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UNCERTAINTY HOVERING OVER UAS USE......ARE DRONES COVERED UNDER STANDARD HOMEOWNER'S INSURANCE POLICIES?

UNCERTAINTY HOVERING OVER UAS USE......ARE DRONES COVERED UNDER STANDARD HOMEOWNER'S INSURANCE POLICIES?

Traditionally, drones, or unmanned aerial systems (UAS), bring to mind images of robotic aircraft armed with bombs or missiles patrolling some of the world’s deadliest regions. However, over the past few years, drone use has become increasingly recreational. So much so that drone sales were predicted to increase by approximately 50% from 2014 to 2015. The Consumer Electronic Association predicted that sales would increase from 600,000 units in 2014, to 900,000 units in 2015. The FAA predicted that as many as one million consumer drones could have been sold during the Christmas holidays alone. And by 2020, the FAA predicts that as many as 30,000 commercial drones will be in use for various commercial purposes.

Drones now retail for as little as $19.99, or less, making them accessible to almost everyone.

The FAA’s Response

In an effort to respond to this growing market, the FAA has already mandated that all recreational drone users register their drone. Fortunately, the registration fee is a meager $5, with a mandatory renewal fee of $5 every three years. A failure to register the drone can result in civil penalties up to $27,500. Criminal penalties can include fines of up to $250,000 or imprisonment for three years. Further, the FAA has allocated over $60 billion to modernize the country’s air control systems to expand coverage and provide accommodation to drone users. The FAA has further mandated that drones must weigh less than 55 pounds, and cannot exceed 4.5 feet in length. The important takeaway is that even the FAA has already acknowledged the emergence and growth of the consumer drone market.

Standard Policy Protections

Since flying 15 pounds drones over your neighbors’ property is inherently risky, the most important question is whether a standard homeowners’ insurance policy provides protection for injuries or damages arising out of the use of a drone. The answer to this question requires a deeper look into a standard homeowners’ policy.

The vast majority of policies exclude liability for injuries or damages that arise out of the ownership, maintenance, operation, use, loading, or unloading of “aircraft.” (Tucker v. Allstate Tex. Lloyds Ins. Co., 180 S.W.3d 880, 884). This begs another question: what does a standard homeowners’ policy consider as an aircraft? A majority of policies define an aircraft as a device used or designed for flight, except model or hobby aircraft not designed to carry people or cargo. (Tucker, 180 S.W.3d at 884). By this definition, the average recreational drone would likely not be considered an aircraft under the standard homeowners’ insurance policy. Therefore, any injury or damage arising out of the use of a drone may be covered by a standard homeowners’ insurance policy.

Possible Exceptions

Possible exceptions that may prevent a standard homeowners’ policy from providing coverage. Since most drones come with cameras, the issue of privacy may be of concern. Some homeowners’ policies provide coverage for invasion of privacy claims. Other policies do not. A major issue of contention could arise when the intentional act exclusion applies.

The intentional act exclusion would apply in circumstances where personal injury or property damage is either an expected, intended, or foreseeable result of an insured’s intentional act. (Minkler v. Safeco Ins. Co. of America, 49 Cal.4th 315, 318). Thus, without prior consent, the unauthorized flying of a drone over a neighbor’s property may be constitute an uncovered intentional invasion of privacy.

Recommendations

In more practical terms, whether or not coverage is afforded for recreational drone use depends predominately on the insured’s conduct. From an insured’s perspective, simply asking a neighbor for permission to fly the drone over their property is the simplest way of gaining consent and avoiding privacy issues altogether.

Since the introduction of recreational drones into the marketplace is a very recent phenomenon, case law is still evolving with respect to coverage protections and exclusions. Our research has also found that many insurance companies continue to study recreational drone use before considering any updates or revisions to standard homeowners’ insurance policies. We recommend that insurers continue to monitor the law, and that they review their policies to make sure they are acting in accordance with current regulations.

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