Drone enthusiasts could soon have a range of insurance policies to choose from. On February 11, the Insurance Regulatory and Development Authority of India (IRDAI) brought out guidelines for issuance of third-party liability policies covering Remote-piloted aircraft systems (RPAS), better known as drones.
Here, the regulator has said that insurers should offer policies covering legal liability for death/injury caused by the drone as well as for physical RPAS repairs.
Typically, for third-party liability policies covering bodily injuries, the premium ranges between 0.5 percent and 0.75 percent of the sum insured. Drones cost between Rs 25,000 and Rs 6 lakh.
Flying drones has been legalised in India since December 2018. However, individuals need to take prior permission from civil aviation regulator DGCA to fly these remote-piloted aircraft. Nano drones, weighing less than 250 grams, have a permit exemption, subject to the condition they are flown at an altitude below 50 feet.
Currently, only a handful of general insurers offer drone insurance in India. IRDAI said that considering the unique characteristics of drones, which differentiate them from other aircraft, and due to the growth in their number, adequate insurance should be available.
Whether they are flown on a private or on a commercial basis, it is mandatory for drones to have third-party liability insurance in India.
What will drone insurance cover?
IRDAI said that drone insurance policies should provide cover against legal liability (including legal costs) to pay damages. This is for third-party civil claims due to death/injury or property damage due to an accident or a handling error by the operator. This will be part of aviation insurance policies.
Further, the regulator has said that insurers must also pay for repair/replacement of the insured drones. Here, the drone includes the unmanned aircraft system, its payload, as well as ground handling tools and equipment.
Optional covers related to cyber liability, invasion of privacy, and night flying can also be offered by insurers.
A working group set up by IRDAI had suggested that if a drone is missing for 30 days after commencement of a flight and not found then the insurer will consider this a total loss. The claim will be paid equal to the insured value of the drone.
Insurers have been asked to also offer accident insurance policies covering drone operators. This cover is only available to the authorised operator for bodily injuries. If there is hospitalisation due to an injury while flying a drone, the insurer will pay the claim.
Drones will not be covered for any war-related risks, including injuries, hijacking or military activity by enemy countries.
Further, claims by operators under the influence of drugs/alcohol will be rejected. Insurance is also not applicable for trial runs. In addition, military engagement-related drone usage injuries will not be covered.
A standard drone insurance policy will not cover instances where the drone is Beyond Visual Line of Sight (BVLOS). This is because drone operators have to ensure a drone is within their line of sight and in control.
An IRDAI working group has recommended that drone operators be allowed to buy an additional cover for BVLOS operations. This will provide for liabilities against any accidents. The working group’s report has been accepted.
Delivery personnel who use drones that are BVLOS will have to purchase such an additional cover if the insurer offers it.
When will these policies be launched?
The regulator has said that insurers can follow the model product developed by the working group on drones to design an insurance policy.
Alternatively, the insurers may design and develop their own product keeping in view the minimum coverage specified. All insurers have been asked to file these products as early as possible to cater to the needs of the Indian drone market.