVIATION ADMIN., Public Operations (Governmental) (Jan. 5, 2016), available at

https://www.faa.gov/uas/public_operations/.

13 DEP’T OF TRANSP., FED. AVIATION ADMIN., DOCKET NO. FAA-2014-0396, Interpretation of the Special Rule for Model Aircraft (June 18, 2014), available at https://www.faa.gov/uas/media/model_aircraft_spec_rule.pdf.

14 See DEP’T OF TRANSP., FED. AVIATION ADMIN., FAA Aeronautical Information Manual (Apr. 3, 2014), available at http://www.faa.gov/air_traffic/publications/media/AIM_Basic_4-03-14.pdf.

15 Id.

16 Id.

17 Id.

18 DEP’T, Interpretation, supra note 8.

19 Current Unmanned Aircraft State Law Landscape, NAT’L CONF. OF STATE LEGIS. (Jan. 13, 2016), available at http://www.ncsl.org/research/transportation/current-unmanned-aircraft-state-law-landscape.aspx.

20 Id.

21 Id.

22 Id.

23 Id.

24 S.B. 0766, 2015 Legis. Sess. (Fla. 2015), available at http://www.flsenate.gov/Session/Bill/2015/0766.

25 Id.

26 Id.

27 Id.

28 Id.

29 See NAT’L CONF., supra note 19.

30 See Lorra Lynch Jones, Lawmakers to Consider Drone Bill That Protects Privacy, 13WMAZ (Jan. 9, 2015), available at http://www.13wmaz.com/story/news/local/bleckley-dodge-pulaski/2015/01/09/ga-lawmakers-consider-drone-bill/21502999/.

31 Id.

32 Id.

33 Assemb .B. 239, (Nev. 2015), available at https://www.leg.state.nv.us/App/NELIS/REL/78th2015/Bill/1672/Overview.

34 Id. (specifically using the term ‘unmanned aerial vehicle’ in the revision).

35 Id. (all other circumstances require a warrant).

36 Id.

37 Id.

38 Id.

39 Earnest v. Norfolk S. Corp. Real Estate &Servs., 2012 WL 2499176 at *2 (N.D. Ala. 2012) (citation omitted) (emphasis added).

40 Laird v. Nelms, 406 U.S. 797,799-800 (1972).

41 U.S. v. Causby, 328 U.S. 256, 266 (1946).

42 Bollea v. Clem, 937 F.Supp.2d 1344, 1352 (M.D. Fla. 2013) (citations omitted).

43 Boring v. Google, 362 Fed.Appx. 273, 278-79 (3rd Cir. 2010).

44 Id.

45 Lane v. MRA Holdings, LLC, 242 F.Supp.2d 1205, 1221 (M.D. Fla. 2002) (citations omitted).

46 Citizen journalism, also sometimes described as participatory, public, or “vigilante” journalism, is the act of private, non-professional citizens playing an active role in the process of collecting, reporting, discussing, and often, selling news information.

47 Citizen Journalism, MACMILLAN DICTIONARY (Jan. 16, 2006), available at http://www.macmillandictionary.com/us/buzzword/entries/citizen-journalism.html.

48 See John Goglia, FAA Says Media Can Use Drone Photos From Citizen Journalists, Not Professionals, FORBES, (May 7, 2015), available at http://www.forbes.com/sites/johngoglia/2015/05/07/faa-says-media-can-use-drone-photos-from-citizen-journalists-not-professionals/.

49 See Bruce v. Martin-Marietta Corp., 418 F. Supp. 829 (D. Okla. 1975) (explaining a claim for an aircraft manufacturing defect against an aircraft manufacturer).

50 See e.g., McCullough v. Beech Aircraft Corp., 587 F.2d 754, 759 (5th Cir. 1979) (finding that proving an aircraft’s defective design requires plaintiffs to show that the design contained some defect that rendered the design unreasonably dangerous, and that the defect was a substantial element in causing the claimed injury).

51 DEP’T OF TRANSP., FED. AVIATION, ADMIN., Fact Sheet – Unmanned Aircraft Systems (UAS) (Feb. 15, 2015), available at www.faa.gov/news/fact_sheets/news_story.cfm?newsId=18297.

52 Id.

53 Kevin Poulsen, Why the US Government is Terrified of Hobbyist Drones, WIRED (Feb. 5, 2015), available at www.wired.com/2015/02/white-house-drone/.

54 Id.

55 Id.

56 Margaret Rouse, Definition: Geo-fencing (geofencing), WHAT IS, TECH TARGET (Sept. 2015), available at whatis.techtarget.com/definition/geofencing.

57 Id.

58 See Gregory S. McNeal, Drone Users Largely Silent Regarding FAA Rules That May Limit Flights, FORBES (July 10, 2014), available at www.forbes.com/sites/gregorymcneal/2014/07/10/drone-users-largely-silent-regarding-faa-rules-that-may-limit-flights/.

59 See Cecilia Kang, F.A.A. Drone Laws Start to Clash With Stricter Local Rules, THE NEW YORK TIMES (Dec. 27, 2015), available at www.nytimes.com/201512/28/technology/faa-drone-laws-start-to-clash-with-stricter-local-rules.html?_r=0.

60 See e.g., In re Air Crash Disaster, 86 F.3d 498, 521-22 (6th Cir. 1996) (explaining the technicality and effects of the “sophisticated user defense” to claims brought by an air carrier).

61 Lemma Ins. (Eur.) Co., Ltd. v. Rumrunner Sport Fishing Charters, Inc., 2012 WL254134 at *2 (M.D. Fla. 2012) (citing Marshall v. Isthmian Lines, Inc., 334 F.2d 131, 134 (5th Cir. 1964).

62 See generally, Sibert-Dean v. Wash. Metro. Area Transit Auth., 826 F.Supp.2d 266 (D.D.C. 2011) (finding even a violation of traffic regulations satisfied “statutory” element of negligence per se).

63 Id.

64 Bettis v. U.S., 635 F.2d 1144, 1148 (5th Cir. 1981).

65 See Sec. Mut. Cas. Co., v. Century Cas. Co., 531 F.2d 974, 975-76 (10th Cir. 1976) (citing Anderson Aviation Sales Co., Inc. v. Perez, 508 P.2d 87 (Ariz. App. 1973) (acknowledging Anderson Aviation as liable for negligent entrustment of an airplane)).

66 Id. (citations omitted).

67 Id. (citation omitted).

68 See Jim Acosta, Friend: Drone Crasher Wants to Apologize to Obama Family, CNN (Feb. 2, 2015), available at www.cnn.com/2015/02/02/politics/white-housedronecrasher-apology/.

69 Cates v. Hertz Corp., 347 Fed.Appx. 2,5 (5th Cir. 2009) (citing Meister v. Fisher, 462 So. 2d 1071, 1072 (Fla. 1984) (quoting Jordan v. Kelson, 299 So. 2d 109, 111 (Fla. 4th DCA 1974))).

70 Cates, 347 Fed.Appx. at 5. (citing Kraemer v. Gen. Motors Acceptance Corp., 527 So. 2d 1363, 1365 (Fla. 1990)).

71 See Gregory S. McNeal, FAA’s Treatment of Amazon Proves Congress Must Act Or Companies Will Take Drone Research Abroad, FORBES (Dec. 10, 2014), available at www.forbes.com/sites/gregorymcneal/2014/12/10/faas-treatment-of-amazon-proves-that-congress-must-acts-or-companies-will-take-drone-research-abroad/.

72 Craig Whitlock, FAA Records Detail Hundreds of Close Calls Between Airplanes and Drones, THE WASHINGTON POST (Aug. 20, 2015), available at www.washingtonpost.com/world/national-security/faa-records-detail-hundreds-of-close-calls-between-airplanes-and-drones/2015/08/20/5ef812ae-4737-11e5-846d-02792f854297_story.html.

73 Id.

74 See Valter Battistoni, Bird Strikes and The Courts: The Antonov Case, 2009 BIRD STRIKE N. AM. CONFERENCE (Sept. 9, 2009), available at http://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1000&context=birdstrike2009.

75 See e.g., Self v. Great Lakes Dredge & Dock Co., 832 F.2d 1540, n. 2 (11th Cir. 1987) (explaining comparative fault in similar scenario maritime collisions).

76 DEP’T OF TRANSP., FED. AVIATION, ADMIN. Roles and Responsibilities of Air Traffic Control Facilities (Mar. 10, 2014), available at https://www.faa.gov/jobs/career_fields/aviation_careers/atc_roles/.

77 Exec. Jet Aviation , Inc. v. City of Cleveland, Ohio, 409 U.S. 249, 265 (1972).

78 Matt Pearce, FAA Restricts Drone and Model Aircraft Within 5 Miles of Airports, LOS ANGELES TIMES (June 23, 2014), available at http://www.latimes.com/nation/nationnow/la-na-nn-faa-drone-model-airplane-rules-20140623-story.html.

79 Carl X. Ashenbrenner and Thomas A. Ryan, Drones: Emerging Commercial Potential, Emerging Liabilities, MILLIMAN (June 15, 2015), available at http://us.milliman.com/insight/2015/Drones-Emerging-commercial-potential--emerging-liabilities/.

80 Proposed Drone Rules Strike Careful Balance: Our View, USA TODAY (Feb. 17, 2015), available at http://www.usatoday.com/story/opinion/2015/02/17/faa-drones-unmanned-aerial-vehicles-amazon-editorials-debates/23585193/.

81 Id.

82 DEP’T OF TRANSP., FED. AVIATION ADMIN., DOCKET NO. FAA-2015-0150, Operation and Certification of Small Unmanned Aircraft Sys. 39 at 56, available at http://www.faa.gov/regulations_policies/rulemaking/recently_published/media/2120-AJ60_NPRM_2-15-2015_joint_signature.pdf.

83 Alwyn Scott, U.S. Issues Draft Rules on Commercial Use of Drones; Insurers Welcome, THE INSURANCE JOURNAL (Feb. 16, 2015), available at http://www.insurancejournal.com/news/national/2015/02/16/357536.htm.

84 Drones Take Flight, LLOYD’S, at 10 (2015), available at https://www.lloyds.com/~/media/files/news%20and%20insight/risk%20insight/2015/drones%20take%20flight20150820.pdf.

85 14 C.F.R. § 205.3 (2004).

86 Id.

87 Compare, Giuseppe Contissa, et al., Liabilities and Automation in Aviation, SESARWPE, at 8-9 (Nov. 27, 2012) available at http://www.sesarinnovationdays.eu/files/SIDs/2012/SID%202012-36.pdf (describing the current insurance practice in Europe).

88 Id.

89 Unmanned Aircraft, AIG AEROSPACE (2016), available at http://www.aig.com/overview_3171_593677.html.

90 UAS UAV Drone Insurance, TRANSPORT RISK MGMT., INC. (2016), available at http://www.transportrisk.com/uavrcfilm.html.

91 See AIG, supra note 89; see also TRANSPORT, supra note 90.

92 Id.

93 GA. CODE. ANN. §30-24-30 (a) (2015); 44 Am. Jur. 2d, Insurance § 719 (2015).

94 GA. CODE. ANN. §30-24-30(b)(1-3) (2015).

95 GA. CODE. ANN. §30-24-30(b)(4) (2015).

96 See Scott, supra note 83.

97 Max Flight, UAV085 NTSB: Putting Some “English” on Drone Investigations (The UAV Digest podcast interview of Bill English, NTSB March 13, 2015), available at http://theuavdigest.com/uav085-ntsb-putting-some-english-on-drone-investigations/.

98 See Scott, supra note 83.

99 See David K. Beyer, et al., Risk, Product Liability Trends, Triggers, and Insurance in Commercial Aerial Robots, WE ROBOT 2014 CONFERENCE ON LEGAL & POLICY ISSUES RELATING TO ROBOTICS, at 3 (April 5, 2014) available at http://robots.law.miami.edu/2014/wp-content/uploads/2013/06/Beyer-Dulo-Townsley-and-Wu_Unmanned-Systems-Liability-and-Insurance-Trends_WE-ROBOT-2014-Conference.pdf .

100 See Scott, supra note 83.

101 Beyer, et al., supra note 99, at 18.

102 Tom Schrimpf and Russ Klingaman, Recreational Drones: Do Homeowners’ Insurance Policies Provide Coverage?, CLAIMS JOURNAL (August 4, 2015), available at http://www.claimsjournal.com/news/national/2015/08/04/264918.htm.

103 Christopher J. Boggs, Drone Coverage: Into the Great Unknown, THE INSURANCE JOURNAL (July 27, 2015), available at http://www.insurancejournal.com/blogs/academy-journal/2015/07/27/376301.htm.