Risk & Business Magazine Capri Insurance Fall 2016 | Page 7

UAV’S BY: CALVIN REICH, CAPRI INSURANCE The Inherent Risks In The Operation Of UAV’s Is Your Business At Risk? U nmanned aerial vehicles (UAVs) are becoming increasingly popular both recreationally and commercially. The media and other equipment manufacturers have tagged UAVs with many different names; however, the most popular term used for a UAV is “drone”. While there are many recreational uses for drones, they are rapidly gaining momentum as a business tool in the commercial sector. Unfortunately, many people do not consider the fact that the use of a UAV can expose their business to significant risk, and they are unaware that most commercial general liability policies do not pick up this “aviation” exposure. Additionally, many businesses do not realise that persons using UAVs other than for purely recreational use must apply for a Special Flight Operations Certificate (SFOC) or meet the stringent requirements of Transport Canada’s exemption rules (the full list of exemption requirements can be found at www.tc.gc. ca/eng/civilaviation/opssvs/ac-600-0042136.html). One of the requirements for receiving an SFOC is proof of liability insurance. An SFOC is usually required regardless of the weight of the drone. All UAV users should have two major concerns: ensuring that they operate their UAVs using best practices and ensuring that they are covered for any unforeseen liabilities. These two concerns overlap. Companies hiring UAV operators need to ask specific questions of them to ensure that their projects will be covered in their entirety. If operators are going to be operating in a nonrecreational setting, they need to ensure that they have an SFOC in place. Under certain circumstances, this requirement can be waived if the area in which the UAV is being operating is deemed to be remote and minimally populated. Professional operators should have this documentation readily available and should be willing to share it with any potential client. On the flip side, illegal operators often find ways to circumvent these requirements. This could be through fraudulent misrepresentation, or it could be as simple “THE TWO MAJOR CONCERNS OF UAV USAGE SHOULD BE BEST PRACTICES IN TERMS OF SAFETY AND INSURANCE AGAINST POTENTIAL LIABILITIES.” as the illegal operator stating that he or she does not require an SFOC due to the weight of the UAV. Many times, illegal operators do not even realize that they are operating outside of the rules as many of them come from a purely recreational background. Unfortunately, this lack of knowledge can expose the company that hires them to vicarious liability arising out of the use of the uninsured drone. Any business choosing to undertake a project that involves UAVs should be aware of the following: • The parameters of the project including time frame and the weight and usage of the UAV • Whether the operator has an SFOC that allows for the specific project or if the operator has been granted an exemption (you should ask for a copy of the SFOC) • That the business be added as an additional insured on the operator’s UAV policy by contract (this will protect it from any vicarious liability arising out of the operation of the drone) • Its own “non-owned aviation” liability exposure (a non-owned aviation liability policy provides coverage for liability arising out of UAVs that are not owned by the policyholder and would pick up any liability attributed to the policyholder that is not vicarious in nature) Don’t make the mistake of assuming you are covered for UAV usage based on your commercial general liability insurance. For more information or to find out if you have a UAV exposure, contact Calvin Reich at [email protected] or 1-250-541-7152. + Calvin Reich has worked in Commercial Insurance for the past 16 years. He has a strong aviation background including his commercial pilots license which has helped him emerge as the leading UAV insurance expert in Canada. Calvin is on the board of directors and executive for Unmanned Systems Canada and speaks at various events and conferences across the country on this challenging and developing industry. FALL 2016 | 7