Helicopter tours provide one-of-a-kind experiences, such as heli-skiing, wine-tasting by air and spectacular views of city landmarks and national parks, but high-profile accidents have led to substantial liability settlements, causing insurance rates to rise and coverage to tighten for some operators.

Experts say strict safety protocols such as regular aircraft maintenance, pilot training and weather monitoring are vital, but managing human behavior — such as passenger distractions — is also key to avoiding accidents and injuries (see related story below).

Implementing safety management systems and integrating advanced technologies, such as crash-resistant fuel systems and synthetic vision, can make insurers more comfortable with an operator’s risk profile.

A Jan. 29 mid-air collision involving a commercial aircraft and a U.S. military helicopter near Ronald Reagan Washington National Airport that killed 67 passengers and crew has drawn attention to the dangers of crowded airspace.

The liability claim could take five to six years to resolve and cost over $1 billion, said Joel Heining, Denver-based senior vice president and aerospace sales leader at AssuredPartners Inc., who is a licensed helicopter pilot.

The impact on helicopter tour operators is minimal, but the entire industry could be affected due to the size of the potential award, Mr. Heining said.

Helicopter operators will likely face scrutiny from insurers on their adherence to standard operating procedures and uncontrolled airspace, he said.

The Federal Aviation Administration indefinitely closed most low-altitude helicopter routes near Reagan National airport in the wake of the collision.

Helicopter tour safety has improved due to efforts by the FAA prompted by recommendations from the National Transportation Safety Board after crashes, said Brian J. Alexander, a partner at Kreindler & Kreindler LLP in New York.

The efforts aimed to enhance safety through regulations and technology, especially in areas such as Alaska and Hawaii, where many incidents have occurred, he said.

Kreindler & Kreindler represented families involved in a recent accident in Hawaii, which highlighted the challenges of rapidly changing weather conditions, for instance, Mr. Alexander said.

He said one result of the crash investigation and subsequent legislative measures was the addition of cameras for specific routes. The cameras allow dispatchers and crews to access real-time weather data and make more informed route decisions.

Crowded airspace

Helicopter tours often operate in areas with heavy air traffic, which is a particular challenge, said Greg Wyght, senior vice president in Marsh LLC’s aviation practice in Vancouver, British Columbia.

“The Grand Canyon is a great example, where you have a high concentration of helicopters trying to operate in the same area, and so you have a significant mid-air collision risk, which is higher than what would normally be experienced in a helicopter,” he said.

Tours often fly close to the terrain, increasing the risk of collision. “Low and slow is a dangerous envelope for any aircraft, including helicopters, so that imposes a greater risk of loss of control,” Mr. Wyght said.

Changing weather conditions should be monitored closely, and it is critical to know when a flight is a “no-go.”

Many passengers schedule their flights weeks or months in advance and have a limited time window, adding to the pressure to fly, even when the weather isn’t good, Mr. Heining said.

“That can drive some higher-risk flights, particularly in winds or when the weather, clouds and rain, might be coming in, obscuring visibility,” and creating conditions “that might push aircraft down to lower levels as they’re touring,” he said.

Hawaii’s terrain is rugged and can be unforgiving for helicopters, said Ladd Sanger, Dallas-based managing partner at Slack Davis Sanger LLP.

“Hawaii, because it has unique microclimates for each island, can be risky, especially for pilots that aren’t really briefed or haven’t experienced it,” Mr. Sanger said. The rise of inexpensive single-engine helicopters like the Robinson R44 has lowered the barriers to entry to the tour helicopter business, he said.

Rising liability costs

While rates have softened recently and market conditions have improved, a smaller pool of insurers cover helicopter tour operations, and placements are spread vertically among multiple underwriters.

Third-party claims in this area can be significant and “include allegations of severe bodily injury and, sadly, death as a result of a crash,” Allianz Commercial, a unit of Allianz SE, noted in its aviation risk report issued last year.

Capacity has increased, leading to a more competitive rate environment, though smaller tour operators still face challenges, said Larry Mills, Dallas-based head of general aviation for Marsh.

“Gone are the days where most operators can get a $100 million limit of liability. For your smaller operators, underwriters have drawn back on the limit of liability they will afford. Most likely, you’re seeing $25 million to $50 million for most operators. Some can only get $1 million,” Mr. Mills said.

The limits of liability for tour operators that were there 10 years ago “simply aren’t there for them now” as insurers look to limit their exposure to so-called nuclear verdicts, he said.

Insurer appetite depends on an operation’s risk profile, said Kevin J. Kovarik, Chicago-based senior vice president and co-head of general aviation at United States Aviation Insurance Group.

USAIG does not currently write heli-skiing or aerial tree trimming operations and no longer insures helicopters that don’t have crash-resistant fuel tanks installed; nor is the insurer adding New York City sightseeing tours, he said.

“With the litigious nature of the society we’re in today, if there’s an operator that chooses not to put that crash-resistant fuel system in their helicopter, and there’s an accident, that’s a quick point that any attorney would look toward and say, ‘This is something that you didn’t do, that you could have done, to try to prevent a loss,’” Mr. Kovarik said.

Last year, a Nevada judge approved a $100 million settlement for the parents of a British tourist who was among five killed when an Airbus EC130 B4 helicopter operated by Papillon Airways crashed and caught fire in the Grand Canyon in 2018. The aircraft was not equipped with a crash-resistant fuel system, and all seven occupants suffered significant burn injuries in the post-crash fire.

A flight nurse with Air Methods Corp., who was severely injured when an air ambulance in which he was flying crashed in 2015, accepted a $100 million settlement in 2018 from Airbus, the helicopter manufacturer, and Air Methods.

That accident prompted legislative efforts and regulatory change. The FAA Reauthorization Act of 2018 prohibited helicopters manufactured after April 5, 2020, from flying in U.S. airspace unless certified with a crash-resistant fuel system. Legislation introduced last year would require older aircraft to comply with the requirements.

Liability issues often involve pilot error and mechanical failures, highlighting the importance of regulatory compliance, proper equipment maintenance and well-trained pilots, Mr. Alexander said. It is essential for tour operators to ensure they have adequate insurance to cover the potential liabilities, he said.

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Tours must begin with signed waivers, passengers educated on safety

Passengers should be thoroughly briefed on safety procedures and have signed liability waivers well ahead of helicopter flights, experts said.

They may be unfamiliar with restraint systems, exits, and emergency procedures, said Greg Wyght, senior vice president in Marsh LLC’s aviation practice in Vancouver, British Columbia.

Training pilots on how to extract passengers in an emergency and conducting pre-flight passenger briefings are critical, Mr. Wyght said.

Managing passengers on the ground during drop-offs or pickups in activities such as heli-biking or wine tours is a significant safety concern, he said.

Onloading and offloading practices must be communicated clearly, said Joel Heining, Denver-based senior vice president and aerospace sales leader at AssuredPartners Inc.

“Instructing and literally hand-guiding people into their seats and helping them buckle is critical,” he said.

The most challenging risk to manage is human behavior, said Mark Schlaefli, director of operations and co-owner of Dakota Rotors LLC in Custer, South Dakota. “The propensity that we have to make errors is huge, regardless of experience,” he said.

Selecting the right pilot to put in the cockpit is critical, said Mr. Schlaefli, who is also chairman of Vertical Aviation International, an Alexandria, Virginia-based advocacy organization for the helicopter industry. “It’s those decisions that help lead to safer operations,” he said.

Ground staff should be trained to identify passenger traits, such as signs of being “under the influence,” and communicate those to flight staff, Mr. Schlaefli said. “Passengers are often excited, sometimes nervous, and most are oblivious to operating in and around aircraft,” he said.

In September, a Manhattan Supreme Court jury awarded $116 million to the family of one of five passengers who died when a “doors off” helicopter tour operated by Liberty Helicopters Inc. crashed and sank in the East River in 2018.

A passenger harness system that didn’t allow for rapid release was among the safety failures, a National Transportation Safety Board investigation found. The website and social media posts of FlyNYON, the company that had arranged the flight, show photos of “shoe-selfies” with passengers’ feet dangling outside the helicopter.