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May 24, 2017 | Blog Post| The D.C. Court of Appeals Just Scrapped the Drone Registry and May Have Also Turned Homeowners Insurers into Aviation Insurers

Model-aircraft hobbyist John Taylor didn’t want to register his model aircraft with the FAA pursuant to the newly created drone registry. So he took on the FAA, challenging new regulations aimed at unmanned aircraft registration and flight restrictions. Last Friday (May 19, 2017), he won. See Taylor v. Huerta, Case No. 15-1495 (D.C. Cir. May 19, 2017). At issue were the recently issued FAA Regulation Rule and Advisory Circular requiring registration of drones and restricting their use in certain areas.  Although not an insurance-related lawsuit, the Taylor court’s ruling will certainly affect insurance-policy interpretation moving forward. Here’s why:

In citing to Section 336(a) of the FAA Modernization and Reform Act (“FMRA”), the Taylor court agreed with Mr. Taylor that the FAA did not have the authority to impose a registration rule for the use of drones. FMRA bars any rules or regulations concerning “model aircraft.” A “model aircraft” is defined under the Act as an “unmanned aircraft that is --- 1) capable of sustained flight in the atmosphere; 2) flown within visual line of sight of the person operating the aircraft; and 3) flown for hobby or recreational purposes.” The court ruled that the Registration Rule is squarely prohibited under FMRA, even though its stated purpose is aimed at addressing aviation-safety concerns.

Did you catch that? The D.C. Circuit Court of Appeals just concluded that hobby or recreational drones are “model aircraft” under the FAA Modernization and Reform Act and therefore can’t be regulated by the FAA. That means that the registration requirement and its modest registration fee weren’t permitted, but that’s not why you’re reading this. You’re reading this because many homeowners’ insurance policies exclude liability coverage for injuries or damage caused by an “aircraft” but then define “aircraft” as “any contrivance used or designed for flight, except model aircraft or hobby aircraft not used or designed to carry people or cargo.”

So, what’s the difference between a “drone” and a “model aircraft”? It seems like there is a difference, doesn’t it? But the difference, it seems, is impossible to articulate. At some level, we think of “model aircraft” as yellow, airplane-shaped hobby devices with propellers flown in public parks by pipe-smoking fathers bonding with their sons, and beyond question, this is what the actuaries had in mind when they blessed the insurance-policy definition of “aircraft” that excluded these wholesome little toys that hardly ever fly directly into someone’s face or capture compromising images of stalking victims. “Drones,” on the other hand, are model aircrafts’ more sophisticated cousins, equipped to do far more dangerous things than simply bring a smile to an apple-cheeked ten-year-old.

But as sure as we are that we understand the differences between the two, the difference defies articulation. Though we tend to think of “model aircraft” as being shaped like airplanes and “drones” as being quadcopters, we know that there are exceptions to both of these generalizations. Though we think of “model aircraft” as being operated by remote control within the pilot’s line of sight and “drones” as being self-piloting and utilizing global positioning systems, we know that there are model aircraft equipped with autopilot and drones that are operated by remote control within line of sight.

So far there isn’t a judicial opinion deciding whether a drone is a “model aircraft” within the meaning of an insurance policy that covers “model aircraft,” but the first judges to confront the question are undoubtedly going to read the D.C. Court of Appeal’s Taylor decision for some insight. And Taylor didn’t even attempt to distinguish between the two. The entire opinion uses “drone” and “model aircraft” interchangeably, and that should alarm homeowners’ insurers that believe there is a difference between a “drone” and a “model aircraft” as that term is used in the policy definition of “aircraft.” Though the Taylor opinion leaves room for the argument that “model aircraft” means something different in a homeowners’ policy than it means in FMRA, the argument doesn’t seem as persuasive after Taylor.

As technology continually advances, insurers scurry to keep up, accommodating shifting trends by clarifying policy language, definitions, and coverage. Only recently, the act of flying model aircraft was once such a rare, esoteric hobby that the additional risk of covering model aircraft under homeowners’ policies was negligible.  We have since, however, seen a recent surge in the number of people who own and fly recreational drones, which now expand across all walks of life.  The drone, which was once seemingly limited to the military, journalists, and first responders to capture photographs in hard-to-reach and/or dangerous places, is now widely used by everyday civilians.

Thus, for now, the ruling in Taylor  gives credence to the argument that the “model aircraft” exception to the aircraft exclusion means that homeowners’ insurers are covering drone risks. Insurers that don’t want to be caught flat-footed should consider either removing the “model aircraft” exception from their definitions of “aircraft” or setting their actuaries to the monumental undertaking of assessing how many of their policyholders have drones in their bedroom closets, and then quantifying this new risk that they may now be covering.

James Michael Shaw, Jr.

A Partner at Butler Weihmuller Katz Craig LLP in Tampa, FL. James practices in our Aviation, Casualty Defense Litigation, and Extra-Contractual departments.

Tracy A. Jurgus

A Senior Associate at Butler Weihmuller Katz Craig LLP in Miami, FL. Tracy practices in our Arson & Fraud, Aviation, Casualty Defense Litigation, First Party-Coverage, and Third-Party Coverage departments.

January 15, 2019 Blog PostThe Federal Aviation Authority Reauthorization Act of 2018 and Its Effect on Drones

The Federal Aviation Authority (“FAA”) Reauthorization Act of 2018 (the “Act”) was signed into law on October 5, 2018, by President Donald Trump. The Act was the first five-year FAA reauthorization since 1982.  Such reauthorizations provide the FAA with guaranteed funding for the next five years. The Act contains a plethora of supplementary provisions in addition to the provisions regarding the authorized funding of the FAA.  The Act can be broken down into five areas: (1) funding authorizations; (2) airline customer service; (3) aviation safety; (4) airports; and (5) unmanned aviation systems (“UAS”), also known as drones.

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December 14, 2018 Blog PostDrone Accident Excluded Under CGL Policy's Aircraft Exclusion

In the most recent edition of our book, Butler on Drones, we reported that ISO has issued specific exclusions for unmanned aircraft for inclusion into CGL policies, but it was an open question whether a CGL policy’s standard aircraft exclusion already excluded coverage for liability arising from the use of a drone. A California federal district court has now weighed in on the question – the first to do so, as far as we are aware. And we like the answer.

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January 18, 2018 Blog PostEighty Years After Earhart: Congress Moves to Motivate and Facilitate Women In Aviation

The aviation industry is in dire need of a future workforce. This industry is already suffering from a shortage of qualified individuals to work in all sectors of aviation. For instance, the Forbes article here states that the gap between supply and demand for aviation mechanics is projected to be at 9 percent by 2027.   

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January 05, 2018 Blog PostRecreational Drone Registration Requirement Has Returned

Back on December 21, 2015, the Federal Aviation Administration (FAA) required drone owners to register their drones if their drones weighed more than 0.55 pounds and less than 55 pounds (small drones). The registration was valid for three years.  Basically, anyone who possessed a drone for recreational use had to pay $5.00 to register their drone online with the FAA.  Following that requirement, over 820,000 drone owners had registered their drones. However, in May 2017, the D.C. Circuit Court of Appeals struck down that requirement, finding that the FAA violated its own rule found in the 2012 FAA Modernization and Reform Act that prohibits the FAA from promulgating any rules or regulations regarding model aircraft in Taylor v. Huerta, 856 F.2d 1089, 1090 (D.C. Cir. 2017). After the Taylor decision, the FAA created a form through which registrants could remove themselves from the registry list and request a refund of their $5.00 registration fee they had paid.

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January 05, 2018 Blog PostFAA Releases Drone Identification and Tracking Report that the FAA Will Consider in Drafting its Final Rule on In-Flight Drone Accountability

Law enforcement agencies want accountability when it comes to drone flights, especially when those flights are over people. Enabling a drone and its owner/operator to be quickly identified by law enforcement is necessary toward the expansion of the authorized use of drones to include flights over people and beyond the line of sight as well as the safe integration of drones in the national Airspace System. The Unmanned Aircraft Systems (UAS) Identification and Tracking Aviation Rulemaking Committee (ARC) chartered by the Federal Aviation Administration (FAA) submitted its report and recommendations to the FAA on technologies available to identify and track drones in flight and other associated issues.

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The Federal Aviation Administration’s (“FAA’s”) authority to institute airspace restrictions derives from 14 CFR § 99.7, “Special Security Instructions,” which is intended to address national security concerns from the Department of Defense and U.S. Federal security and intelligence agencies. 

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August 23, 2017 Blog Post"It's Not Old, It's A Classic!": Risk in Aging Aircraft with GARA Protecting Manufacturers

The General Aviation Revitalization Act of 1994 (“GARA”) was a byproduct of aging aircraft, rising costs, and tort liability in the United States.  Congress was concerned that aircraft manufacturers were being devastated by liability costs for accidents occurring long after the planes left the manufacturer.  These liability costs drove up the price for aircraft beyond what the market would bear, and general aviation experienced a sharp decline.  The General Aviation Manufacturers Association reports the total U.S.-manufactured general aviation airplane shipments went from a high of 17,811 in 1978 to a low of 929 in 1994.  As a result many manufacturers stopped making certain model aircraft, including Cessna which ceased production of all piston aircraft in 1986. 

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July 14, 2017 Blog PostNew Laws passed in Florida and Oregon add to Varying State Drone Regulations

More and more states are adopting individual rules for UAS operations within their borders. These rules vary from state to state.  Congress wanted to take up the issue and regulate UAS federally, but stakeholders including the Aircraft Owners and Pilots Association, Drone Manufacturers Alliance, the National Business Aviation Association, and the Commercial Drone Alliance, among others, are encouraging Congress to defer regulation of UAS pending the report and recommendations of the Drone Advisory Committee, the “DAC”.

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April 13, 2017 Blog PostThe Answers to Some of Your Questions About What Airlines Can Do When a Flight is Overbooked and Someone Is Going to Have to Get Off of the Plane

Suddenly, the entire world is interested in learning about the laws governing airlines’ actions when a flight is overbooked. It isn’t every day that the entire world suddenly wants to learn all about something that you’ve spent years studying, so this post is for our clients who insure aviation risks, our clients who are frequent air travelers, and perhaps a few curious strangers who have no business with our law firm but have nonetheless been led here by their quest for answers. 

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April 05, 2017 Blog PostA Federal Court in Kentucky Shoots Down Drone Airspace Case

The Western District of Kentucky recently granted a motion to dismiss for lack of subject matter jurisdiction, determining that there is no federal question jurisdiction when a claim is brought for trespass to chattels and declaratory judgment where a drone is flown above an individual’s property. 

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