Drones and the Insurance Industry


Drones: The Complexities for the Insurance Industry

While Star Wars and Star Trek brought sci-fi into the mainstream, it was the release of the Terminator movie in 1984 that provided a real glimpse into the future of technology. The T-800 cyborg previewed the future of the robotic soldier, soldiers that are believed to be in existence today. And although we will probably not see this type of technology introduced to society in the near future, there is another futuristic technology among us already: drones.

The History of Drones

Drones, also called an Unmanned Aerial Vehicle, are similar to remote-controlled planes and helicopters in that they fly without humans on board. The technology is not new; the American military used drones in the 1960’s to minimize risk to soldiers in high-risk regions. Drones have been used in military operations for years, but it has taken awhile for them to become available to everyday businesses and consumers.

The Legality of Drones

Drones are legal in Canada, with restrictions, but commercial use is not legal in the United States at this time. According to Transport Canada, some of the laws regarding drone use include not flying a drone within 9 kilometres of an airport, and not flying a drone 90 metres above ground. Pricing starts at a few hundred dollars for personal drones, and up to $200,000 for commercial drones, much cheaper than hiring airplanes and helicopters for aerial work.

The Business of Drones

The commercial use of drones, while not widespread, is increasing in Canada. The most common uses for potential clients of KTX Insurance Brokers are for aerial photography and roof inspections. Many businesses are starting to use aerial photography as a value-added service, such as real estate agents looking to sell high-valued homes. Amusement parks may want pictures of their signature roller coaster at its highest peak, and a biologist could take pictures of birds while in flight. Roof inspections can be dangerous for contractors, especially roofs that are at the end of their life cycle. Drones can also carry thermographic cameras to measure heat loss, with no need for an individual’s feet to ever leave the ground. In the near future, we will see packages delivered by drones, as some companies like Amazon have already started plans to bring this service to fruition.

Insurance for Drones

When looking for insurance for drones, whether for the drone itself, the commercial operation for which the drone is needed, or both, people (or companies) looking to insure a drone need to be aware of any exclusions included in the insurance policy. If someone is using a drone for aerial photography and their policy includes an aircraft exclusion, no claims will be paid should the drone cause bodily injury or property damage to third parties, nor for damage to the drone itself.

General liability issues are not the only concern for insurers. While most drone owners will use their drones for lawful personal or commercial use, there is always a risk that some may use drones for unlawful purposes, such as voyeurism. While illegal activities are excluded on insurance policies, the insurer may have a duty to defend any lawsuits, which could result in substantial legal fees. Pricing can be an issue for policies that include drones and their usage, and many insurers will not insure drones and/or their operations until insurers can quantify the types of losses that could occur.


James Mior

James Mior

COMMERCIAL LINES MANAGER - James has managed the Commercial Lines department at KTX Insurance Brokers since February 2014, including Commercial Property/Liability, Commercial Auto/Fleet, and Commercial Customer Service. James obtained his RIBO licence in 2002, and has spent his entire career in Commercial Lines. Along with managing the commercial team, he also writes new business with standard Canadian insurers, as well as managing agents and Lloyd’s of London. He developed and still manages a successful I.T. insurance program, and has successfully placed coverage for thousands of clients in retail, general contracting, real estate, professional services, and errors & omissions for consultants. Unlike traditional brick-and-mortar brokerages, James leverages the technology of Kanetix to provide instant online insurance quotes for many business owners.

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