UAS Insurance – Drones & Risk Management
Canadian businesses across many industries are adapting drones, also commonly referred to as unmanned aerial systems (UAS) or unmanned aerial vehicles (UAV) technology for their own uses. Drones or UAS are creating new opportunities and risks for businesses to evaluate, and regulators and insurance carriers are scrambling to keep pace. In addition to mapping out how your business uses drones, it’s critical to understand the risks associated with commercial drone operations. Here is an overview of some risks to consider.
With only two exemptions, Transport Canada requires businesses to obtain a Special Flight Operations Certificate (SFOC) prior to operating a drone or UAS. “The Canadian Aviation Regulations (CARs) require unmanned air vehicle (UAV) operators to apply for SFOCs so Transport Canada can ensure operators use their UAV reliably and safely.”1 Additionally, drone operators must also observe all other applicable laws and regulations, including the Criminal Code and provincial and municipal laws related to trespassing and privacy.
Physical Loss: Beyond the Aircraft
One of the most widespread applications of drones to date is unmanned aerial photography. Real estate, agriculture, filmmakers and other businesses survey and photograph land using cameras that tend to be expensive. Drone payloads often have a higher intrinsic value than the aircraft itself. Because cameras and other payloads are usually slung below the drone, in the event of a hard or emergency landing, damage to the payload is a significant risk.
Planning for Obsolescence
Many drone manufacturers haven’t diversified, and if a technological advancement proves to be too costly for smaller companies to adopt, they could potentially go out of business. Bankrupt or defunct manufacturers, coupled with a lack of industry standards for design, could mean that the loss of a relatively inexpensive motor today would instead be a total financial loss on the aircraft five years from now, when replacement parts are completely unavailable.
Casualty and Liability
As with conventional aircraft, a drone crash could mean a hefty casualty claim. Businesses, especially those that operate drones in populated areas, should make sure they are adequately covered in the event of property damage or injury to a third party.
Theft and Fraud
Small drones are easy and attractive targets to thieves. Unlike the traditional aircraft industry, which has a tracking system and serial numbers for aircraft parts, the drone industry hasn’t adopted either a tagging or tracking system. In other words, there’s almost no chance of recovering a stolen drone.
The same drone that photographs a parcel of land for a realtor on one day could be used to survey a hazardous chemical spill the following day. Each new opportunity this kind of flexibility offers brings with it additional exposures that compound upon one another. Businesses need to consider how they use drones in order to make sure that their Transport Canada authorization and insurance covers each arena of commercial use.
Protect Your Business Drones With UAS Insurance
Across Canada, our insurance advocates understand the fundamentals of UAS insurance. From legal liability coverage for drone operators to personal injury, premises liability and non-owned coverage to product liability for drone manufacturers or service providers, we can help you navigate the many new coverage options and protect your bottom line. Wherever you are located, we can help you get a drone insurance quote that delivers more value and options to your Canadian business.
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Sources: Adapted from Risks Insights © 2015 Zywave, Inc. All rights reserved. This Risk Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.
1 Transport Canada: Getting Permission to Fly Your Drone Transport Canada: Drone Safety