Lessons from AUVSI on UAS Insurance and FAA

Our law firm’s experience exhibiting at the 2014 AUVSI conference last week was a very positive one. As we had hoped, our attendance and personal meetings with folks from the insurance industry and FAA proved invaluable.  Here are some of the take-home lessons for those wishing to profitably enter the commercial drone space.

Insurance Companies Want to See Your Safety Plan

The ability to demonstrate that you have your “stuff” together and are safety-minded will go a long way in getting insurance in the first place, and getting insurance at a price that will seem to be reasonable.

I was told first-hand what the insurance companies want to see (at least the major insurer I spoke with). The following are my impressions as to what you should consider showing when you apply for insurance for your drone/UAS operation. Note: this is not a fully  comprehensive list. You should demonstrate that you:

  1. Personally walk the site before your time to fly and shoot.
  2. Plan a flight path away from large crowds and not directly above people and property that can be damaged by your drone.
  3. Ensure that neighboring property is not going to be an issue (in terms of risk to persons and property) if wind or equipment malfunction causes the drone to down off your intended flight path.
  4. Explain your pre-flight checks. This likely includes far more than just checking your battery leads are snug and Lipos are fully charged.
  5. Provide quality/historical information as to the manufacturer and model of the drone you are flying. If you made it yourself, your experience as a builder may be helpful if it is extensive and the known quality of the components may be helpful to note as well.

FAA May Allow Limited Small Drones/UAS in Industry Soon

The FAA had both a staffed exhibition booth and spoke at several of the panel discussions. One important announcement was an indication of the FAA’s willingness to expedite small drones (“UAS”) in several industries through Section 333 of the FAA Modernization and Reform Act of 2012. These industries were movie making, precision agriculture, oil and gas flare stack monitoring, and powerline inspections.

While we still await specific procedures, a notecard (embedded below) the FAA handed out stated that “UAS that can safely operate in a controlled, low-risk environment may be able to obtain authorization under Section 333.” This would allow some commercial use on a case-by-case basis before the awaited sUAS rules come out, which seems frustratingly behind schedule.

FAA Small UAS Proposed Rules Out in Late 2014 and Final Rules May Not Be in Place Before 2016

The presentation by Jim Williams of FAA indicated that the proposed rules for commercial small drone “Small UAS or sUAS” use will be published in late 2014, and the expected comment and final rule-making process would be 18 months long.  In my personal opinion, this is far too long and must be expedited for safety and economic reasons.

Many operators have expressed their view that they believe it is legal to fly drones for commercial purposes, especially after the NTSB decision of FAA v. Pirker.  FAA’s position is that since an appeal in Pirker has been filed, “nothing has changed.” While an appeal may clarify whether or not the FAA has had the authority it has claimed over small drones for a number of years, in my personal opinion what really matters is that we have new rules for small drone commercial use MUCH sooner than 18 to 22 months from now.

Publishing proposed rules may inform those operating commercially now of safety standards they may not have thought about, and money is currently on the sidelines awaiting “the green light.” AUVSI had a number of investors present, including institutional investors looking for the right opportunity.  Our economy needs the small drone industry to take off with all the current potential it now has. Dithering (real or imagined) may cement the US in the non-leading position it is in now.  Investment in US firms producing and operating small drones, in a responsible manner, will produce good jobs and entrepreneurial companies.

FAA Section 333 postcard

FAA Section 333 illustration

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