Ahmedabad Air India plane crash: What aviation and travel insurance will cover
The airline has announced an ex gratia payment of ₹1 crore to the families of each deceased passenger.
However, beyond this, several layers of insurance—aviation, life, and personal accident—are expected to provide further compensation and support to the victims’ families.
Aviation insurance: What does Air India’s policy cover
Air India, like other major international carriers, maintains a comprehensive fleet-level aviation insurance policy.
According to Sajja Praveen Chowdary, Director, Policybazaar for Business, “Commercial airlines typically purchase a broad aviation insurance program that includes hull insurance, passenger liability insurance, third-party legal liability, cargo liability, and crew personal accident cover.”
According to Hitesh Girotra, Vice President, Prudent Insurance Brokers, commercial airlines typically secure the following key covers:
- Hull all risk: Covers physical damage to the aircraft (excluding wear and tear, mechanical breakdowns, or nuclear risks).
- Hull war Risk: Covers hijacking, sabotage, and terrorism.
- Combined single liability (CSL): A mandatory global cover comprising:
- Passenger liability (governed by the Montreal Convention)
- Baggage and cargo liability
- Third-party liability (for injury or damage on the ground)
- Excess war liability (AVN 52E): Covers war-related claims like those from events similar to 9/11.
- Hull deductible buyback: Reduces the deductible burden on airlines in case of a claim, ensuring even lower-value claims are admissible.
“The physical value of the Boeing 787-8 Dreamliner is typically much lower than its list price,” said Hari Radhakrishnan, aviation insurance expert and IBAI member. “While the list price may be around $250 million, the insured value can be closer to $115 million, depending on depreciation and market conditions.”
“Passenger liability alone for international flights often exceeds $500 million, especially due to global conventions like the Montreal Convention and EU aviation safety directives,” he added.
How much will families receive
Under the Montreal Convention, which governs international aviation liability, the airline is liable to pay compensation without requiring families to prove fault.
This global treaty mandates that airlines are strictly liable for proven damages up to 113,100 SDRs (approximately ₹1.26 crore at current exchange rates), without requiring claimants to prove negligence.
“Liability insurance ensures that affected individuals or their families are compensated in accordance with international standards,” Chowdary added.
Additional compensation may be owed if negligence is established or through civil claims.
The EU regulation, which mandates a minimum of 250,000 SDRs (approx ₹2.8 crore) in insurance cover per passenger, applies to all carriers flying to or from Europe.
In addition to this:
Air India’s ₹1 crore ex gratia payment offers immediate relief.
Credit card air personal accident (PA) cover may pay an additional ₹1 crore to ₹3 crore if tickets were bought using eligible cards.
“Most Indian credit cards offer such cover, but the benefit activates only if the air ticket was purchased using that card,” Chowdary noted.
Additionally, it must be noted that ₹1 crore compensation announced by the Tata Group is over and above the insurance families are legally entitled to.
Travel insurance and emergency support
Many passengers may have had individual travel insurance, which includes accidental death, medical evacuation, and repatriation of remains.
“In the event of accidental death, beneficiaries receive a lump sum payout—typically ₹10-15 lakh for a $150,000 policy,” said Meet Kapadia, Head of Travel Insurance at Policybazaar.
Kapadia added: “Most insurers have fast-track protocols in such situations. Dedicated helplines, expedited claims, and logistical support are activated to assist families and medical teams.”
Risk sharing: How are global reinsurers involved
“The aviation insurance market is structured globally,” said Narendra Bharindwal, President of the Insurance Brokers Association of India (IBAI). “Air India’s fleet insurance is syndicated and reinsured across international markets such as London and New York.”
“No single insurer bears the entire risk. Coverage is distributed across global reinsurers, with one often holding 1.5% to 2%. A lead reinsurer typically retains 10–15%,” Bharindwal said.
These global reinsurers may include players like Allianz, AIG, and Lloyd’s syndicates, and they may even offload portions of the risk through retrocession, i.e., reinsuring themselves.
Life insurers activate emergency claims teams
Responding to the tragedy, Bajaj Allianz Life Insurance has established a dedicated claims desk to support its affected customers.
In a statement, the company said:
“We have simplified documentation norms. If a death certificate isn’t available, a hospital or municipal confirmation will suffice. Claims will be settled on priority.”
LIC of India has also announced concessions to mitigate the hardships of the claimants of LIC policies.
“In lieu of death certificates, any evidence in government records of death of the policyholder due to the plane crash or any compensation paid by central/state government /airline authorities will be accepted as proof of death,” LIC said.
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