Page 31 - Insurance Times February 2021

Legal aspects of drone risk: bodily injury resulting in death of the insured beneficiary

It is legal to fly drones in India since December 2018. within 12 months of such bodily injury being sustained. With
However, individuals need to take prior permission from the the growth in the use of drones, some insurers are already
civil aviation authority for flying these remote-piloted offering drone cover through existing products and extending
aircraft. Nano drones weighing less than 250 grams have a some covers as and when required.
permit exemption, subject to the condition that they are Restricted areas
flown below 50 feet. Right now, general insurers are
reluctant to offer drone insurance as a mass product because 1 Within an area of 5 km (2.7 NM) from Aerodrome
reinsurers have sought clarity on the product structure and Reference Point of operational airports.
pricing. Since third-party liability plans have the possibility 2 Above the Obstacle Limitation Surfaces (OLS) of an
of high claims, insurance companies in turn take risk covers operational aerodrome specified in Ministry of Civil
from reinsurance companies by paying a fixed premium. Aviation (Height Restrictions for Safeguarding of
Aircraft Operations) Rules, 2015 notified through
So whenever an insurer incurs a claim, this is paid out of Gazette of India notification GSR751(E) or its
the reinsurance cover. The IRDI Working Group has left the amendments.
decision of arriving at the third-party liability limits to 3 Within permanent or temporary Prohibited,
individual insurers as the underwriting appetite, retention, Restricted and Danger Areas including TRA and TSA
reinsurance programme devised and finally the business as notified by AAI in AIP.
volume generated for the drone segment may differ. 4 Without prior approval, over densely populated
However, the drone owner/ operator should choose an areas or over or near an area affecting public safety
appropriate third-party liability limit when flying the drones or where emergency operations are underway.
in a high value concentration zone, after a thorough 5 Within 50 km from international border which
assessment of potential scenarios which can lead to liability includes Line of Control (LoC), Line of Actual Control
claims. (LAC) and Actual Ground Position Line (AGPL).

However, the unlimited legal recourse brings in an element 6 Beyond 500 m (horizontal) into sea from coast line
of uncertainty in determining the exposure which is a key provided the location of ground station is on fixed
concern to insurers and re-insurers in supporting this platform over land.
promising technology and developing the drone insurance 7 Within 5 km radius from Vijay Chowk in Delhi.
ecosystem within the country. 8 Within 500 m from perimeter of strategic locations
notified by Ministry of Home Affairs.
Liability limits: 9 Within 500 m from perimeter of military installations/
Typically, for third-party liability policies covering bodily facilities.
injuries, the premium ranges between 0.5 percent and 0.75 10 From a mobile platform such as a moving vehicle,
percent of the sum insured. Drones cost anything from Rs ship or aircraft.
25,000 to Rs 6 lakh. The IRDAI has now set up a nine- 11 As an autonomous flight, unless it is following an
member working group to look at the insurance needs of Autonomous Flight Termination (AFT) or Return to
remote-piloted aircraft systems (RAPS), also called drones. Home (RH) procedure.
The IRDAI working group has left the decision of setting 12 Over eco-sensitive zones around National Parks and
drone third-party liability limits to individual insurers as the Wildlife Sanctuaries notified by Ministry of
underwriting appetite, retention, reinsurance programme Environment, Forests and Climate Change without
devised and the business volume generated for the drone prior permission.
segment may differ from insurer to insurer.
However, the drone owner/ operator should choose an Commercial Drones at a Glance:
appropriate third-party liability limit when flying the drones In Insurance, the property and casualty insurance industry
in a high value concentration zone, after a thorough can benefit significantly from the use of drones, especially
assessment of potential scenarios which can lead to liability in the areas of claims adjudication, risk engineering and
claims. Among suggested measures, the committee catastrophe claims management. Drones are distinguished
proposes that insurers pay the sum assured in the event of by the following key features:
The Insurance Times, February 2021