Drones What Could Possibly Go Wrong?...10 Legal Timeline of Drones...

$: Drones What Could Possibly Go Wrong?...10 Legal Timeline of Drones g\unit_shea\2015\drones.pptx\#7007 Oct 2015 FAA Fined SkyPan International Inc., $1.9 million penalty for reported$
L O C K T O N C O M P A N I E S

Drones—What Could Possibly Go Wrong?

A Discussion of the Legal and Liability Aspects of Operating Drones by Commercial Entities

1

https://www.youtube.com/watch?annotation_id=annotation_863790077&feature=iv&src_vid=zuW7Fc2iN8E&v=HSBhAx3QMDA

https://www.youtube.com/watch?v=zuW7Fc2iN8Ev

https://www.kickstarter.com/projects/742279450/smartchutes-quadcopter-parachute-recovery-system



https://www.youtube.com/watch?v=zuW7Fc2iN8Ev










http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi-roDDxLvMAhUJHD4KHXGJBgQQjRwIBw&url=http://familycircus.com/comics/april-27-2016/&bvm=bv.121070826,d.cWw&psig=AFQjCNGmCzqmeOQhY9NvlOf3HQAXFOUk1w&ust=1462283446621838

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj2sJzdxbvMAhVEdD4KHSyZAAUQjRwIBw&url=http://fpvcentral.net/tag/comic/&bvm=bv.121070826,d.cWw&psig=AFQjCNFPp-oD-hxetBzbeG4IuVZ-Rh-JMg&ust=1462283528292535

2

Why use a Drone (UAS)?

g\unit_shea\2015\drones.pptx\#7007

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwj8iPegh57MAhUEVT4KHWaeA9EQjRwIBw&url=https://laraquiphotography.wordpress.com/2015/03/20/ban-of-the-drones/&psig=AFQjCNEpY8g3cZbJiWII0pCPg5HfWnyb7w&ust=1461270548301053

3 g\unit_shea\2015\drones.pptx\#7007

What is a “DRONE”

What’s in a Name:

Drone – indicates REMOTE pilot operation (operator away from aircraft)

UAV (Unmanned Aerial Vehicles)

UAS (Unmanned Aerial System)

4 g\unit_shea\2015\drones.pptx\#7007

What is a “DRONE”

Fixed Wing:

Longer Range

Aerial Mapping

More Expensive

Quad (Multi)-Copter:

Most Common

More Payload

Most Inexpensive

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.heliguy.com/blog/2014/11/13/dji-inspire-1-released/&ei=xy13VaycNMGKsAXSp4CwBQ&psig=AFQjCNHdwas9NXjwIkahWJmTqfYawCGpiA&ust=1433960242227342

5

Practical Uses of a Drone

Three D’s—Work That is Dangerous, Dull or Dirty

Inspections of flare stacks at factories

Bridge inspections

Powerline/pipeline patrol

Security at large facilities

Wildlife conservation/fire patrol

Search and rescue

Cost Effective Aerial Mapping/ Photography

Commercial helicopter = $1,500 per hour

Drone = $1,500 one-time purchase


6

Top Industries Using Drones

Agriculture

Film Production

News Media

Real Estate

Construction

Mining

Utilities

Energy


7

Legal (FAA) Timeline


https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi33oj1hp7MAhWMND4KHfa1CLsQjRwIBw&url=https://www.cinema5d.com/drones-banned-in-all-u-s-national-parks/&psig=AFQjCNFR9JmV6fckVFaHA3LZcu1Ijt5MXw&ust=1461270415490103

8

Legal Timeline of Drones


Oct 2011 The FAA fined a filmmaker $10,000 for “careless or reckless UAS operation” (Pirker) Univ of Virgina

March 2014 NTSB ALJ Dismisses FAA’s $10,000 Civil Penalty Against UAS Operator “No Enforceable FAR” (Pirker)

May 2014 Virtually All Major News Organizations File Brief in Pirker, Assert First Amendment Rights

Nov 2014 National Transportation Safety Board, determined that the FAA's existing "aircraft" regulations can apply to model aircraft, drones, and remote controlled aircraft.

Dec 2014 FAA announces “333 Exemption Process” for commercial drone operators.

9



Feb 2015 Applications for “333 Exemption” and “Certificate of Authority” (COA) flooding FAA. DOT and FAA Propose New Rules for Small Unmanned Aircraft Systems “UAS” (to become law in 2016)

March 2015 FAA Publishes “Blanket COA” to mirror proposed rules. This allows operators who have received 333 Exemption to operate under the proposed rules without notifying the FAA for EACH Flight

August 2015: FAA launches a “Know before you fly” campaign due to the UAS’s flying over wildfires in California, preventing Airborne firefighters from dousing the fires. “If you endanger manned aircraft or people on the ground with an unmanned aircraft, you could be liable for a fine ranging from $1,000 to a maximum of $25,000,” said FAA Administrator Michael Huerta. “Know the rules before you fly. If you don’t, serious penalties could be coming your way for jeopardizing these important missions.”

10



Oct 2015 FAA Fined SkyPan International Inc., $1.9 million penalty for reported 65 illegal flights between March 2012 and Dec. 2014 in Class B Airspace

Dec 2015 FAA announces new Registration process for recreational/hobby users for all drones between 0.55 lbs and 25 lbs at cost of $5 per registration

March 2016 U.S. Senate Committee approves FAA reauthorization bill that includes the FAA’s proposed new drone regulations. Awaiting approval from House of Representatives and final votes.

11

Legal drone operations


https://cmgajcradiotvtalk.files.wordpress.com/2015/01/drone.jpg

12

SECOND - With a 333 Exemption – Users may operate UAS under a “Blanket COA (Certificate of Authorization)” or apply for COA if needs fall outside the “Blanket COA” requirements:

The FAA has created a streamlined COA process for commercial operations “to respond to the current demands and to bridge existing UAS operations with the proposed small UAS rule,” according to an FAA memorandum.

This blanket COA will allow commercial operators to fly without receiving special authorization under certain operational parameters.


What do businesses do between NOW and when the new rules take effective (2016/2017)

FIRST - Apply for “333 Exemption” - this is the only LEGAL means to operate a drone commercially in US airspace

• Apply for Exemption thru FAA website. • Hire attorney to complete the application • Use available online tools (AVUSI) to help complete the application

yourself and file with the FAA. • Currently running SIX months from application to approval. • Current Exemption requires the operators maintain at minimum

a Sports Pilot License – this can cost $5,000 - $10,000 per pilot.

13

Do You Need the “333 Exemption” and “COA” to Operate a Drone?

Disclaimer . . . I am not an attorney and Lockton is not a law firm. We recommend you discuss the legality of drone use in your business with a qualified aviation attorney.

FAA.GOV “The FAA currently authorizes the use of unmanned aircraft systems (UAS) for commercial or business purposes on a case-by-case basis. You may not fly your UAS for commercial purposes without express permission from the FAA. You should check with the FAA for further determination as to what constitutes a commercial or business use of small UAS.”

Is it better to ask for permission or beg forgiveness?


October 6 2015 – FAA Fined SkyPan International Inc., $1.9 million penalty for reported 65 illegal flights between March 2012 and Dec. 2014 in Class B Airspace.

14

Legal Status

FAA Notice of Proposed Rulemaking (Part 107) – Feb 2015

Must weigh less than 55 lbs

Visual Line of Sight only

Daylight Only (sunrise to sunset)

Maximum Airspeed 100 mph

Maximum altitude 400 ft above ground level

Minimum weather—three miles visibility

Airspace Restrictions

No operations over people or in careless/reckless manner

Operators must be 17 years old, pass an aeronautical knowledge test (pilot’s license NOT required) and pass a TSA background check

Eliminates the “333 Exemption and COA Process” for most operators

When will this become law? 2016…..2017….????


15

State/Local Laws


More than THIRTY municipalities have passed their own ordinances/laws regarding the use of drones including: Miami/Chicago/Seattle/Pittsburgh/Los Angeles

• Pittsburgh banned the use of drones above, within or in the vicinity of a public park • Chatham Township, New Jersey prohibits the use of drones launched from, landing on, or

flying above government or public buildings, property, or parks • Los Angeles passed an ordinance that approximately mirrors FAA recreational drone

guidelines with a punishment for violators of up to $1,000 and six months in jail

Other municipalities have previously banned the uses of drones altogether from flying within the airspace of the city - St. Bonifacius, MN- Northampton, MA: Iowa City IA

FAA RESPONSE: “If municipalities enacted ordinances regulating UAS in the navigable airspace and a significant number of municipalities followed suit, fractionalized control of the navigable airspace could result. In turn, this ‘patchwork quilt’ of differing restrictions could severely limit the flexibility of FAA in controlling the airspace and flight patterns, and ensuring safety and an efficient air traffic flow. A navigable airspace free from inconsistent state and local restrictions is essential to the maintenance of a safe and sound air transportation system.”

16

Potential Legal Battle Brewing???


States control Privacy Issues

FAA Controls Airspace

17

Safety & Risk Management


18

Safety and Risk Management

Select aircraft right for your mission

Size

Flight Duration

Fixed Wing: 40-50 Minutes Per Flight

Rotor Wing: 20-25 Minutes Per Flight

Type of Images to be gathered

Camera

LIDAR

Heat

Operator training

Documented and recurrent

Manufacturer approved (if possible)


19


Development of Safety Management System (SMS)

Pre- and post-flight checklists

Logbooks

Weather minimums (wind and visibility)

Operational guidelines (spotter/safety line, etc.)

Flight Tracking Software

Understand FAA Airspace

Corporate policy for handling images captured

Maintenance

Documented

Scheduled


20



Lockton Training and Safety Manual – Phantom 3 Professional

21




22




23




24




25




26

Drone insurance


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwih0pnSyqLMAhXJWj4KHclAC38QjRwIBw&url=http://www.droneinjurieslawyer.com/read-me/&psig=AFQjCNG1M8zo9Xn1Pfal6HQmhJ2xCYaaRg&ust=1461426062801393

27

Frequently Asked Questions Regarding Drone Insurance

Do I need to be approved by the FAA to obtain drone insurance?

Do I need insurance for my drone?

What would commercial drone insurance cover/not cover?

How much does drone insurance cost?

Does the FAA require we have insurance?


28

Do I Need to be Approved by the FAA To Obtain Aviation Specific Drone Insurance?

Standard underwriter data needed:

Do you have a “333 Exemption” from the FAA?

Make and model name of drone including size and weight?

Description of area of operation (urban/rural).

Use of operation: mapping; agriculture; law enforcement; aerial survey?

Operators experience level and pilot ratings (if any)

Description of training provided to operators:

Is a spotter in addition to the operator used in operations?

Description of corporate policy for handling of images captured. Are images kept in secured server/password protected laptop? Images reviewed prior to publishing to public (editing images you don’t have authority to make public).


29

Do I Need Insurance For My Drone?

Yes; aviation has been and always will be a litigious environment – and the first BIG claim is waiting to happen…


March 22 2014 – Drone nearly collides with U.S. Airways Flight landing in Tallahassee FL

Nov 11, 2014 – Three different airline crews report drone operating in approach pattern to JFK Airport.

May 28, 2015 – Shuttle America reports near drone hit landing at LaGuardia Airport

Sept 2015 - A New York district court in Queens sentenced a man who illegally flew a UAS recreationally over a stadium at the U.S. Open to five days of community service.

April 17, 2016 -Airbus A320 landing at Heathrow Airport strikes small drone operating new airport.

More than 406,000 people have registered their drones from December 2015

to April 2016. The FAA estimates small, hobbyist UAS purchases may grow

from 1.9 million in 2016 to over 4 million by 2020.

30

Do I Need Insurance For My Drone?


2014 (Feb – Dec) FAA Reported UAS

Encounters

2015 FAA Reported UAS

Encounters

238 1208

31

Where can I find Coverage?

Employee Owns the Drone and it is insured under their Personal Insurance Policy:

Homeowners’ Policies Policy typically excludes any business/commercial operations.

Very likely excludes drone liability.

“Hobby” policies (Academy for Model Aeronautics) Specifically Excludes coverage for “commercial/business” use


32


General Liability Policy Standard coverage only applies while aircraft “is operated per the procedures and practices specified in

the FAA Small UAS Notice of Proposed Rulemaking, February 15, 2015”

Liberty Mutual: “When used in compliance with all FAA rules and regulations, unmanned aircraft usage”

AIG: Bodily injury or property damage arising out of the operation of an unmanned aircraft system which (i) is remotely controlled by an operator, (ii) is operated per the procedures and practices specified in the FAA Small UAS Notice of Proposed Rulemaking, February 15, 2015, (iii) has an airworthiness certificate or an exemption under Section 333 of the FAA Modernization and Reform Act of 2012, and (iv) does not weigh more than ten (10) pounds (hereinafter referred to as Unmanned Aircraft Systems).


FAA Notice of Proposed Rulemaking (Part 107) • Must weigh less than 55 lbs • Visual Line of Sight only • Daylight Only (sunrise to sunset) • Maximum Airspeed 100 mph • Maximum altitude 500 ft above ground level • Minimum weather—three miles visibility • No operations within Five Miles of Airport

33


Hire a Professional Contractor to operate it for you.

Require the operator to maintain 333 Exemption/COA

Require they operate under the FAA regulations/proposed rules

Minimum Insurance Requirements ($1M) or higher

Require certificate of Insurance naming customer (you) as Additional Insured

Waive rights of subrogation as respects physical damage in your favor

Include 30 (Thirty) day notice of cancellation

Be Primary and without right of contribution of any insurance maintained


34


Aviation Specific Policy Broadest coverage

Most Expensive

Tailored to fit the exposure

Ability to purchase physical damage coverage

Aviation adjustors to handle claims


35

What Would Commercial Drone Insurance Cover?

Physical Damage

Some insurers willing to provide physical damage on values as low as $1,000.

Standard Rates (10% Rate / 10% Deductible)

Explore adding to Corporate Property Insurance Program (flight coverage excluded)

Liability—Bodily Injury and Property Damage

Arising out of the use, ownership, or operation of a UAS for bodily injury and property damage

Coverage provided on “Occurrence Basis”

All major aviation insurers will consider providing coverage for UAS

Up to $2M readily available for any operator with or without 333 Exemption

$5M to $25M for available for operators with 333 Exemption with documented training procedures.


36


Personal Injury Aviation Coverage (Limit follows Aircraft Liability)

(a) False arrest, detention or imprisonment;

(b) Malicious prosecution;

(c) The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room,

dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;

(d) Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services;

(e) Oral or written publication, in any manner, of material that violates a person’s right of privacy;

(f) The use of another’s advertising idea in your advertisement; or

(g) Infringing upon another’s copyright, trade dress or slogan in your advertisement. Most underwriters agree the greatest concern they have is personal injury suits brought against companies using a drone for aerial photography.


37


Additional Coverages:

Medical Payments

Worldwide Territory

Coverage includes “All Operations of the Named Insured”

Premises Liability Coverage

Non-Owned Drone Liability Coverage


38

Standard Drone Liability Policy Exclusions

Expected or intended injury

Workers compensation (or similar laws) & Employers Liability

Damage to property owned by the insured

War, Hijacking and other perils – can be removed for additional premium

Discharge of any munitions

Dispensable Loads (releasing anything from the drone)

Noise and other pollution (unless caused by an aircraft crash, fire or explosion or collision)

Indoor Use – risks underwritten very carefully can have this exclusion deleted

Consequential Loss – some underwriters will delete this exclusion

Fines or Penalties from Government Agencies

October 6 2015 – FAA Fined SkyPan International Inc., $1.9 million penalty for reported 65 illegal flights between March 2012 and Dec. 2014 in Class B Airspace. FAA Penalties range from $100 for small entities or individuals to $25,000 per violation for large businesses.


http://skypanintl.com/



39

How Much Does Drone Insurance Cost?

Recent Example of Aviation Specific Policy (Nov 2015)

DJI S1000 (13lbs /purchase price $20,000 / 20 Min Flight Time)

Engineering Firm (With FAA 333 Exemption)

Aerial survey

Liability $5MIL

Physical Damage—$20,000

Annual Premium

Liability $5M : $3,500

Hull $20K: $1,500.

Total Premium: $5,000


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCNL7o66kn8gCFcpsPgodqloOjA&url=http://www.dji.com/product/spreading-wings-s1000&psig=AFQjCNHUzgrluGkBJGTCvTkLIOQzGS0JOA&ust=1443720564931172

40

Does the FAA Require We Have Insurance?

No - FAA does not require Drone aircraft operators to maintain insurance.

No mention of insurance requirements in the “333 Exemption” & “COA” process nor in the Notice of Proposed Rulemaking released in February 2015.

Very likely that operators who are “operating UAS for hire” will need to secure some type of liability coverage (just a commercial aircraft operator is currently required to maintain).


41

Resources


Association for Unmanned Vehicle

Systems International

Questions?

43

Our Mission

To be the worldwide value and service leader in insurance brokerage, employee benefits, and risk management

Our Goal

To be the best place to do business and to work

www.lockton.com

© 2015 Lockton, Inc. All rights reserved.

Drones What Could Possibly Go Wrong?...10 Legal Timeline of Drones...

Documents

Transcript of Drones What Could Possibly Go Wrong?...10 Legal Timeline of Drones...