Drone operators, liabilities and insurance.

Posted on: February 26, 2016 by Nettel Media Inc.

Category: General

Drone operators, liabilities and insurance.

Here is a story - Company X hires drone operator D to record some aerial footage of a home. A never thinks of asking D about insurance. After all, D advertises itself as one of the best at the lowest price possible when it comes to drone video recording. Even though D has experience flying, it just happens that on that particular day weather conditions change quickly and at some point the drone spins out of control and crashes on the roof a neighbour’s home causing some damage. Then the nightmare begins. X wants D to pay for the damage, while D wants X to pay for the drone. The neighbour threatens to sue them for property damage and invasion of privacy. -

 

How can a scenario like the above be resolved? We talked to our friend Gordon Manzer, an Insurance and Financial Advisor with The Cooperators, who provided important details to consider when it comes to business insurance and drone operation.

 

- What kind of liabilities can a business or drone operator face when utilizing a drone to record video?

 

A drone operator should be mindful of the following liability exposures: property damage and bodily injury; hijacking; midair collisions with another aircraft; damage to the drone, its equipment or payload; negligence in hiring and training operators; trespass and nuisance claims; and, invasion of privacy, whether intended or not.

 

- What kind of insurance should a business or drone operator have if they want to use a drone to record video? Up to how much should they be insured for?

 

Operators should be aware that most Commercial General Liability policies have a broad aviation exclusion that would not cover any damage or liability caused by a flying drone. A few insurers in Canada have developed specialty policies to cover drones, both the equipment itself and liability. Operators should have third party liability coverage and strongly consider added coverages for system hacking, personal injury (invasion of privacy) and negligence in hiring or training. An operator can also purchase coverage for damage to the drone, launch equipment and payload equipment, especially if the video equipment being used is of high value.

 

The current limits available for liability under these drone policies range from $1,000,000 to $5,000,000, but operators should be aware that Transport Canada requires all commercial operators to carry a minimum liability limit of $100,000 for any flights.

 

- If an insured business/operator is liable under any circumstance for an accident using a drone, will the insurance become invalid if the business did not request the proper permit to Transportation Canada?

 

While policy exclusions will vary from one insurer to the next, the safe bet for any commercial drone operator is to obtain a Special Flight Operation Certificate (SFOC) from Transport Canada. Failure to do so can result in fines up to $25,000 and if an operator has a SFOC but fails to follow the requirements the fines can be up to $15,000. Insurance policies in general will not cover punitive damages of any kind so even if an operator’s liability is covered by the policy when operating the drone without a SFOC, the fines would not be covered.

 

- What is the average cost for a business and what kind of insurance is recommended to be able to offer drone video recording services?

 

Again, costs will vary greatly from one risk to the next depending on the types of coverage and limits required, the type of missions the operator plans to do, the size and cost of the equipment and the experience of the operator. The rates for drone policies could potentially change drastically in the coming years since insurers have little loss experience with these machines and greater numbers of losses will affect future rates.

 

All operators should keep detailed logs of all flights performed and any and all maintenance done on the drone, including serial numbers and costs of replaced parts.

 

As more companies look into hiring drone operators to record great aerial visuals, always remember to ask about the type of insurance an operator carries. If you have other insurance questions contact Gord Manzer at http://www.cooperators.ca/en/gordon-manzer/Home.aspx.

 

For a safe and insured drone recording experience contact Nettel Media or our colleague Mike DiRoma at https://www.descriptivevideos.com/aerial-photography.html

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