Saturday, April 5, 2014

Risk, Product Liability Trends, Triggers, and Insurance in Commercial Aerial Robots

Risk, Product Liability Trends, Triggers, and Insurance in Commercial Aerial Robots


David K. Beyer, Donna A. Dulo, Gale A. Townsley, and Stephen S. Wu

April 5, 2014

here is the link


The commercialization of autonomous aerial robots, also known as drones or unmanned aerial systems, will make autonomous aerial robots pervasive and ubiquitous across the national airspace within the next few years. Yet even today with a highly limited number of drones operating in restricted airspace, accidents are making national news, including ones with fatalities and property damage. How can drone operators and drone manufacturers protect themselves from risk and liability once commercial operations are opened up in the national airspace in 2015?

Drones are essentially robotic aircraft. They can be operated with a “pilot” sitting in a ground station, but many will have autonomous capabilities where the aircraft will operate on its own. These autonomous aircraft will operate through advanced software systems coupled with sensing hardware and GPS navigation packaged in a highly maneuverable airframe. A key feature will be an autonomous anti-collision system that must not only protect the drone from collisions with other drones but also protects it from collisions with birds, other aircraft, buildings and structures.

The risks of crashes and incidents caused by drones in the national airspace are currently unknown. Risk profiles have yet to be determined due to the lack of available information. Insurance carriers may be able to extrapolate loss experience from the aviation industry but will need to be adjusted for the issues of robotic autonomy in flight, autonomy in collision avoidance, and autonomy in critical issues such as lost links, in which communications are cut off and the drone must make decisions on its own.

This paper will discuss drones in the national airspace from an autonomous robotics point of view. An original set of data will be presented with analysis based on studies of unmanned military aircraft accidents. These data and analysis will be applied to the current issues of national airspace integration to help determine liability triggers and trends to help answer insurance underwriting trends and products liability questions. In addition, the paper will discuss theories of product liability that plaintiffs may assert against drone manufacturers. For instance, plaintiffs may allege causes of action 1

such as strict product liability, negligence, breach of warranty, and the violation of laws against unfair and deceptive trade practices. The paper will apply these theories to the context of piloted and autonomous unmanned systems. It will also cover methods for mitigating product liability risks.

Finally, the paper will discuss the unique insurance issues that may arise as commercial owners, manufacturers, and operators of drones seek to limit their risks of liability and damage exposure through the purchase of insurance. The paper will discuss the current emerging market of available insurance as well as the likely trend of insurance coverage including scope, limits, restrictions and availability as more drones are deployed commercially and claim experience grows. Both domestic and Lloyd’s of London based markets will be discussed.