IRDAI working group suggests policies for theft, liability damage of unmanned aircraft systems

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Drone insurance: IRDAI working group suggests policies for theft, liability damage of unmanned aircraft systems

Drone-led businesses may soon get a wider range of insurance products to cater to their specific needs.

A working group set up by Insurance Regulatory and Development Authority of India (IRDAI) has suggested that insurers offer products related to physical loss of drones, third-party liability for drone owners.

If a drone is missing for 30 days after commencement of flight and not found then the insurer will consider this as total loss. The claim will be paid equal to the insured value.

Further, additional covers related to invasion of privacy, noise liability and cyber-loss of digital assets (loss of data due to computer virus) can also be offered.

The working group report said that insurers can also offer policies to cover against legal liability (including legal costs) to pay damages, for third party civil claims arising out of injury or death due to an accident caused by a drone.

The report said that for payment of claims, the insurer will seek documents related to proof of drone purchase, photo/video of the accident as well as flight data.

For drones flown on a private and as well as commercial basis, it is mandatory to buy third-party liability insurance in India.

However, in the absence of a defined product structure, both insurers as well as drone enthusiasts, are finding it difficult to find specific covers at affordable rates. To add to this, most insurance firms are unwilling to offer covers citing lack of reinsurance support.

To deal with this, IRDAI had set up a working group to look at the insurance needs of remote-piloted aircraft systems (RAPS), also called drones.

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 anything from Rs 25,000 to Rs 6 lakh.

The working group report said that war and allied perils, wear-and-tear, electrical and mechanical breakdown and flying drones under the influence of alcohol will be excluded from coverage.

The premium will be calculated based on the size of the drone, pilot/operator experience as well on basis of the drone flying range.

Flying drones has been legalised in India since December 2018. However, individuals need to take prior permission from the civil aviation authority DGCA for flying these remote-piloted aircraft. Nano drones weighing less than 250 grams have a permit exemption, subject to the condition that they are flown below 50 feet.