The Insurance Regulatory and Development Authority of India (Irdai) has urged all general insurance companies to launch covers for mishaps related to remotely piloted aircraft systems (RPAS) or drones.
The regulator in a circular issued on Thursday noted that only a few general insurers in India are offering coverage for drones through products under aviation insurance.
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“Considering the unique characteristics of drones that differentiate them from other aircraft and taking into account the phenomenal growth in the usage of drones for multiple purposes, there is a need to augment the current insurance availability customized to the requirement of drone owners and operators,” Irdai said. Usage of drones has picked up in India over the past few years after they were allowed by the government in 2018.
The regulator had constituted a working group, which has constructed a specimen policy that can be used as a template by insurance companies. They also have the freedom to design and develop their own products. “The filling of the said product may be carried out at the earliest to respond to the new and quickly growing market,” Irdai said.
With the objective of making basic insurance covers available by the general insurers for drones, the regulator has provided the following product construct.
The insurance companies must indemnify the insured against its legal liability, including defense costs, to pay damages, for third-party civil claims arising out of bodily injury or death or property damage, by an accident or a handling error on part of the authorized operator.
Irdai said insurers must indemnify the insured or authorized operator for bodily injury sustained while operating drones and arising out of an accident.
“The company shall pay the sum assured in the event of bodily injury resulting in the death of the insured beneficiary within 12 months of such bodily injury being sustained,” it said.
Moreover, in the event of bodily injury resulting in permanent total disability of the insured, the company will pay 125% of the sum assured, whereupon this coverage will expire.
Medical expenses cover
Insurers must offer indemnity cover for the medical expenses for the insured who has been hospitalized because of a bodily injury arising out of a flight of the covered drone.
Meanwhile, according to the model product, an insurance company can also provide cover for the repair or replacement of a drone.
To enhance the coverage, policies can also come with optional covers such as the invasion of privacy and cyber liability covers.
The regulator said it will be mandatory for the companies to offer third-party insurance covering the liability that may arise on account of any mishap involving drones and causing death or bodily injury to any person or damage to property.