Without a doubt, starting a new business can be one of the most rewarding, and equally terrifying, experiences in anyone’s life. With the commercial availability and success of Unmanned Aircraft Systems (UAS), commonly referred to as drones, many business entrepreneurs are starting new aviation businesses. Whether the UAS business uses drones for aerial mapping/videography/photography, pipeline/hydro-transmission line inspection, real estate, railroad and highway maintenance, film production, agricultural and conservation, or for any other purpose, UAS business owners need to consider the drone liability ramifications should a drone cause damage to a person’s property or injury to a person during the commercial usage of that UAS.
From a legal standpoint, current federal law states that “a lessor, owner or secured party of an aircraft is liable for personal injury, death, or property loss or damage on land or water only when a civil aircraft, aircraft engine, or propeller is in the actual possession or control of the lessor, owner, or secured party” and “the personal injury, death, or property loss or damage occurs because of the aircraft, engine, or propeller, or the flight of, or an object falling from, the aircraft, engine, or propeller.” 49 U.S.C.A. §44112(b) (2015).
In a case involving the crash of a fixed wing aircraft and death of a passenger, the Florida Supreme Court in Vreeland v. Ferrer, 71 So. 3d 70 (Fla. 2011), held that 49 U.S.C.A. §44112 preempts Florida’s statutes and applies in cases where people on the ground (surface of the Earth) are injured or killed, but does not apply when the injury, death or property damage is to the passenger of an aircraft. Given the holding of the Florida Supreme Court and unique nature of unmanned drones, liability for drone operators, at least in Florida, will fall under 49 U.S.C.A §44112. Consequently, as the “lessor, owner or secured party of an aircraft,” the UAS business entrepreneur will likely be liable for injuries or damages to people or property on the surface when caused by the UAS drone.
So, what does the UAS business entrepreneur do to protect himself? For starters, UAS business owners that operate drones can personally protect themselves from liability by forming either a limited liability company (LLC) or a corporation. While an LLC provides for both a favorable flow-through partnership taxation and limited liability protection for all members, corporations allow for limited liability, continuity of life, free transferability of ownership interests and centralized management. The greatest benefit of a corporation is the limited liability aspects – a shareholder’s financial risk is limited to the amount invested in the corporation and the shareholders is not liable for corporate obligations. Simply put, in most cases, the liability for any injuries or damages due to a UAS crash will stop with the business such that the injured or damaged party will not be able to collect from the UAS business owner’s personal assets.
New UAV business owners should also consider insuring their drones before taking to the skies. In the unfortunate event that a drone crashes, a UAS business owner will want to have peace of mind that any damage caused by his drone will be covered by insurance. A quick Google search yields several insurance companies that insure UAS operators for commercial purposes. UAS Business owners should purchase an insurance policy that will fully cover all aspects of the UAS business’ operations. Before inking the contract for drone insurance, read the policy to see what exclusions the policy contains. After all, a UAS business owner would hate to have a drone crash and injure a person because the drone lost signal connectivity, only to later find that the insurance policy excludes accidents that occur under those conditions.
Even before the FAA grants a UAS business owner’s petition for Section 333 exemption, the business owner needs to consider the liability aspects of his new business. If you are a UAS business entrepreneur and have questions about your new drone business, give The Ison Law Group a call at either 855-LAW-1215 or 863-712-9475.