Unmanned airships (UAS) also known as drones are rapidly becoming a part of our daily lives in both the recreational and commercial context. In March, 2015, the FAA recently relaxed regulations, allowing additional exemptions to commercial uses for drones.  A party seeking commercial use can now more easily obtain a Section 333 exemption, which states that the drone will be used in a low-risk, controlled environment below 200 feet.  (FAA Modernization and Reform Act of 2012, PL 112-95, February 14, 2012, 126 Stat 11).  As of November, the FAA has approved more than 2,000 compared to less than twenty at the beginning of 2015.  (https://www.faa.gov/uas/legislative_programs/section_333/).

In many aspects, the growth of the commercial drone industry is outpacing the speed that the federal government can regulate it. Small businesses are dominating the number of commercial exemptions granted, and many of the current uses involve the movie industry, real estate photography, search and rescue operations, surveying, and delivery of goods to customers.

The continued use and growth of the drone industry can potentially impact insurance companies in two ways: 1) adjusters could potentially send drones out to survey an accident while the parties are still on the phone; and 2) drones could create the need for an entirely new category of insurance policies.

Emerging Market for Insurance Companies

Coverage questions will arise as more people use drones recreationally and commercially. Since drones are unmanned, questions arise as to their use and who is at fault if they cause injury to person or property.  The FAA stated that more aircraft pilots are reporting incidents with drones, and this will only increase as more inexperienced consumers begin utilizing drones. (“Pilot Reports of Close Calls with Drones Soar in 2015” https://www.faa.gov/news/updates/?newsId=83445&cid=TW329). Pilots spotting the drones are mere steps away from accidents.

While many of the incidents with drones appear to be isolated, it is a call for both reform of state regulations and creation of an emerging market for insurance companies. Questions need to be addressed as this market is developed.  As any hobbyist can purchase and fly a drone, how liability for accidents will be defined or determined has yet to be seen.  The FAA is currently working to require recreational drone owners to register their aircraft, but it does not appear they are hopeful of a long-term solution.  (“FAA Panel Still Hasn’t Decided How to Regulate Drones” Martyn Williams.  Nov. 5, 2015. PC World.  http://www.pcworld.com/article/3001906/faa-panel-still-hasnt-decided-how-to-regulate-drones.html).  However, there appears to be a growing concern over accountability for use of drones.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.