Recreational Drones: Do Homeowners’ Insurance Policies Provide Coverage?

The rise in recreational uses of drones (more accurately described as Unmanned Aerial Systems or just “UAS”) has sparked much debate, including concerns over safety and privacy. The scenarios are rather simple to envision: Suppose a person insured under a standard homeowners’ insurance policy uses a small camera-equipped UAS, purchased online for less than $1000, and unexpectedly crashes it into a neighbor’s car, or uses it to take pictures of a neighbor’s children playing in their backyard. If the neighbor pursues a claim against the UAS operator for property damage or personal injury, to what extent, if any, is coverage provided by the UAS operator’s homeowners’ insurance policy? This article seeks to answer that question.

Years ago when most people thought about a drone or UAS, the image of a large missile-yielding military machine designed to spy on and target national security threats in the Middle East likely came to mind. Now, however, people are becoming more familiar with the small recreational UAS equipment, which uses a four-to-eight blade propeller designed to take off and land vertically while being powered with a small battery and controlled remotely by a handheld device. This growing familiarity is due to the rapid increase in the production and sales of affordable UAS equipment for recreational users. In fact, the Consumer Electronics Association predicted consumer UAS sales will increase almost 50 percent this year (at least 300,000 more sales than last year), according to a January 31, 2015, Forbes article by Gregory S. McNeal, Will Recreational Drone Flying Lead Drone Usage in 2015? The increases are due in large part to rapid technological advances, including the miniaturization of the sensing, localization and control technologies inside UAS, reported Daniel Simmons, in an article titled Attack of the Consumer Drones, published by the website Thrive Detroit on July 7, 2015.

With the rise in popularity, availability, and use of recreational UAS equipment – paired with the FAA’s lenient guidelines – it undoubtedly follows there will likely be an increase in UAS-related accidents. For example, during a TGI Friday’s promotion in December 2014, a drone crashed into a woman’s face, clipping her nose and her chin. The incident made Conner Forrest’s list of the 12 Drone Disasters that Show Why the FAA Hates Drones, published by TechRepublic on March 20, 2015. Another example is the UAS that crashed into the Grand Prismatic Spring in Yellowstone National Park in September 2014, which officials feared could endanger the spring. These examples raise the question: To what extent are recreational UAS operators covered by their homeowners’ insurance policies?

The short answer to whether harm caused by the recreational use of a UAS is covered by a standard homeowners’ insurance policy is, “probably yes.” However, as with every insurance coverage issue, the availability of coverage depends on the specific policy’s language – including the grant of coverage, the definitions, the exclusions, the exceptions to the exclusions and other conditions.

The standard homeowners’ policy provides coverage for damages the insured becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence to which the policy applies. See, e.g., Metro. Prop. and Cas. Ins. Co. v. Gilson, No. 09-CV-1874, 2010 WL 2721906, at *1 (D. Ariz. July 7, 2010). Absent extenuating circumstances, there is no doubt this broad grant of coverage initially extends insurance for liability arising from recreational UAS operations. However, this broad coverage may, of course, be limited by policy exclusions.

Most homeowners’ policies exclude liability for injuries or damages arising out of the ownership, maintenance, operation, use, loading, or unloading of “aircraft.” See, e.g., Id.; Aridas v. Royal Ins. Co. of Am., 462 F. Supp. 2d 76, 77 (D. Me. 2006); Hanover Ins. Co. v. Showalter, 561 N.E.2d 1230, 1231 (Ill. App. Ct. 1990); Tucker v. Allstate Tex. Lloyds Ins. Co., 180 S.W.3d 880, 884 (Tex. App. 2005). The critical question of whether harm caused by a recreational UAS operation is covered under a standard homeowners’ policy depends on how the term “aircraft” is defined. Our research reveals that at least some homeowners’ policies define “aircraft” as “any device used or designed for flight, except model or hobby aircraft not used or designed to carry people or cargo.” See, e.g., Tucker, 180 S.W.3d at 884. To the extent a UAS operator’s homeowners’ policy includes this definition, or some similar variation, harm caused by an insured’s UAS is likely covered because a UAS will probably be deemed “a model or hobby aircraft not used or designed to carry people or cargo.”

It is also important to recognize that most homeowners’ policies exclude coverage for business activities. Hence, most homeowners’ insurance policies will not provide coverage for harm associated with commercial use of UAS equipment, at least according to Andrew Amato in a June 2014 article published by DroneLife titled Does Your Homeowner’s Insurance Cover Your Drone?

The line between recreational and business uses may not always be crystal clear, but insureds who receive compensation for their UAS use will probably jeopardize their homeowners’ coverage. For example, taking photographs with a UAS for personal use is likely considered recreational. Conversely, taking photos for a realty listing for a fee or as a part of a part time real estate brokerage business is not likely considered recreational.

Another major concern with emerging recreational UAS operations is privacy because cameras are often attached to most UAS equipment. Simple precautions, such as gaining consent before filming, can avoid breaching someone’s reasonable expectation of privacy, writes Chris Proudlove in Unmanned Aviation Risk Management, Accident Prevention and Insurance. However, not all recreational uses will be conducted in a responsible and ethical manner, and there will undoubtedly be invasion of privacy claims against UAS operators in the future.

Some homeowners’ policies may provide coverage for invasion of privacy claims resulting from the UAS operations. Coverage should be available if the policy includes liability for “personal injury,” normally defined as injuries due to false arrest, detention, malicious prosecution, libel, slander and invasion of privacy, according to Rough Notes, Policy Form & Manual Analysis,§420.4-3 (2004). If initial coverage is established, an insurer must look to see if any exclusions apply, most notably the aircraft and intentional act exclusions.

A potential coverage issue that might arise in UAS-related invasion of privacy claims is whether the intentional act exclusion applies. Most homeowners’ policies, in some variation or another, exclude coverage for injuries expected or intended by the insured. See, e.g., W. Protectors Ins. Co. v. Shaffer, 624 F. Supp. 2d 1292, 1295 (W.D. Wash. 2009); Bailer v. Erie Ins. Exch., 687 A.2d 1375, 1378 (Md. 1997). An insurer might argue that the alleged invasion of privacy with a UAS was an intentional act by the insured, as opposed to negligent, and thus, there is no coverage. This argument’s success depends, in large part, on the insured’s specific conduct, the language of the “personal injury” coverage grant, the intentional acts exclusion, and the elements necessary to sustain an invasion of privacy claim.

Some jurisdictions, such as Washington, recognize invasion of privacy claims as purely an intentional tort. W. Protectors Ins. Co.,624 F. Supp. 2d at 1301. In these jurisdictions, the grant of coverage for invasion of privacy, an intentional tort, would directly contradict the exclusion for intentional acts. Courts have determined the coverage grant trumps the exclusionary language and find coverage in the insured’s favor. On the other hand, if the jurisdiction recognizes invasion of privacy claims in other forms, such as negligence, and the complaint alleges an intentional act, then an insurer might be able to avoid coverage because the grant of coverage would not be illusory as the policy would cover negligent invasion of privacy while excluding intentional invasions of privacy. See Bailer, 687 A.2d at 1381.

Given the increase in recreational UAS operations, there will be an increase in claims against UAS operators for accidents that cause both bodily and personal injury, as well as property damage. We predict that – in the near term – insurers will see a significant increase in recreational UAS operators seeking coverage under existing homeowners’ insurance policies. Insurers of UAS operators should familiarize themselves with their policy’s exclusions and see if their policies include an exception from the definition of “aircraft” for any model or hobby machines that fly. They should also evaluate their exclusion for commercial operations and intentional torts – to see if they apply to their insureds’ UAS operations.

Tom Schrimpf is a partner with Hinshaw & Culbertson LLP. He focuses his practice on insurance coverage and commercial litigation. He has prosecuted and defended insurance coverage litigation related to all types of commercial and personal claims, D&O and professional liability. Contact Schrimpf at tschrimpf@hinshawlaw.com.

Russ Klingaman is a partner with Hinshaw & Culbertson LLP and immediate past-president of the Lawyer-Pilots Bar Association. He focuses his practice on aviation law, commercial litigation, insurance coverage, insurance defense, intellectual property and product liability. He leads the firm’s national Aviation Law Team. Klingaman can be reached at rklingaman@hinshawlaw.com.