The tip of the (drone) blade; exploring commercial deployment of UAV’s

Drones are exploding into everyday life at an accelerating pace. Just a few years ago the idea of mass adoption at the consumer level seemed a bit science fictiony (I just made that a word if it wasn’t), but hardly a week goes by now without drones hitting the news feed. Most drone news touches on other areas of law like personal injury, privacy, trespass, which are all very interesting in this nascent era of drones. That said, early adopters of UAV technology should also appreciate the implications of commercial use and liability as drones become a business asset.

• Ever increasing use: Like any technology, commercial use of drones will surely expand into new and clever applications. It’s no secret that Amazon is investing significantly in the logistics space. Photography and videography are also early applications of commercial drone use. Agriculture, research, reporting, communications and many other fields are beginning to discover how drones can be put to practical use as well.

• Increasing importance of liability insurance: The development of special liability insurance will become an increasingly important tool for business users of drone vehicles.  Aerial vehicles are often an excluded activity in a general commercial liability policy. To cover risks from their use, a special rider is required, or a separate policy altogether from an aviation carrier might also be appropriate. Insurance is going to serve as a cost effective solution to the uncertainty of drone operation. The law must play catch up to the evolving uses and consequences thereof. In the absence of established laws and regulations, and without the benefit of coalesced public attitudes and expectations, it really is the wild west. In any dispute over drone use, both sides will believe each was in the right or at least not in the wrong. So what can possibly go wrong with a UAV? Consider the case where a drone falls out of the sky and hits someone. Or consider a case where a drone runs into a skyscraper, breaking a window, and plummeting to the ground alongside glass shards. Maybe you prefer when drones become a wrench in firefighting plans.The list could go on of course. Each of these are recent, in-fact occurrences. Fortunately none turned out to be worst case scenarios in terms of property damage or personal injury, but it’s easy to see how things could have been much worse. Businesses looking to use drone technology in any capacity should discuss policy options with an agent and not assume that their standard CGL coverage includes coverage for this unique risk.
• Commercial intent may impact application of FAA regulations: Until final rule making is completed, commercial use of a drone triggers the application of the interim rules under the 2012 FAA Modernization and Reform Act. Most importantly, the interim regulations require a Certificate of Authorization to operate the UAV. These are granted on a case by case basis, basically upon a showing that the operator is capable of safe operation in compliance of several specific rules. The recent release of the proposed final rules indicates that commercial intent will likely continue to determine whether additional regulations apply to an operator. The bottom line for businesses is that recreational users may engage in activity that is prohibited if it is coupled with a commercial purpose, so don’t necessarily rely on another user’s permitted activity to guide business use. The news gathering setting offers a good illustration of this, as detailed in a recent FAA memo.
• Patchwork of state laws: Until the FAA develops a comprehensive scheme for drone regulation states are free to craft there own laws. A federal scheme might also leave open to the states a certain zone of airspace above the ground, to regulate as they see fit. Political winds may very wildly across borders. Consider a recently proposed South Carolina law that creates broad restrictions against law enforcement and private citizen use of any drone with a camera or audio recording device when operated above another’s private property.

Commercial drone use will continue to be a rich source of market opportunity and legal confusion. Stay tuned!