Drone insurance: does your company really need it? Yes, and here are some of the reasons why and tips to keep in mind.
Insurance is required by Transport Canada
Transport Canada requires commercial operators to hold liability insurance of at least CA$100,000 if you are flying a drone weighing more than 1kg (note: this requirement will be expanded to any drones weighing more than 250g in mid-2018 when new drone regulations come into force).
Flying a drone for commercial purposes in Canada also requires a “special flight operations certificate” (SFOC), unless your operation fits into one of the exemptions prescribed by Transport Canada. Insurance is required regardless of whether your company is flying a drone under an SFOC or the exemptions.
Tip: You need drone insurance if you are flying drones commercially that weigh more than 1kg. Watch out for the new regulations in mid-2018 that expand that requirement to drones weighing more than 250g.
Types of Insurance
What kind of insurance will cover the commercial operations of your drone? Be aware that most commercial insurance policies do not include any aviation activity; this includes the use of your drone.
Many companies are now offering commercial drone liability insurance, which will often cover damage to or loss of the drone, liability insurance of the drone’s operator and crew, and personal injury.
In addition, you may consider hull insurance, which will cover damage to the body of the drone if damaged during flight. Hull insurance often takes into account depreciation of the drone.
Tip: Consider whether you need separate insurance for the drone’s payload, non-owned coverage or war, hijacking and terrorism (often achieved by adding a “schedule” to your existing policy).
How much Insurance?
Chances are, if you are using your drone for commercial purposes, you will be using a drone larger than 1kg (or soon, 250g). So, the question remains, how much insurance is enough? To answer this question, consider the following:
- Where will you be flying your drone?
- How close will you be to buildings, roadways or livestock?
- How many people will be in the vicinity?
- How many people will be involved in the operation?
- Will you be close to any expensive equipment or natural hazards?
At present, if you or your company is applying for an SFOC for complex operations, Transport Canada needs to be satisfied that you have insurance that is substantially more than C$100,000. Ideally, a company conducting operations for profit should obtain between C$1 million and C$5 million of general liability insurance that is specific for drones or expressly includes aviation activity.Tip: Seek advice from your insurance broker or company on how much liability insurance may be required for your company’s specific drone operations.
Consequences of Flying Without Insurance
Failing to obtain insurance will have consequences, which may include a fine from Transport Canada, a conviction of an offence and, if convicted, an increased difficulty in obtaining SFOCs from Transport Canada in the future (perhaps when your company is seeking to conduct beyond visual line of sight operations). From a business perspective, customers are more often requesting proof of liability insurance before you can get the job. In order to get on approved vendor lists for larger corporations, proof of insurance will be ‘table stakes’. Even beyond that, customers are requesting to be added as an additional insured to your drone liability insurance before the flight is conducted.
Tip: When choosing insurance for your drone, confirm that your insurance provider will allow you to add additional insureds at no extra charge. Make sure you shop around, as some insurance companies are more flexible than others and can better suit your business’ needs.