Drone Risks within the Real Estate & Construction Industry – Part 2

Owning and Operating Drones in the Commercial Real Estate & Construction Industry – Part 2

In our previous article, Drone Risks within the Real Estate and Construction Industry, we discussed how the commercial real estate industry has become increasingly reliant on the utilization of unmanned air vehicles (“UAVs”), commonly known as drones.

In this article, we will explore how owning and operating drones for commercial/professional use has become increasingly common within the Real Estate and Construction Industry. This ever-expanding technology poses new risks for owners and operators, therefore it is important to follow the rules and regulations outlined by Transport Canada.

Transport Canada requires that owners/operators utilizing drones for commercial and/or professional use obtain a Special Flight Operations Certificate (SFOC).  The SFOC outlines how and where operators are permitted to fly drones. However, it is possible to qualify for the exceptions made for 1) drones that weight less than 1 kilogram and 2) for drones between 1 and 25 kilograms.

To qualify for the SFOC exemption, the owner must meet the following criteria:

• The drone is being used for work or research;
• The owner has at least $100,000 of liability insurance;
• The owner has confirmed that it has read the applicable exemption documents and agreed to follow all conditions;
• The owner has notified Transport Canada before flying its drone by completing the exemption notification form.

Transport Canada requires that all owners of drones carry $100,000 of liability insurance. However, INTECH recommends that owners take a more holistic and fulsome approach to risk management and insurance by obtaining the following types of coverage:

1. Property Insurance – This first party coverage protects against property damage to your drone. Drones can be an expensive investment so it is important to ensure that adequate coverage is in place in the event of a loss. Drones are often outfitted with expensive add-on equipment. For example, specialty cameras can cost significantly more than the drone itself.  It is important that all add-ons are properly insured. A common option is to have the equipment scheduled to the policy. This will come at an additional premium, but will ensure there is adequate coverage in the event of a loss.

2. Liability Insurance – This will provide coverage in the event a third-party suffers bodily injury or physical damage to their property due to the operation of the drone.  As mentioned, Transport Canada requires owners carry a minimum limit of $100,000 in liability coverage.  Given the various use of drones in commercial/professional use, we recommend that owners consult with an experienced risk management consultant to ensure adequate limits are purchased.

3. Premises Liability – This will protect against bodily injury or property damage that may occur on premises used for commercial/professional activities. In addition, we recommend obtaining coverage for any work or for the performance of any duties carried out by owner and/or his/her employees in connection with commercial/professional activities.

Please stay tuned for Part 3 of this article which will examine the proposed changes set forth by Transport Canada, expected to come into force in of the spring of 2018.

Scott Badali
Risk Analyst, Risk & Insurance Services
sbadali@intechrisk.com

About INTECH

INTECH Risk Management (“INTECH”) is an independent insurance consulting company involved in the analysis, design, development, implementation and management of insurance programs. INTECH does not sell insurance, nor is it affiliated with any insurance company or brokerage.  This unique independent position in the marketplace enables our consultants to avoid conflicts of interest and provide our clients with unbiased, expert advice. INTECH has received the 2017 Award for Excellence in Risk Management from Insurance Business Canada, the 2017 Insurance Adviser of the Year as well as 2015 and 2016 Due Diligence Provider of the Year Award from IJGlobal, and has achieved Platinum Elite Status on ReNew Canada’s Top100 Projects.

For more information, please click here.