Up In The Air: Keeping Up With Drones

The presence of drones has increased rapidly over the past 18 months. As businesses and individuals continue to create a demand for this emerging technology, the risks associated with them are also multiplying. Even though insurance companies are creating products acknowledging the popularity of this technology, not every policy is the right fit. What exactly are the risks of operating a drone and whose fault is it when there is an incident?

The Oxford English Dictionary defines a ‘drone’ as “a remote-less controlled piloted aircraft or missile”. Unmanned aerial vehicles (UAVs) as we know them were used by the military during significant attacks in World War II and the Vietnam War. Since then they have mostly been utilised by the military as means of warfare and surveillance. Alongside military operations, the civil use of comercial drones has rapidly increased as technology has recognised the potential of remote controlled aircraft. As well as for surveillance drones can also be used as recording equipment, transportation, search and rescue, safety inspections, crop scouting for agriculture, storm forecasting and purely for personal entertainment purposes.

When drones are used by the armed forces the most likely insurance needed would be machinery and equipment breakdown coverage if there is manufacturing damage or an electrical fault with the aircraft. With personal use, not only is the coverage area still unclear, but the liability of who is responsible for the damage. As a ‘gadget’, most drone users can include their gadget as part of their home insurance policy. Insured as an electrical or high-value item, a drone can be combined with other household contents which covers loss, damage and repair.

Due to the size of drones and the complications around their usage it is becoming increasingly difficult to insure something that is no longer a mere toy. If a drone malfunctions mid-flight it could come crashing down on someone or their property, causing bodily harm or damage as a result. This then complicates the liability as it is the drone that has caused the damage, either through a malfunction or the inexperience of the user controlling it. There is also the distinction between what happens if a drone causes damage to your property or somebody elses.

Aaron McCrorie of Transport Canada commented that, “We do have instances of these things crashing into vehicles, for example, so there has to be some means of accounting for the cost of those damages”. Whilst individually customized specialty products were lacking two years ago, insurance companies have responding to this growing trend and have created new products to cater to this growing demand.

Whilst drones have seen the scope of their usage increase they have also seen them exploited. The importance of drone safety has increased but dangerous incidents are also on the rise. In November 2016 a Porter Airlines plane landing in Toronto was forced to make a sudden dive to avoid a mid-air collision with an unidentified object thought to be a drone. Flying such an aircraft into designated airspace could be catastrophic, especially if intentional. There is significant potential for a drone to cause a terrorist incident either by invading airspace or carrying weapons. Other potential misuses of drones range from unauthorised surveillance, smuggling contraband to restricted areas (such as prisons) and intentional damage of property.

The office of Transport Minister Marc Garneau said that “‎new, clearer regulations” for drone use would be released in the coming months. Over 80 potential UAV infractions were reported in Canada last year and as a result Transport Canada have taken steps to regulate airspace in efforts to improve public safety. Guidelines have been published online as well as authorisations required in order for personal users to be able to fly their drones with permission. There is also an online reporting tool if anyone sees a drone used in an authorised area or if there is an incident caused by a drone.

Whilst receiving a good response from both regulators and insurance companies, there is still the need to be cautious when insuring a drone. This is to ensure that it is being operated responsibly as well as cover being expansive enough so that anything outside of loss and damage are also covered.


To find out more about insuring drones on Insurr, click here.

Other pages of interest:

Transport Canada: Drone users need insurance by Insurance Business on November 20, 2016

Commercial drones: risk and new insurance category by RCI on 21 March, 2016

Transport Canada: Drone Safety