The Risk and Insurance of Unmanned Aircraft

By Sandy Odebunmi of Sound Insurance Services

In the past few years one of the biggest changes to come to Canadian Aviation is the expansion of unmanned aircraft. Also called drones, UAVs, RPAS, and UASs, unmanned aviation is becoming more and more prevalent in Canadian Aviation.

While a lot of drone users are hobbyists, Transport Canada (TC) has classified all unmanned aircraft, down to the smallest micro-drone (under 250g), as an aircraft with its operation needing to be regulated.

In a market study completed by Research Drive on the Global UAV Drone Market , the global UAV industry was worth over $19 billion and is expected to grow by an additional 20% by 2027. As of April 30, 2021 over 59,000 drones have been registered in Canada and nearly 60,000 pilots’ certificates have been issued by Transport Canada.

All these numbers can be reduced to one single fact: Aviation is growing!
Lately we’ve seen more and more unmanned aviation startups, existing aviation maintenance organizations and flight schools expanding their services to include drones, and even aviation associations expanding their memberships to include benefits for drone users.

In addition to aviation companies, there is a huge growth of drone use by commercial operators. UAVs are being used in search and rescue, construction, communications, photography, cargo deliveries, the military, survey and mapping, and so much more.
And while the market for unmanned aviation grows, it is important to consider the risk of adding drones to the existing Canadian airspace. From an insurance perspective we’ve also had to revise and develop our products and services to encompass the risk of unmanned aviation.

Fortunately, there are plenty of resources in place, from Transport Canada, NAV Canada, new and existing aviation operators, and insurance companies that are helping bring safety to unmanned aviation.

Governmental Regulations and Resources

Since the summer of 2019 Transport Canada has made substantial strides in regulating unmanned aviation.

They’ve made it mandatory to register and mark all devices weighing over 250g, have pilots complete training courses to be certified for their type of operations, and implemented rules or where and when it’s safe to fly.

Most pilots can get a Basic Operations Certificate which excludes flight near bystanders and controlled airspaces. Advanced Operations allow for more flexibility in where they can fly, including within 30 meters of bystanders, and requires additional training. Any flights involving heavier drones, public events or above 400 feet elevation require a Special Flight Operations Certificate and a filed flight plan.
Special permissions can also be granted on an individual basis for operations that don’t fit into the Basic, Advanced, or Special categories.

As of now legal UAV operations need to be done within visual line of sight, away from controlled and restricted airspace and all other aircraft. Transport Canada has also implemented penalties up to $3,000 for individuals and $15,000 for corporations who violate their rules.

Transport Canada is still working though. They’re busy developing more UAV framework, including for flight beyond visual line of sight and options for heavier drones.

NAV Canada has also expanded their resources by providing a mobile app that allows UAV pilots and owners to obtain advanced operations permissions and register flight plans, as well as information on where they’re qualified to fly depending on their pilot certificate. Between the months of June to December 2020 they reported over 16,000 RPAS flight authorizations were requested.

Past Drone Incidents and Accidents

Despite all these resources and regulations being developed for Unmanned Aviation there is still considerable risk. CTV reported in late 2018 that between 2014 and 2018 alone there were around 500 near misses between UAVs and manned aircraft – and that was before major growth in UAVs.

As of September 2021, CADORS has reported over 1,200 incidents involving UAVS and they are still reporting near daily occurrences. These reports encompass incidents of drones operating where and when they’re not supposed to, posing a concern for civilian privacy, trespass, and safety, and collisions.

The overlap of the hobbyist nature of drones, where knowledge of responsible and legal operation may be lacking, and safety oriented manned aviation can already be traced as the reason for several incidents with severe consequences.

For instance, UAVs are not allowed to fly in restricted airspace. In July 2021 a forest fighting operation near Kimbol Lake, BC, the presence of civilian drones resulted in BC Wildfire Service having to ground their helicopter and wait for the skies to be clear before resuming their aerial firefighting efforts. The presence of a wildfire automatically restricts the surrounding airspace, meaning the UAVs were operating there illegally.

Another example of a failure of rules knowledge occurred at a 5km run in June 2016 in Beloeil, QC a 3lb DJI phantom was being flown over the event and lost power, dropping directly onto woman’s head. The drone pilot claimed not to know he wasn’t allowed to fly over people despite having done a training course. The entire incident was filmed by another drone who was also flying over top of the event.

Some occurrences involve unlawful practices as well. The use of drones while hunting was made illegal in 2016, but even so in December of 2018, a man used a drone while on a hunting expedition. The operator was fined over $1,000, was prohibited from hunting for one year, and had his drone confiscated.

Even when the UAV is being operated in accordance with TC’s regulations and by trained individuals there can still be a concern for safety. In February 2020, near the Buttonville Municipal Airport an RCMP drone collided with a privately registered Cessna 172 which led to considerable damage to the aircraft and the drone being destroyed.

While lack of knowledge is dangerous, it’s not the only concern. The intentional malicious use of drones not only causes safety concerns but is typically more widely publicized causing damage to the aviation industry’s reputation.

In November 2018 the Gatwick Airport in the UK was harassed by the reported appearance of drones which resulted in 58 flights being diverted or cancelled. In New Jersey, drones were used to smuggle contraband over prison walls.

UAV Insurance

Despite Transport Canada’s regulations which are designed to safely incorporate drones into Canada’s airspace, it’s clear it will take a while and there is still cause to be concerned and be prepared for damage caused by or to drones.

As of now very few UAV operators are required to carry insurance. It was originally required years ago when drones were just starting to be recognized as a growing sector, but Transport Canada repealed the rule requiring it following concerns over the cost and difficulty to obtain suitable coverage.

Fortunately, getting insurance for UAVs is now much easier with more flexible limits, coverage and use options.

With the growing ways drones can be used there is an ever-increasing risk of an accident and just like every other type of aircraft if the operator is found to be the cause of an accident or incident, they will be financially liability.

Despite not requiring it, TC still recommends operators carry some liability coverage for damage to third parties. This is the biggest insurance concern for UAV operators.
Manned aircraft are required to carry a minimum limit of $1,000,000 Third Party Liability but this may be way too much for a UAV operator. Most insurers have revised their options to be more reasonable offering limits as low as $100,000 and as high as $5,000,000 depending on what makes the most sense for the operation.

Different insurers are also able to quote different add on coverages, such as noise liability which is normally excluded from standard aircraft policies, and privacy liability which is especially important for photographers using drones. There is also more availability to add coverage for damage to your drone as well as any attached equipment there may be.

Pricing has become more affordable too, with basic policies starting at $350 for an annual policy.

Previously it was also difficult to obtain coverage for those operating their UAVs recreationally, especially in Canada. Most standard homeowners’ insurance policies will exclude the use of drones (Transport Canada also tries to bring attention to this).
There are a great number of websites offering policies to American operators, but it has only been recently that online options have opened up to Canadians, including CoverDrone which has the option for flexible policy periods.

A few Canadian aviation insurance companies have also opened up their underwriting appetites to recreational drone use. They were originally covering business use only.

For suppliers, manufacturers, distributors, flight instructors, and maintenance shops the insurance for them is quite simple if they are just expanding their operations to include unmanned aviation products. Coverage can be added to their existing policies for little to no additional premium.

For non-aviation companies adding UAVs to their operations (such as those in photography, real estate, construction, or farming) some of the biggest commercial insurance companies have added the capability to endorse drone use to their policies.

Conclusion

I’ve been working as an Aviation Insurance Broker for over 30 years and have found that one of the ways aviation differs from any other industry is how serious about safety everyone is. All my clients, from large to small, be they flight schools, manufacturers, suppliers, private pilots, and even balloonists, know how expensive, and how deadly the consequences of unsafe flight can be.
As unmanned aviation is still relatively new and still learning the risk flying can pose. Transport Canada, some insurers, and especially existing aviation companies are doing excellent work at passing their experience and services on to help unmanned aviation newcomers operate as safe as possible.

Sandy Odebunmi has been an aviation insurance broker for over 30 years during which time she has specialized in General Aviation and creating affordable solutions for her clients and aviation associations across Canada. She is now the Vice President of Aviation at Sound Insurance Services in Toronto and can be reached at 416-642-6360 or sandyo@soundinsurance.ca.