Irdai urges general insurers to file products for drone coverage

The Insurance Regulatory and Development Authority of India (Irdai) has asked general insurance companies to file the “model product” suggested by one of its working groups, regarding drones, given that only a handful of insurers offer coverage to drones under aviation insurance at present.

Alternatively, they could can design and develop their own product and file it with the insurance regulator at the earliest to meet the demands of this growing sector.

However, any product developed by insurers has to offer third-party liability insurance, the regulator added.

“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, customised to the requirement of drone owners and operators,”, said the regulator.

The model product of the regulator will provide coverage for legal liability to third parties, physical damage to drone bodies, medical expenses incurred by operators, and personal accident cover to operators. In legal liability to third parties, insurance firms will — subject to the sum assured — pay all fees and expenses incurred during the investigation, defence, or settlement of any claim. Costs incurred by the insured for representation at any civil inquest or inquiry, too, will be borne by them.

In drone hull cover, insurers will be liable to indemnify the policyholder for any cost incurred on account of repair (or replacement) of drones arising out of accident or theft. Similarly, in personal accident cover of operators, insurers will have to pay the sum assured in case the operator suffers a bodily injury resulting in death. In addition, it will also have to pay 5 per cent of the sum assured or ~5,000 — whichever is lower — to transport the mortal remains of the insured.

If the bodily injury results in permanent disability, the insurer will have to pay 125 per cent of the sum assured.

Under the medical expense cover, the insurance company has to reimburse reasonable and customary medical expenses, incurred up to the maximum sum insured, if the operator gets hospitalised. Further, the insurer will have to pay for the ambulance cost, which is capped at ~1,000.